BloostonLaw Telecom Update Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP [Selected portions reproduced here with the firm's permission.] www.bloostonlaw.com | Vol. 12, No. 18 | May 6, 2009 |
FTC Delays Enforcement Of Red Flag Rules Until August 1 The Federal Trade Commission (FTC) has delayed enforcement of the “Red Flag” Rules for 90 days until August 1, 2009, to give creditors and financial institutions additional time to implement identity theft programs. Under the new rules, all businesses that maintain a creditor-debtor relationship with customers, including virtually all telecommunications carriers (but other companies as well), must adopt written procedures designed to detect the relevant warning signs of identity theft, and implement an appropriate response. The Red Flag compliance program was in place as of November 1, 2008. But the FTC will not en- force the rules until August 1, 2009, meaning only that a business will not be subject to enforcement action by the FTC if it delays implementing the program until August 1. The FTC announcement does not affect other federal agencies’ enforcement of the original Nov. 1, 2008, compliance deadline for institutions subject to their oversight. Other liabilities may be incurred if a violation occurs in the meantime. The requirements are not just bind- ing on telcos and wireless carriers that are serving the public on a common carrier basis. They also ap- ply to any “creditor” (which includes entities that defer payment for goods or services) that has “covered accounts” (accounts used mostly for personal, family or household purposes). This also may affect private user clients, as well as many telecom carriers’ non-regulated affiliates and subsidiaries. BloostonLaw has prepared a Red Flag Compliance Manual to help your company achieve compliance with the Red Flag Rules. Please con- tact Gerry Duffy (202-828-5528) or Mary Sisak (202-828-5554) with any questions or to request the manual. |
INSIDE THIS ISSUE - 8th Circuit rules in favor of Vonage in Nebraska USF contribution case.
- Obama taps Clyburn for FCC seat.
- SBE opposes several recon petitions on “white spaces.”
- RUS publishes final rule on fiber optic cable specifications.
- Is the Internet running out of space?
- Bird groups want action on antennas.
- VITALMEETINGS AND DEADLINES
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8th Circuit Rules In Favor Of Vonage In Nebraska USF Contribution Case The 8th U.S. Circuit Court of Appeals in St. Louis has ruled that Vonage Holdings Corp. does not have to con- tribute to the Nebraska state Universal Service Fund (NUSF). In Vonage v. Nebraska Public Service Com- mission, the 8th Circuit affirmed a lower court decision that the FCC, rather than the PSC, has jurisdiction over Vonage’s nomadic interconnected voice over Internet protocol (VoIP) service. Specifically, the district court held the NUSF was preempted and enjoined its enforcement. Specifically, the district court concluded that the FCC, in an order resolving a dispute between Vonage and the Minnesota Public Utilities Commission, had concluded nomadic interconnected VoIP services were only subject to regulation by the FCC (Vonage Preemption Order). The 8th Circuit noted that VoIP is an internet application used to transmit voice communication over a broadband internet connection. With traditional circuit-switched telephone communications, the end-to-end geographic locations of landline-to-landline telephone communications are known, and the interstate or intrastate nature of the calls is readily determinable. VoIP-to-VoIP communications originate and terminate at IP addresses and are tied to no identifiable geographic location. In 1997, Nebraska enacted the NUSF, authorizing the NPSC to establish a fund to subsidize telecommunication services in high cost and remote areas throughout Nebraska. In 2006, the FCC issued an order directing interconnected VoIP service providers to collect a federal USF surcharge. In 2007, the NPSC followed suit and ordered nomadic interconnected VoIP service providers to collect a NUSF surcharge. Thus, VoIP service providers operating in Nebraska were required to collect a fee on interstate services for the USF, and a fee on intrastate service for the NUSF. As part of its 2006 order, the FCC recognized the difficulties associated with attempting to divine the interstate and intrastate nature of interconnected VoIP communications. Thus, it established a "safe harbor" provision denoting 64.9 as the percentage of a customer's interconnected VoIP communications determined to be interstate, and to which the USF surcharge applied. VoIP providers, unless they could determine actual interstate versus intrastate traffic, collected and paid into the USF based on the safe harbor provision. In determining intrastate usage for purposes of applying the NUSF, the NPSC simply adopted the remaining 35.1 percent as necessarily reflecting the amount of intrastate nomadic interconnected VoIP usage. Additionally, the NPSC used the customer's billing address as a proxy for where nomadic interconnected VoIP services occurred. In other words, even though there was no way to determine the geographic origin of the communication, 35.1 percent of nomadic interconnected VoIP usage by customers having Nebraska billing addresses was deemed intrastate. Vonage refused to collect the NUSF surcharge and a complaint was filed with the NPSC to enforce the NUSF order. Vonage filed a law suit in federal court seeking 1) a declaration the NUSF was preempted by federal law, and 2) a preliminary injunction prohibiting Nebraska from enforcing the NUSF. Vonage argued, among other things, the NUSF was preempted by federal law and, as noted above, the district court agreed. The NPSC then appealed the district court's grant of a preliminary injunction, arguing the court erred in concluding the Vonage Preemption Order preempted all state regulation of nomadic interconnected VoIP service providers. The NPSC argues the NUSF is consistent with and does not conflict with the FCC's imposition of the USF. The district court concluded the FCC had preempted all state regulation of nomadic interconnected VoIP service providers under the impossibility exception. Under the impossibility exception, the FCC may preempt all state regulation of services which would otherwise be subject to dual control if it is impossible or impractical to separate the service's interstate and intrastate components, and the state regulation interferes with valid federal rules or policies. The district court found no evidence showing Vonage's nomadic interconnected VoIP services could be separated into interstate and intrastate components. Further, the district court concluded the Vonage Preemption Order categorically preempted all state attempts to impose regulations on nomadic interconnected VoIP services. The NPSC argued the Vonage Preemption Order only preempts "traditional telephone company" regulations, and in applying it to the NUSF the district court interpreted it too broadly. It contended the scope of the order must be limited to the type of regulation Minnesota was seeking to impose, i.e., provision of 911 services. According to the NPSC, the type of regulation at issue in Minn. Pub. Utils. Comm'n, acted as a barrier to entry into the market and clearly conflicted with federal regulations prohibiting states from imposing entry conditions. Conversely, it contended the NUSF is the state counterpart to a complimentary federal regulation – Nebraska seeks to collect a fee on intrastate service while the FCC regulation only reaches interstate service. Vonage contended the language of the Vonage Preemption Order clearly states the FCC intended to preempt all state regulation of nomadic interconnected VoIP service providers. It conceded the FCC could implement a universal service fund surcharge on both interstate and intrastate VoIP traffic, but argued only the FCC has the authority to impose such an obligation. Further, it contended the potential for conflict and overlap between various states attempting to implement similar regulations will thwart federal objectives. The 8th Circuit concluded that the Vonage Preemption Order clearly preempted state regulation of Vonage’s service. It added: “For such services, comparable regulations of other states must likewise yield to important federal objectives.” In Minn. Pub. Utils. Comm'n, “we interpreted the Vonage Preemption Order, holding: ‘The impossibility exception, if applicable, is dispositive of . . . whether the FCC has authority to preempt state regulation of VoIP services.’ We concluded, as did the FCC, that VoIP services cannot be separated into interstate and intrastate usage. We find nothing in the NPSC's arguments here to alter our earlier conclusion. Because Vonage's nomadic interconnected VoIP service cannot be separated into interstate and intrastate usage, the impossibility exception is determinative. The impossibility exception further requires a finding the state regulation interferes with valid federal rules or policies.” BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. OBAMA TAPS CLYBURN FOR FCC SEAT: President Barack Obama has announced his intention to nominate Mignon Clyburn, a utility regulator and former newspaper executive from South Carolina, to the Federal Communications Commission. The president previously announced his intention to nominate Julius Genachowski to fill the chairman's seat. The White House announced the president's decision on Clyburn late last Wednesday. FCC nominees need to be confirmed by the Senate. Clyburn is the daughter of the House majority whip, Rep. James Clyburn. She has been a member of the Public Service Commission of South Carolina since 1998. Before that, she spent 14 years as the publisher and general manager of The Coastal Times, a weekly newspaper in Charleston. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast. SBE OPPOSES SEVERAL RECON PETITIONS ON “WHITE SPACES”: The Society of Broadcast Engineers (SBE) has filed comments opposing several petitions for reconsideration of the FCC’s November 14, 2008, Second Report & Order relating to unlicensed, high power Part 15 operation on "unused" TV Broadcast channels. This ET Docket No. 04-186, 02-380 proceeding also involves additional spectrum for unlicensed devices below 900 MHz and in the 3 GHz band (BloostonLaw Telecom Update, April 8). Among the petitions opposed by SBE is one filed jointly by Fiber Tower Corp., Rural Telecommunications Group (RTG), COMPTEL, and Sprint Nextel, seeking to expand backhaul capacity in white spaces. SBE said in its opposition that this is “untenable.” According to SBE, “First… there are no vacant TV channels for TVBDs (devices operating in TV white spaces) except outside even medium-sized metropolitan areas. There- fore, there are no vacant TV channels for backhaul use. Second, there is no such thing as a ‘protected’ Part 15 application. Part 15 uses are, by definition, and by statutory requirement, unprotected devices with no allocation status; they operate at sufferance to all licensed services. TVBD’s cannot have it both ways: the flexibility of unlicensed operation and a status of a protected (i.e. licensed) radio service. The decision to allow white spaces devices is seriously flawed and not supported by the record in this proceeding. As the Commission has failed to properly analyze the interference potential from these devices, it is unreasonable to postpone that analysis to the equipment authorization stage on a case-by-case basis. Most urgently, the Commission should not adopt the rule relaxations also proposed by Adaptrum, Public Interest Spectrum Coalition (PISC), Motorola, Dell/Microsoft, Wireless Internet Service Providers Association, Southern California Tribal Digital Village (SCTDV), The Wi-Fi Alliance, and IEEE 802 Local and Metropolitan Networks Standards Committee. Rather, far more strict provisions to prevent interference to licensed services ex ante, especially for broadcast and broadcast auxiliary operations on television broadcast channels, are required and must be implemented.” BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino. RUS PUBLISHES FINAL RULE ON FIBER OPTIC CABLE SPECIFICATIONS: The Rural Utilities Service (RUS) has published its final rule revising its regulation on fiber optic cable specifications to meet current indus- try standards. This final rule, which became effective May 5, revises the current requirements for fiber optic cables of 7 CFR 1755.900 codified in 1995 as well as minor editorial changes. The final rule sets the minimum performance requirements based on current industry standards. This revision was initiated to resolve problems the rural telecom industry is experiencing with cables manufactured under the existing specifications and reported by rural carriers and their consulting engineers. It addresses the buffer tube shrinkage caused by storage at low temperatures, which impairs fiber-to-the-home system performance, and sets new requirements for drop cables (cables with 12 or fewer fibers operating up to 100 meters (300 feet)). Cables manufactured to these revised specifications will have lower average bi-directional loss at fusion splices, about 0.1 decibels (dB) instead of the 0.2 dB currently required. For fiber-to-the-home applications the specification requires a maximum mid-span length of 6.1 meters (20 feet) for cables used on mid-span applications with buffer tube storage. From a polarization mode dispersion standpoint, the maximum Statistical Parameter of Polarization Mode Dispersion (PMDQ) of 0.20 Picosecond per nanometer times kilometer (ps/[radic]km) specified will allow the deployment of higher-speed transmission systems at longer distances: 3,000 kilometers (km) (1,864 miles) for digital systems operating at 10 Gigabits per second (Gbps) and 80 km (50 miles) operating at 40 Gbps. These performance refinements are necessary because end-users deploying cable meeting this level of performance expect it to deliver high bit rate services during the useful economic life of these cables. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. CONSERVATION GROUPS SEEK FCC ACTION ON ANTENNA STRUCTURES: The American Bird Conservancy, Defenders of Wildlife, and National Audubon Society have filed a Petition for Expedited Rulemaking and Other Relief, requesting that the FCC adopt new rules which they assert are necessary to comply with the National Environmental Policy Act (NEPA), the Endangered Species Act (ESA), and the Migratory Bird Treaty Act (MBTA), and their implementing regulations, and to carry out the mandate of the U.S. Court of Appeals for the District of Columbia Circuit in American Bird Conservancy, Inc. v. FCC. Specifically, Petitioners request that the FCC undertake the following actions: - Amend the Commission’s regulations that implement NEPA, “consistent with Council on Environmental Quality regulations and guidance,” to “cure deficiencies” and to ensure that only Commission actions that have no significant environmental effects individually or cumulatively are categorically excluded;
- Prepare a programmatic environmental impact statement addressing the environmental consequences of its Antenna Structure Registration (“ASR”) program on migratory birds, their habitats, and the environment;
- Promulgate rules to clarify the roles, responsibilities and obligations of the Commission, applicants, and non-federal representatives in complying with the ESA;
- Consult with the U.S. Fish and Wildlife Service on the ASR program regarding all effects of towers and antenna structures on endangered and threatened species; and
- Complete the proposed rulemaking in the Migratory Birds Proceeding to adopt measures to re- duce migratory bird deaths in compliance with the MBTA.
The FCC seeks comments on these proposals. Comments in this WT Docket No. 08-61, 03-187 proceed- ing are due May 29, and replies are due June 15. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino. IS THE INTERNET RUNNING OUT OF SPACE?: The Times of London reports that Internet users could face regular “brownouts” that will freeze their computers as capacity runs out in cyberspace, according to research to be published later this year. This research predicts that consumer demand, already growing at 60% per year, will start to exceed supply next year because of more people working online and the increasing popularity of websites such as YouTube and services such as the BBC’s iPlayer, which consume bandwidth. Initially computers will be disrupted and go offline for several minutes at a time. From 2012, however, PCs and laptops are likely to operate at a much reduced speed, rendering the internet an “unreliable toy,” the Times reports. It said that when Sir Tim Berners-Lee, the British scientist, wrote the code that transformed a private computer network into the world wide web in 1989, the Internet appeared to be a limitless resource. However, a report being compiled by Nemertes Research, a respected American think-tank, will warn that the web has reached a critical point and that even the recession has failed to stave off impending problems. Despite billions of dollars in facilities upgrades, demand for bandwidth continues to outstrip supply. The amount of traffic generated each month by YouTube is now equivalent to the amount of traffic generated across the entire Internet in all of 2000. Engineers are already preparing for the worst. While some are planning a lightning-fast parallel network called “the grid,” others are building “caches,” private computer stations where popular entertainments are stored on local PCs rather than sent through the global backbone. Telephone companies want to recoup escalating costs by increasing prices for “net hogs” who use more than their share of capacity, the Times said. JUNE 1: FCC FORM 395, EMPLOYMENT REPORT. Common carriers, including wireless service providers, with 16 or more full-time employees must file their annual Common Carrier Employment Reports (FCC Form 395) by May 31. (But since May 31 falls on a Sunday this year, the report is due June 1.) This report tracks carrier compliance with rules requiring recruitment of minority employees. Further, the FCC requires all common carriers to report any employment discrimination complaints they received during the past year. That information is also due on May 31. The FCC encourages carriers to complete the discrimination report requirement by filling out Section V of Form 395, rather than submitting a separate report. Clients who would like assistance in filing Form 395 should contact Richard Rubino. JUNE 30: ANNUAL ICLS USE CERTIFICATION. Rate of return carriers and CETCs must file a self-certification with the FCC and the Universal Service Administrative Company (USAC) stating that all Interstate Common Line Support (ICLS) and Long Term Support (LTS) will be used only for the provision, maintenance, and upgrading of facilities and services for which the support is in- tended. In other words, carriers are required to certify that their ICLS and LTS support is being used consistent with Section 254(e) of the Communications Act. Failure to file this self-certification will preclude the carrier from receiving ICLS support. We, therefore, strongly recommend that clients have BloostonLaw submit this filing and obtain an FCC proof-of-filing receipt for client records. BloostonLaw contacts: Ben Dickens and Gerry Duffy. JULY 10: DTV EDUCATION REPORT. New 700 MHz licensees from Auction No. 73 are required to file a report with the FCC concerning their efforts to educate consumers about the upcoming transition to digital television (DTV). Last summer, we explained that the FCC’s Part 27 rules require 700 MHz licensees that won licenses in Auction No. 73 to file quarterly reports on their DTV consumer outreach efforts through the Spring of 2009. However, in an apparent contradiction, the same rules do not impose any substantive consumer education requirements on 700 MHz license holders. This situation has not changed. The reporting rule simply states that “the licensee holding such authorization must file a report with the Commission indicating whether, in the previous quarter, it has taken any outreach efforts to educate consumers about the transition from analog broadcast television service to digital broadcast television service (DTV) and, if so, what specific efforts were undertaken.” Many licensees may not have initiated 700 MHz service as of yet. However, to the extent they are also an Eligible Telecommunications Carrier (ETC) and recipient of federal USF funds, separate FCC rules found in 47 C.F.R. Part 54 (Universal Service) require ETCs to send monthly DTV transition notices to all Lifeline/Link-Up customers (e.g., as part of their monthly bill), and to include information about the DTV transition as part of any Lifeline or Link-Up publicity campaigns until June 30, 2009. BloostonLaw contacts: Hal Mordkofsky and Cary Mitchell. JULY 20: FCC FORM 497, LOW INCOME QUARTER- LY REPORT. This form, the Lifeline and Link-Up Work- sheet, must be submitted to the Universal Service Administrative Company (USAC) by all eligible telecommunications carriers (ETCs) that request reimbursement for participating in the low-income program. The form must be submitted by the third Monday after the end of each quarter. It is available at: www.universalservice.org. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. JULY 31: FCC FORM 507, UNIVERSAL SERVICE QUARTERLY LINE COUNT UPDATE. Line count up- dates are required to recalculate a carrier's per line universal service support, and is filed with the Universal Service Administrative Company (USAC). This information must be submitted on July 31 each year by all rate-of-return incumbent carriers, and on a quarterly basis if a competitive eligible telecommunications carrier (CETC) has initiated service in the rate-of-return incumbent carrier’s service area and reported line count data to USAC in the rate-of-return incumbent carrier’s service area, in order for the incumbent carrier to be eligible to receive Interstate Common Line Support (ICLS). This quarterly filing is due July 31 and covers lines served as of December 31, 2007. Incumbent carriers filing on a quarterly basis must also file on September 30 (for lines served as of March 31, 2008); December 30 (for lines served as of June 30, 2008), and March 31, 2009, for lines served as of September 30, 2008). BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. JULY 31: FCC FORM 525, COMPETITIVE CARRIER LINE COUNT QUARTERLY REPORT. Competitive eligible telecommunications carriers (CETCs) are eligible to receive high cost support if they serve lines in an incumbent carrier’s service area, and that incumbent carrier receives high cost support. CETCs are eligible to receive the same per-line support amount received by the incumbent carrier in whose study area the CETC serves lines. Unlike the incumbent carriers, CETCs will use FCC Form 525 to submit their line count data to the Universal Service Administrative Company (USAC). This quarter- ly report must be filed by the last business day of March (for lines served as of September 30 of the previous year); the last business day of July (for lines served as of December 31 of the previous year); the last business day of September (for lines served as of March 31 of the current year); and the last business day of December (for lines served as of June 30 of the current year). CETCs must file the number of working loops served in the service area of an incumbent carrier, disaggregated by the incumbent carrier’s cost zones, if applicable, for High Cost Loop (HCL), Local Switching Support (LSS), Long Term Support (LTS), and Interstate Common Line Support (ICLS). ICLS will also require the loops to be reported by customer class as further described below. For Interstate Access Support (IAS), CETCs must file the number of working loops served in the service area of an incumbent carrier by Unbundled Network Element (UNE) zone and customer class. Working loops provided by CETCs in ser- vice areas of non-rural incumbents receiving High Cost Model (HCM) support must be filed by wire center or other methodology as determined by the state regulatory authority. CETCs may choose to complete FCC Form 525 and submit it to USAC, or designate an agent to file the form on its behalf. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. JULY 31: REPORT OF EXTENSION OF CREDIT TO FEDERAL CANDIDATES. This report (in letter format) must be filed by January 30 and July 31 of each year, but ONLY if the carrier extended unsecured credit to a candidate for a Federal elected office during the reporting period. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino. VITAL MEETINGS & DEADLINES May 8 – Deadline for comments on NOI to refresh record on non-rural USF support mechanism (WC Docket No. 05-337). May 8 – Deadline for reply comments on various recon petitions regarding unlicensed devices below 900 MHz and in the 3 GHz band (ET Docket No. 04-186, 02-380). May 13 – FCC open meeting. May 15 – Deadline for comments on price cap carriers’ short form TRP associated with annual access tariff filing due July 1. May 15 – Deadline for comments on Iowa Telecom re- quest for waiver of Section 61.41 “all or nothing” rule regarding acquisitions of Lakedale and Sherburne (WC Docket No. 09-25). May 15 – Deadline for comments on unassigned BRS auction spectrum (Auction No. 86) practices and procedures (AU Docket No. 09-56). May 20 – Deadline for comments on Supplemental NOI regarding video competition report (2008 data) (MB Docket No. 07-269). May 22 – Deadline for reply comments on price cap carriers’ short form TRP associated with annual access tariff filing due July 1. May 26 – Deadline for reply comments on Iowa Telecom request for waiver of Section 61.41 “all or nothing” rule regarding acquisitions of Lakedale and Sherburne (WC Docket No. 09-25). May 29 – Deadline for reply comments on unassigned BRS auction spectrum (Auction No. 86) practices and procedures (AU Docket No. 09-56). May 29 – Deadline for comments on conservation groups’ request for FCC action on antenna structures (WT Docket Nos. 08-61, 03-187). May 31 – FCC Form 395, Employment Report, is due. June 8 – Deadline for reply comments on NOI to refresh record on non-rural USF support mechanism (WC Dock- et No. 05-337). June 8 – Deadline for comments on NOI seeking comment on developing national broadband plan (GN Docket No. 09-51). June 12 – DTV Transition. June 13 – DTV Analog Nightlight program begins and runs for 30 days until July 12. June 15 – Deadline for reply comments on conservation groups’ request for FCC action on antenna structures (WT Docket Nos. 08-61, 03-187). June 16 – Deadline for ILECs filing annual access tariffs on 15 days’ notice (carriers proposing to increase any of their rates). June 19 – Deadline for both paper and electronic copies of applications for FY 2009 RUS Community Connect Grants for broadband projects. June 23 – Deadline for petitions to suspend or reject annual access tariffs filed on 15 days’ notice (by carriers proposing to increase any of their rates). |
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