BloostonLaw Telecom Update Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP [Portions reproduced here with the firm's permission.] www.bloostonlaw.com |
| Vol. 12, No. 37 | x October 21, 2009 |
 Enforcement of Red Flag Rules Takes Effect Nov. 1 The Federal Trade Commission (FTC) last summer granted a three-month enforcement delay—until November 1—of its Red Flag Rules to give creditors and financial institutions more time to review FTC guidance and develop and implement written Identity Theft Prevention Programs. The delay applies to entities under the jurisdiction of the FTC and does not affect the Address Discrepancy or Card Issuer Rules. 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 Nov. 1, 2008. But the FTC will not enforce the rules until November 1, 2009, meaning only that a business will not be subject to enforcement action by the FTC if it delays implementing the program until Nov. 1, 2009. 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 binding on telcos and wireless carriers that are serving the public on a common carrier basis. They also apply 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 contact: Gerry Duffy (202-828-5528) or Mary Sisak (202-828-5554) with any questions or to request the manual. |
INSIDE THIS ISSUE - FCC adopts “net neutrality” NPRM at open meeting.
- FCC gets objections to Flow Mobile request to use public safety interoperable voice channels for broadband service.
- McCain introduces “Internet Freedom Act of 2009.”
- Comment sought on 2010 average schedule formulas.
- FCC seeks comment on protecting children in new digital media age.
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Stimulus Application Update: Grants Due In Dec.-Feb. Timeframe At the Oct. 27 Senate Commerce Committee oversight hearing, NTIA and RUS announced that first round broadband stimulus grant and loan awards will be made from mid-December through mid-February. NTIA/RUS also announced that there will be only one additional application round (rather than two) before the statutory Sept. 30 deadline. Therefore, any clients interested in seeking BTOP or BIP stimulus funding should prepare ASAP to participate in the last funding round, since the application filing window could be announced imminently (and almost certainly by the end of the year). Comments Sought on Another Batch of Applications by Nov. 20: On Thursday, October 22, RUS and NTIA reported that they have updated the BroadbandUSA Mapping Tool and Searchable Database to include approximately 40 additional broadband stimulus applications (and corresponding Public Notice Filings). Some of these applications are paper applications that were received by the August 14 deadline, while others are valid electronic applications which were simply not published in the original Searchable Database and Mapping Tool Public Notice Filing round. These applications were officially posted to the Searchable Database and the BroadbandUSA Mapping Tool on October 20, 2009, and therefore Public Notice Responses can be submitted for these particular infrastructure applications through the Mapping Tool until November 20, 2009. The list of the applications by organization can be found at
http://www.broadbandusa.gov/new_pnf.htm The corresponding Public Notice Filings and maps are viewable by going to the mappingtool.broadbandusa.gov and using the normal search functions. As with the initial round of Public Notice Filings, we are able to provide assistance drafting summary and comment language for your Public Notice Responses. It should also be noted that, if an incumbent carrier was unable to submit timely comments on the first batch of applications (due Oct. 28), it is possible to submit late comments. NTIA has stated that “if an existing service provider submits a response outside the timeframe specified in this NOFA, it will not be considered an existing service provider for determining whether the applicant’s service area is eligible, but will still be considered with respect to the agencies’ other applicable eligibility requirements.” The NOFA does not make clear what other eligibility requirements apply, but to the extent that NTIA and RUS are supposed to make an informed decision in awarding funds, late comments may be useful. BloostonLaw contacts: Gerry Duffy, Mary Sisak, Ben Dickens. FCC Adopts “Net Neutrality” NPRM at Open Meeting At its October 22 open meeting last week, the FCC adopted a “net neutrality” Notice of Proposed Rulemaking (NPRM), with Commissioners Robert McDowell and Meredith Atwell Baker dissenting in part, and concurring in part. The NPRM seeks comment on draft rules to codify the four principles the Commission articulated in its 2005 Internet Policy Statement. The NPRM also seeks comment on draft rules that would codify additional principles of nondiscrimination and transparency: - The draft nondiscrimination principle would require that, subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner.
- The draft transparency principle would require that, subject to reasonable network management, a provider of broadband Internet access service must disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in the rulemaking.
In a departure from the past, this NPRM actually publishes the language of the proposed draft rules: 1. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet. 2. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from running the lawful applications or using the lawful services of the user’s choice. 3. Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network. 4. Subject to reasonable network management, a provider of broadband Internet access service may not deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers. 5. Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner. 6. Subject to reasonable network management, a provider of broadband Internet access service must disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this part.
Further, the NPRM proposes a draft rule for “reasonable network management”: Reasonable network management consists of: (a) reasonable practices employed by a provider of broadband Internet access service to (i) reduce or mitigate the effects of congestion on its network or to address quality-of-service concerns; (ii) address traffic that is unwanted by users or harmful; (iii) prevent the transfer of unlawful content; or (iv) prevent the unlawful transfer of content; and
(b) other reasonable network management practices.
The FCC said its draft rules make clear that providers would also be permitted to address harmful traffic and traffic unwanted by users, such as spam, and prevent both the transfer of unlawful content, such as child pornography, and the unlawful transfer of content, such as a transfer that would infringe copyright. Further, nothing in the draft rules supersedes any obligation a broadband Internet access service provider may have — or limits its ability — to deliver emergency communications, or to address the needs of law enforcement, public safety, or national or homeland security authorities, consistent with applicable law. The Commission is also seeking comment on how it should address “managed” or “specialized” services, which are Internet-Protocol-based offerings provided over the same networks used for broadband Internet access services. While the proceeding will seek input on how best to define and treat such services, managed services could include voice, video, and enterprise business services, or specialized applications like telemedicine, smart grid, or eLearning offerings. These services may provide consumer benefits and lead to increased deployment of broadband networks. The NPRM asks how the Commission should define the category of managed or specialized services, what policies should apply to them, and how to ensure that broadband providers’ ability to innovate, develop valuable new services, and experiment with new technologies and business models can co-exist with the preservation of the free and open Internet on which consumers and businesses of all sizes depend. The NPRM affirms that the six principles it proposes to codify would apply to all platforms for broadband Internet access, including mobile wireless broadband, while recognizing that different access platforms involve significantly different technologies, market structures, patterns of consumer usage, and regulatory history. To that end, the NPRM seeks comment on how, in what time frames or phases, and to what extent the principles should apply to non-wireline forms of broadband Internet access, including mobile wireless. Recognizing that the Commission’s decisions in this rulemaking must reflect a thorough understanding of current technology and future technological trends, the Chief of the Commission’s Office of Engineering & Technology will create an inclusive, open, and transparent process for obtaining the best technical advice and information from a broad range of engineers. Our clients will want to comment on a number of issues related to the proposed rules that may affect smaller broadband providers, such as what constitutes “reasonable network management” as that term will be applied to specific circumstances faced by small carriers; and whether the rules impose any sort of proactive obligation (and potential liability) for policing some of the practices governed by the proposed rules. Comments in this GN Docket No. 09-191 and WC Docket No. 07-52 proceeding are due January 14, 2010, and replies are due March 5, 2010. FCC Chairman Julius Genachowski stressed the importance of the “openness” of the Internet. “Accordingly, I fully support this Notice, which will launch a fact-based, transparent, and participatory process to develop rules to preserve an open Internet. The Notice seeks to identify the hard questions the Commission must address as part of this rulemaking, and that the Commission must ultimately address based on the facts and the record before it.” The Chairman said he has “been clear that government should not be in the business of running or regulating the Internet. Government should promote competition. It should protect consumers’ right to access the lawful content, applications, and services of their choosing. It should ensure that there is no central authority preventing people or businesses from communicating over the Internet. It should certainly not be that central authority. As others have said: ‘The minute that anyone, whether from government or the private sector, starts to control how people use the Internet, it is the beginning of the end of the Net as we know it.’ There should be no confusion on this point, at home or abroad. This Commission fully agrees that government must not restrict the free flow of information over the Internet.” He also noted that “openness is essential for the Internet however it’s accessed. It doesn't make sense to have one Internet when your laptop is plugged into a wall and another when accessing the Internet through a wireless modem. At the same time, wireless networks are different from wired networks. Given fundamental differences in technology, how, when and to what extent open Internet rules should apply to different access platforms, particularly mobile broadband, will undoubtedly vary. This is an important issue on which the Notice seeks to develop a full and informed record.” FCC Commissioner Robert McDowell said he does not agree with the majority that the Commission has the legal authority to regulate the network management of the Internet as proposed. He hoped the FCC can explore the differences between discriminatory conduct and anti-competitive conduct. “During the course of this debate, many have confused the important difference between discriminatory conduct and anticompetitive conduct,” he said. “But the reality is that the Internet can function only if engineers are allowed to discriminate among different types of traffic. The word ‘discriminate’ carries with it negative connotations, but to network engineers it means ‘network management.’ Discriminatory conduct, in the network management context, does not necessarily mean anticompetitive conduct.” “For example,” McDowell continued, “to enjoy online video downloads without interruption or distortion, consumers expect video bits to be given priority over other bits, such as email bits. Such conduct is discriminatory, but not necessarily anticompetitive. If discriminatory conduct were to become anticompetitive conduct, then could it not be addressed in the context of competition and anti-trust laws? While [the NPRM] provides an opportunity to comment on the applicability of such laws, I hope that the record will contain a relevant market analysis before we venture further. Without a finding of a concentration of market power and abuse of such power in the broadband market, additional regulation is likely not warranted.” “In fact, just over two years ago the Commission launched an inquiry into the state of the broadband services market. We cast a wide net in an effort to harvest evidence of fundamental market failure, and we came up empty. Similarly, after a lengthy and thorough market analysis, the Federal Trade Commission (FTC) issued a report on the state of the broadband market just 27 months ago. In a unanimous and bipartisan 5-0 vote, the FTC strongly cautioned against imposing Internet regulation, saying: ‘[W]e suggest that policy makers proceed with caution in evaluating calls for network neutrality regulation …. No regulation, however well-intended, is cost-free, and it may be particularly difficult to avoid unintended consequences here, where the conduct at which regulation would be directed largely has not yet occurred. … Policy makers should be very wary of network neutrality regulation.’ “What tectonic market changes have occurred since the 2007 FTC report that would warrant a change in policy?” McDowell asked rhetorically. “Since the Supreme Court’s decision in Brand X v. NCTA, we have been busy taking broadband services out of the common carriage realm of Title II and classifying them as largely unregulated Title I information services due to market conditions,” he continued. “So an important question to ask might be to what degree would a lack of a change in market conditions threaten the viability of any new regulations on appeal?” “Some point to less than a handful of troublesome actions – some several years old – by a few market players as sufficient evidence to justify a new regulatory regime,” McDowell said. “An important fact lacking in this debate is that once these actions were brought to light, however, all were resolved without imposing new regulations. Additionally, given the context of the uncountable number of Internet communications that occur every day, is such a small number of quickly resolved incidents evidence that the Internet is breaking to the point of needing more regulation?” “As the Commission embarks upon this regulatory journey, we should do so with our eyes wide open regarding the potential consequences of our actions, be they beneficial or harmful and intended or unintended. For instance, the recent 700 MHz auction teaches important lessons about unintended consequences. I cast the only dissent against the open access requirements because the evidence in the record told me that the market was already headed toward offering more device and application portability. As it turns out, not only were several Wi-Fi-enabled handsets already on the market at the time of our order, but, more importantly, several carriers, device manufacturers and application providers were working together to produce open devices and networks long before even a draft of the 700 MHz order was contemplated. At the time, I also did not think that the rule would achieve the advertised goal of attracting a new national broadband provider. Additionally, I was concerned that larger carriers would avoid the encumbered spectrum and outbid smaller players in the smaller, unregulated spectrum blocks. Sadly, my fears proved to be correct, but I wish I had been wrong. Hopefully, we can all learn from that experience: Even with the best of intentions, our rules can produce unpredictable outcomes that cause unforeseen harms,” McDowell said. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. FCC Receives Objections To Flow Mobile Request To Use Public Safety Spectrum For Broadband Service New EA, Inc. dba Flow Mobile, in conjunction with the State of North Dakota, has requested a waiver of the public safety allocation rules, to allow Flow Mobile to utilize 700 MHz spectrum allocated for nationwide and local public safety voice communications. Flow Mobile also seeks a waiver to utilize the 700 MHz public safety broadband spectrum, for use in constructing a WiFi-based network. The FCC has raised questions about whether Flow Mobile is eligible to apply for public safety spectrum, with or without assistance from North Dakota; and whether Flow’s proposed use of the public safety spectrum for a WiFi broadband network would disrupt the plans for interoperable public safety broadband operations on the broadband spectrum, and for interoperable voice operations on the narrowband spectrum. In response to the FCC’s request for public comment, the Commission received comments from the Public Safety Spectrum Trust (PSST), APCO, NPSTC and IACP, among others, opposing any use of the public safety narrowband channels for Flow’s proposed network, since it would harm the P25 interoperable voice network plan for the United States, and create the potential for interference to neighboring jurisdictions’ public safety radios. The commenters also indicated concern that the Flow Mobile WiFi technology would not be compatible with public safety’s evolution to Long Term Evolution (LTE) broadband technology. Additionally, the National Telecommunications Cooperative Association (NTCA) filed comments opposing Flow Mobile’s request. NTCA stated that Flow Mobile recently submitted hundreds of individual applications seeking broadband stimulus funding for last mile remote area projects so that it could provide for-profit broadband service in rural areas. NTCA said that Flow Mobile is not a permissible licensee of the public safety spectrum and cannot escape the restriction by having a state file a request for waiver on its behalf. NTCA said its members are deploying broadband service to their subscribers. They are using innovative methods, combining fiber, wireless and other technology to reach that difficult “last mile.” In furtherance of their efforts, NTCA said its members spent millions of dollars to obtain commercial 700 MHz spectrum. “The State of North Dakota now proposes to introduce an unproven commercial competitor with free access to spectrum and a guaranteed source of revenue in the form of a public safety subscriber. This plan undermines the business decisions of the rural carriers who are dedicated to the rural communities they serve and who have been offering service for decades,” NTCA said. According to NTCA, “Rural carriers who paid for spectrum would not be able to compete for customers with a state subsidized competitor. Rural carriers could not offer a competitive price and still recoup their initial investment. Without the ability to offer a competitive broadband product, rural carriers would likely delay, if not abandon, broadband deployment.” A number of North Dakota ILECs also filed comments expressing concerns about the numerous issues raised by the Flow proposal. Reply comments on the Flow Mobile PS Docket No. 06-229 petition, as well as waiver requests filed by various state and local government entities seeking to operate on the public safety broadband spectrum, are due November 16. BloostonLaw contacts: John Prendergast and Cary Mitchell. McCAIN INTRODUCES “INTERNET FREEDOM ACT OF 2009”: U.S. Senator John McCain (R-Ariz.) has introduced the Internet Freedom Act of 2009 that would prohibit the FCC from enacting rules that would regulate the Internet. The Commission has adopted a Notice of Proposed Rulemaking (NPRM) to propose “net neutrality” rules (see separate story above). Specifically, Sen. McCain said in a statement, the Commission will seek to impose "net neutrality" rules that would reign in the network management practices of all Internet service providers, including wireless phone companies. “This government takeover of the Internet will stifle innovation, in turn slowing our economic turnaround and further depressing an already anemic job market. Outside of health care, the technology industry is the nation's fastest growing job market. Innovation and job growth in this sector of our economy is the key to America's future prosperity. In 2008, while most industries were slashing jobs in the worst economy in nearly 30 years, high tech industries actually added over 77,000 good high-paying jobs. Just this month, Google and Yahoo both released positive earnings reports.” McCain said “the wireless industry exploded over the past twenty years due to limited government regulation. Wireless carriers invested $100 billion in infrastructure and development over the past three years which has led to faster networks, more competitors in the marketplace and lower prices compared to any other country. Meanwhile, wired telephones and networks have become a slow dying breed as they are mired in state and Federal regulations, universal service contribution requirements and limitations on use. Today I'm pleased to introduce the Internet Freedom Act of 2009 that will keep the Internet free from government control and regulation. It will allow for continued innovation that will in turn create more high-paying jobs for the millions of Americans who are out of work or seeking new employment. Keeping businesses free from oppressive regulations is the best stimulus for the current economy.” Meanwhile, Sen. Jay Rockefeller (D-W.V.) and Rep. Henry Waxman (D-Calif.), the chairmen of Congress' commerce committees, sent a letter to FCC Chairman Julius Genachowski signaling their support for the draft rules. The two, who have expressed support for net neutrality in the past, said that they continued to support "policies that protect consumers and promote an open Internet," and expected to commission to "make every effort to consider all voices prior to voting on final rules." BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. COMMENT SOUGHT ON 2010 AVERAGE SCHEDULE FORMULAS: On August 27, 2009, the National Exchange Carrier Association, Inc., (NECA) filed its 2010 Modification of Average Schedule Universal Service High-Cost Loop Support Formula. On September 28, 2009, the Universal Service Administrative Company (USAC) filed its 2010 Average Schedule Company Local Switching Support Formula. The proposed formulas, if approved, would be scheduled to take effect on January 1, 2010, and remain in effect through December 31, 2010. The FCC’s Wireline Competition Bureau seeks comment on the proposed formulas. Comments in this WC Docket No. 05-337 proceeding are due November 20, and replies are due December 7. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. FCC SEEKS COMMENT ON PROTECTING CHILDREN IN NEW DIGITAL MEDIA AGE: The FCC has released a Notice of Inquiry (NOI) asking how children can be served and protected and how parents can be further empowered in the new digital media landscape. The NOI comes almost 20 years after enactment of the Children’s Television Act and follows the Commission’s recently issued Child Safe Viewing Act Report, which examined parental control technologies for video and audio programming. The NOI asks to what extent children are using electronic media today, the benefits and risks this presents, and the ways in which parents, teachers, and children can help reap the benefits while minimizing the risks of using these technologies. The NOI also recognizes that a wealth of academic research and studies exists on these issues and asks commenters to identify additional data and studies, and to indicate where further study is needed. The NOI additionally seeks comment about the effectiveness of media literacy efforts in enabling children to enjoy the benefits of media while minimizing the potential harms. The NOI recognizes that other federal agencies are addressing similar issues, at least with respect to online safety, and asks what the Commission can do to assist with these efforts. The deadline for filing comments in this MB Docket No. 09-194 proceeding is 60 days after publication in the Federal Register and the deadline for reply comments is 30 days thereafter. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. ACLP RELEASES REPORT ON BARRIERS TO BROADBAND ADOPTION: The Advanced Communications Law & Policy Institute (ACLP) at New York Law School has released a report identifying major barriers to broadband adoption among senior citizens and people with disabilities, and across the telemedicine, energy, education, and government sectors. This report was prepared in coordination with staff of the Omnibus Broadband Initiative (OBI) for use in the development of the FCC's National Broadband Plan. The factors impeding more robust broadband adoption among different demographics and sectors are numerous, varied, and substantial. Throughout the following analysis, major themes regarding non-adoption will emerge for each of this Report’s six focus areas. As an overview: - For senior citizens, a general lack of adequate education and training are key contributors to a relatively low broadband adoption rate;
- For people with disabilities, widespread negative perceptions regarding the accessibility of broadband impedes further adoption and use of this technology;
- In the telemedicine sector, a number of outdated legal and policy frameworks hinder more robust adoption and use of broadband-enabled telemedicine services by patients and healthcare providers;
- In the energy arena, the highly regulated and conservative nature of many energy utilities challenges the dynamic nature of broadband and the ecosystem of innovation that it fosters;
- In the education space, lack of targeted funding and inadequate training impede further adoption and usage of broadband and broadband-enabled educational tools in schools across the country; and
- For government entities, institutional inertia and a lack of cross-government collaboration regarding best practices has slowed the effective integration of broadband into many government processes.
With regard to forging policies that spur broadband adoption in each sector, the Report states, one size will not fit all. Indeed, as discussed throughout this Report, each sector faces a unique set of barriers to further broadband adoption. Overcoming these barriers will likely require carefully tailored policies that target the distinctive needs of each discrete group. In addition, promoting widespread awareness of the many benefits that can flow from a broadband connection, including an array of cost savings and economic opportunities, is critical to spurring adoption. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. 9th CIRCUIT SAYS CITY CAN BAN TOWERS FOR AESTHETIC REASONS: The 9th U.S. Circuit Court of Appeals in San Francisco has reversed and remanded a lower court decision that had sided with Sprint in a tower dispute case. In Sprint PCS Assets v. City of Palos Verdes Estates, the 9th Circuit found that the City was justified in denying Sprint’s application for a permit to construct two new towers on aesthetic grounds. The court said the City’s denial is supported by substantial evidence, and the disputed issues of material fact preclude a finding that the decision amounted to a prohibition on the provision of wireless service. The court noted that the California Constitution gives the City the power to regulate local aesthetics, and that nothing in the Public Utilities Code divests it of that authority. The ruling is potentially harmful to wireless carriers trying to provide ubiquitous coverage that their customers have come to expect. This is especially true in a market like San Francisco that is confined by terrain features, making it difficult to provide a reliable signal from remote tower sites. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Cary Mitchell. |
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