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.
14, No. 6 |
February
9, 2011 |

INSIDE
THIS ISSUE
- FCC
adopts modifications to ex parte, “Sunshine” rules.
- Egyptian
Internet shutdown raises questions here,
too.
- FCC
seeks comment on Rural Broadband Report.
- FCC
paves way for first-ever presidential
alert over EAS.
- House
panel sets hearing on broadband stimulus
spending.
|
FCC
BEGINS RULEMAKING TO “REFORM” HIGH-COST
SUPPORT AND ACCESS REVENUE STREAM
FCC
Plan Could Threaten Existing and Future RLEC Broadband
Service
The
FCC, at its February 8 open meeting, launched a
Notice of Proposed Rulemaking (NPRM) and Further
NPRM that, if adopted as an Order, will, over time,
move existing high-cost support programs (including
RLEC mechanisms) into a single broadband Connect
America Fund (CAF) and eliminate access charges
altogether or replace them with some form of transitional
CAF support. There is no doubt that some changes
in Universal Service programs are needed to adapt
to the transformation of the public telecommunications
network from a voice network to a broadband network.
However,
there are serious concerns that the ultimate impact
(if not purpose) of the FCC plan is to redistribute
high-cost support away from the RLECs that have
been using it efficiently and effectively to deploy
broadband to larger price cap carriers, wireless
carriers and public-private partnerships. Whereas
the task of preserving a substantial and viable
role for RLECs in the national broadband network
will be difficult, the war is not lost. BloostonLaw
is in the process of positioning its clients to
overcome what is clearly a major threat to the
rural telecommunications industry.
According
to the FCC, the NPRM and FNPRM outline a path to transforming
programs that are currently focused on 20th Century
voice service into a Connect America Fund (CAF) that
would help make 21st Century broadband available and
affordable to rural communities.
The
FCC asserts that the Universal Service Fund (USF), which
helped connect rural America to telephone service, fails
to effectively and efficiently target support for broadband
in rural areas. During the coming months, the FCC can
be expected to continue to complain about the alleged “Rural/Rural
Divide” – that is the fact that RLECs operating
under rate-of-return (RoR) regulation have elected to
invest in the network upgrades necessary to deploy broadband,
while the much more financially powerful price cap carriers
have shown little interest in doing so. Notwithstanding
the proven incentives and success of RoR regulation,
the FCC continues to label it as “inefficient” and
to seek ways to extend the very same price cap regulation
that has proven so ineffective and devoid of incentives
for investing in rural and other areas of limited potential
profitability.
The
FCC also tries to paint the current USF as wasteful
and inefficient by seizing upon the relatively small
number of situations where annual per line support exceeds
$20,000 a year. BloostonLaw notes that these situations
are outliers that generally involve startups and/or
very small RLECs (in most tem is rooted in outdated
distinctions between local and long-distance telephone
service, and inefficient per-minute charges. ICC also
suffers from loopholes that distort markets and derail
investment in advanced Internet Protocol (IP) networks,
according to the Commission.
The
text of the FCC’s proposals was not available
at our deadline, but the Commission’s press releases
included the following:
The
NPRM proposes four key principles to guide the FCC’s
reform plan:
- Modernizing
USF and ICC To Support Broadband Networks.
Modernize and refocus USF and ICC to make
affordable broadband available to all Americans
and accelerate the transition from circuit-switched
to IP networks, with voice ultimately one
of many applications running over fixed and
mobile broadband networks.
- Ensuring
Fiscal Responsibility. Control
the size of USF as it transitions to support
broadband by combating waste and inefficiency.
The Commission said it recognizes that American
consumers and businesses ultimately pay for
USF.
- Demanding
Accountability. Require accountability
from companies receiving support, to ensure
that public investments are used wisely to
deliver intended results. Government must
also be accountable for the administration
of USF, including through clear goals and
performance metrics for the program, the FCC
says.
- Enacting
Market-Driven and Incentive-Based Policies. Transition
to market-driven and incentive-based policies
(i.e., reverse auctions, procurement
auctions and/or models) that encourage companies
to maximize the impact of scarce program resources
and the benefits to all consumers, the FCC
says.
Specific
proposals in the NPRM include:
Eliminate
waste and inefficiency throughout the current program.
- Transition
funding for duplicative phone service by multiple phone
companies operating in the same area to provide support
where it’s most needed.
- Impose
reasonable limits and guidelines for reimbursement to
providers that have little incentive under the current
subsidy system to operate efficiently.
- Review
continued need for funding mechanisms that have not
been reevaluated in many years.
Use
savings to spur investment in high-speed Internet
in unserved areas.
- Identify
unserved areas using the forthcoming National Telecommunications
and Information Administration (NTIA) national broadband
map.
- Create
the Connect America Fund to quickly and efficiently
deliver support to unserved areas.
- Use
market-based policies to support providers in a technology-neutral
manner, targeting areas where broadband funding will
have the biggest impact.
- Ultimately,
streamline and consolidate the five separate Universal
Service Fund programs that support rural phone networks
into the Connect America Fund. According to the FCC,
this will constrain spending and bring fixed and mobile
broadband to unserved areas while preserving voice service
for all, creating jobs and fueling economic growth.
Stimulate
investment in broadband by reforming the Intercarrier
Compensation system.
- Eliminate
wasteful billing disputes by closing loopholes and tightening
rules to prevent “phantom traffic,” which
is traffic that has been disguised so it can’t
be identified for billing purposes.
- Amend
rules to reduce “traffic pumping,” a practice
that drains revenues from the system by exploiting existing
rules to earn more intercarrier compensation. Reclaimed
revenues could be invested in networks or used to reduce
prices for consumers.
- Gradually
reduce per-minute Intercarrier Compensation charges.
These charges create incentives for carriers to maintain
legacy networks that maximize intercarrier revenues
rather than investing in advanced, efficient IP-based
infrastructure.
- Develop
a system to offset reductions in intercarrier rates,
including, where necessary, support from the Connect
America Fund.
Increase
accountability for recipients and for government,
and more effectively measure program performance.
- Adopt
clear performance goals and metrics for the Connect
America Fund.
- Require
increased disclosures about the operating performance
and
- Increase
transparency, oversight, and accountability.
FCC
Chairman Julius Genachowski made this
statement, and we will let our rural clients evaluate
it: “At the same time, USF and ICC have become
riddled with inefficient, outdated rules and perverse
incentives. For example, according to one study,
approximately one hundred million dollars flow
to phone companies each year to serve areas where
competing providers, without a dollar of government
support, offer voice service to all households.
In many places, USF funds four or more phone companies
to serve the same area. And it leaves hundreds
of companies to control their own funding spigot,
with guaranteed double-digit returns. Does that
make sense? “
Commissioner
Michael Copps said: “…it
is imperative that we work closely with our state
colleagues as partners in this transition. You
have heard me speak many times about this so I
won’t belabor it here, but I believe the
Telecommunications Act of 1996 envisioned a level
of federal-state cooperation in implementing the
statute that has not yet been achieved. Maybe we
can achieve it here; I hope so.”
Commissioner
Robert McDowell said: “I have long
advocated for comprehensive reform of
the entire universal service and intercarrier compensation
regimes. It’s like fixing a watch; it is
impossible to tinker with one component of the
mechanism without affecting all of its parts at
the same time. Today, the Commission is choosing
to take the piecemeal route again by not addressing
the contribution mechanism at the same time. While
not ideal, in my view, piecemeal reform is better
than no reform at all.”
Commissioner
Mignon Clyburn said: “[F]rom my
travels across the country, including to some of
the hardest-to-serve areas in our nation, a one-size-fits-all
approach will not achieve the goals of universal
service. The comprehensive nature of this Notice,
along with the number of detailed questions and
alternative proposals, underscores the complexity
of reform for a nation that is so vast and geographically
diverse. The Notice will afford all interested
parties the chance to demonstrate which proposals
will offer the most immediate benefits of both
voice and broadband services to as many Americans
as possible.”
Commissioner
Meredith Baker said: “I also support
the sensible approach in the Notice to
design new funding mechanisms for broadband. We
should resist the urge to simply layer broadband
funding on to the top of today’s fractured
system or to start offering duplicative broadband
support in addition to existing voice-based support.
We need a fresh approach that drives our telecommunications
infrastructure from voice to broadband and from
circuit-switched to IP. It is more fiscally responsible
and prudent to craft broadband-specific programs
that can better ensure accountability, efficiency,
and adequate funding in areas where market forces
are not sufficient to drive broadband services
to America’s consumers.”
BloostonLaw
contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC
Adopts Modifications To Ex Parte, “Sunshine” Rules
The
FCC has adopted a Report and Order (R&O) and
Further Notice of Proposed Rulemaking (FNPRM) amending
and reforming its rules on ex parte presentations
made in the course of rulemakings and other permit-but-disclose
proceedings. The R&O adopts a new rule requiring
all oral ex parte communications to be documented, and
their content described. This reform should enable those
participating in FCC proceedings as well as those observing
them to better identify and understand the issues being
debated before the Commission. New electronic filing
rules will empower anyone using the Internet to access
this information, and stronger enforcement provisions
will bolster these new requirements. Given the complexity
of the issues the FCC must decide and the far-reaching
impact agency decisions often have, the Commission said
it believes these initiatives to increase transparency
serve the best interests of the Commission, the entities
it regulates, and the public it serves. The FCC also
adopted an FNPRM that asks for comment on whether the
interests of fairness and openness would be served by
adopting real party-in-interest disclosure rules based
on those that apply in many court proceedings. The
rule changes are designed to add transparency in place
of the current practice whereby meetings are held with
FCC officials about a particular issue, and the public
report only reflects that the parties “discussed
issues in the docket” without much information
about what was said during the meeting.
R&O: Highlights
of the R&O are as follows:
1)
Written notices required for all ex parte meetings,
regardless of whether “new” arguments
are put forth. Parties must also summarize the
arguments made in ex parte notices or cite to the
pages or paragraphs of such prior filings where
the information can be found.
2)
Written notices must list the names of everyone
participating in ex parte meetings, and parties
must mail or email copies of ex parte notices to
each meeting participant and to Commissioners and
Staff in attendance at the meetings.
3)
Sunshine Period changes:
- The
sunshine period will now commence on the day after the
FCC announces it, not the moment it is announced.
Weekends and holidays are included.
- Parties
making an ex parte presentation on the day the
sunshine period is announced will have until close
of business the next day to file the written notice,
instead of the usual two business days. (Notices
of ex parte presentations made outside
the Sunshine period must be filed within two business
days of the presentation.)
- During
the sunshine period, the FCC will permit the filing
of written ex parte comments (but not
meetings) in response to notices of meetings that
occurred on the day the sunshine period was announced.
Those comments must be filed one business day after
the meeting notice is filed, and may not raise
issues beyond those in the notice.
- Notices
of ex parte presentations that occur during
the sunshine period must be summarized and filed
before midnight of that same day. Written replies
will also be permitted to such notices, and must
be filed no later than one business day after the
meeting notice.
4)
To facilitate stricter enforcement of the ex
parte rules, the Enforcement Bureau is authorized
to levy forfeitures for ex parte rule violations.
FNPRM: The
FCC said the question whether to require disclosure
of real parties-in-interest requires further consideration
in light of issues raised by the commenters. Therefore,
while it did not adopt disclosure requirements in the
R&O, it is including an FNPRM to elicit further
comment on this matter.
The FCC
said it agreed that, although some interested parties
may be knowledgeable about the identities of the “parties
behind the parties” supporting or opposing their
positions, other parties and the general public may
not be equally knowledgeable. Thus, the Commission said
it believes it would serve the public interest to have
a disclosure requirement that addresses this problem
without imposing undue burdens on the disclosing party
or requiring duplicative filing of information already
generally available from another source. The FNPRM solicits
comment on what type of disclosure rule would balance
those two interests, and how it should be applied.
The initial
question focuses on the range of proceedings to which
new disclosure rules should apply. Typically, written ex
parte presentations and notices of oral ex parte
presentations are not the only filings in the record
of a proceeding, and parties often do not make ex parte
submissions at all. In this light, is it sufficient
for any disclosure rule to apply to ex parte filings,
or is it appropriate to have a broader disclosure rule
that applies to some or all categories of Commission
proceedings? If the latter, what categories of proceedings
should be within the scope of the disclosure rule? Should
the information required to be disclosed depend on the
nature of the proceeding in which the filing is made?
Conversely, are there any Commission proceedings that
should be exempt from any new rule, either because disclosure
would be unnecessary or unduly burdensome? Are the disclosure
practices of other agencies instructive?
The FCC
also asks for further comment on the disclosure requirements
that should apply to different categories of entities.
Should trade associations be required to adhere to the
same disclosure requirements as corporations, and if
not, what different levels of disclosure should apply,
and why? Should the FCC include special provisions for
nonprofit public interest, grassroots, or issue-oriented
groups that are funded by contributions, and, if so,
what should these be? Finally, if a party is submitting
a comment under its own name that was given to it by
another entity with the request that the party file
it in the party’s own name, should the filer be
required to identify the source of the comment? What
if an entity other than the filer paid for the preparation
of the filing?
Should
the FCC require disclosure in cases when the information
to be disclosed can be found in existing records at
this Commission, or when the information appears on
an entity’s website? If the FCC were to rely on
information already on file with the Commission, how
can the agency ensure that this information is easily
accessible and up-to-date? Should the Commission create
a single electronically accessible source for all disclosure
statements, and how often should filers be required
to update this information? If the FCC were to rely
on information already provided by a party on its Internet
site, how could the Commission assure itself that this
information would be kept up-to-date?
Comments
in this GC Docket No. 10-43 proceeding will be
due 45 days after publication in the Federal Register,
and replies will be due 30 days thereafter.
BloostonLaw
contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy,
and John Prendergast.
Egyptian
Internet Shutdown Raises Questions Here, Too
During
the recent and ongoing Egyptian crisis, as reported
by the press, including PC Magazine, the Internet shutdown
could possibly cost that country $90 million, according
to preliminary estimates from the Organisation for Economic
Cooperation and Development (OECD). The OECD estimates
put Egyptian telecom and Internet services at about
3%-4% of Gross Domestic Product (GDP), or a loss of
approximately $18 million per day. It is unclear what
the long-term impact will be, according to OECD. Vodafone,
for example, had to shut down its call center in Egypt
and hire workers in New Zealand to handle call volume.
There is also a loss of confidence by customers, OECD
said. Ironically, the government shutdown of the Internet
had little effect on the protests.
The Egyptian
Internet shutdown prompted CNN to ask whether this could
happen in the U.S. The answer was “technically,
yes, but highly unlikely.”
According
to CNN, understanding what happened in Egypt helps frame
the discussion about what could happen to the Internet
in the United States or around the globe. According
to Internet traffic monitors and experts, CNN said,
Egypt's government likely called the country's five
main Internet service providers— like on the phone — and
ordered them to barricade online traffic. “That's
sort of like calling all of the post offices in the
country and telling them to throw the mail away instead
of delivering it,” said Robert Faris, research
director at Harvard's Berkman Center for Internet & Society,” according
to CNN.
But instead
of shredding paper mail, the Egyptian Internet providers
altered their Border Gateway Protocols, the software
that routes online information.
"There's
not an on-off switch," Faris said. "What it
is, it's a list of IP addresses that route information
between nodes on the Internet. And what they did (in
Egypt) is they changed all the software and the list
in there to something called null routing. So all the
traffic going in and out was essentially thrown away." (as
CNN reported)
CNN said
Faris believes that technically, the United States could
do the same thing Egypt did to block internet access:
That is, the government would have to call four or five
top internet providers and order them to disrupt Border
Gateway Protocols in a way that shut down the majority
of American Internet traffic, he said. Others said the
government would have to deal with the country's thousands
of Internet providers in order to fully clamp down on
Internet access, which would be logistically difficult.
As CNN
noted, the U.S. Internet is much larger, there are more
providers, and U.S. law prohibits such an easy authoritarian
shutdown. In fact, as CNET has reported, the three U.S.
senators who have introduced legislation to give the
President emergency powers over the Internet in case
of a cyber-attack, are now distancing themselves from
the events in Egypt.
And there
are now questions about whether the “Net Neutrality” rules
might not end up on the back burner, at least for a
while.
BloostonLaw
contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC
SEEKS COMMENT ON RURAL BROADBAND REPORT: In
the 2008 Farm Bill, Congress directed the FCC Chairman
to submit a report to Congress describing a comprehensive
rural broadband strategy. On May 22, 2009, Acting
Chairman Michael J. Copps delivered to Congress
the 2009 Rural Broadband Report. The report
recommended new policies to deliver broadband to
rural areas and restore economic growth and opportunity
for Americans residing and working in those areas.
Congress also required the Commission’s Chairman,
in coordination with the Secretary of Agriculture,
to “update and evaluate” the rural
broadband report during the third year after enactment
of the 2008 Farm Bill. The FCC now seeks comment
on how to update and evaluate this report. Comments
in this GN Docket No. 11-16 proceeding are due
March 2. There is no reply date. Since the Rural
Broadband Report will no doubt serve as support
for the FCC’s planned changes to the USF
and ICC rules, rural carriers should examine the
report critically and submit comments. The 2009
Rural Broadband Report identified a number
of challenges typically affecting rural broadband,
including technological issues, high costs, and
lack of data. The report made a number of recommendations,
including enhancing coordination among and between
federal, Tribal, state, and community agencies,
governments, and organizations; reviewing existing
federal programs to identify barriers to rural
broadband deployment; coordinating broadband data
collection and mapping efforts; and supporting
consumer education and training initiatives aimed
at stimulating and sustaining broadband demand.
The report also identified a number of policy areas
and proceedings where Commission action could support
broadband deployment and adoption. There have been
many broadband-related developments since the release
of the 2009 Rural Broadband Report. Many
of these developments result from the American
Recovery and Reinvestment Act of 2009 (Recovery
Act), in which Congress provided new direction
and support for federal broadband policies and
initiatives. The FCC seeks comment on how to update
and evaluate the 2009 Rural Broadband Report. What
actions have the Commission and other federal agencies
taken since the 2009 Rural Broadband Report that
impact or enhance broadband deployment and adoption
in rural areas? Have improvements in federal broadband
data collection fostered rural broadband? The FCC
asks commenters to identify any actions or changes
that should be reflected in our update and evaluation
of the 2009 Rural Broadband Report, including
any additional measures that would improve access
to rural broadband deployment and adoption. The
FCC encourages interested persons to submit relevant
data and analyses regarding broadband deployment
and adoption in rural areas. Finally, the FCC welcome
comments on the extent to which the recommendations
in the 2009 Rural Broadband Report have
been implemented. BloostonLaw contacts: Ben Dickens,
Gerry Duffy, and Mary Sisak.
FCC
PAVES WAY FOR FIRST-EVER PRESIDENTIAL ALERT OVER
EAS: The FCC has taken action to help
pave the way for the first-ever Presidential alert
to be aired across the United States on the Nation’s
Emergency Alert System (EAS). The national test
will help determine the reliability of the EAS
system and its effectiveness in notifying the public
of emergencies and potential danger nationwide
and regionally. The FCC voted unanimously to adopt
a Third Report and Order that sets forth rules
that will facilitate the federal government’s
efforts to conduct a national EAS test by transmitting
a Presidential Alert from Washington, D.C. to television
and radio broadcasters, cable systems and satellite
service providers who will then deliver the alert
to the American public. The test will assist the
FCC, in coordination with the Department of Homeland
Security’s Federal Emergency Management Agency
(FEMA) and the National Weather Service (NWS),
with assessing the current system and better determining
what improvements need to be made to further strengthen
the Nation’s EAS, particularly as broadband
technologies continue to emerge. Although the date
for the National EAS test has yet to be determined,
establishing the rules is an important first step
in the process. As Next Generation EAS systems
become operational over the next few years, they
will complement other public alert and warning
system's now being developed, including FEMA’s
Integrated Public Alert and Warning System (IPAWS)
and the Commercial Mobile Alert System that will
enable consumers to receive alerts through a variety
of multimedia platforms on their smart-phones,
blackberries and other mobile broadband devices.
The national test will require EAS participants
to be part of the exercise and to receive and transmit
a live code that includes a Presidential alert
message to their respective viewers and listeners.
The FCC, FEMA and NWS, in coordination with EAS
participants, will work together to launch a nationwide
EAS Public Education and Awareness Campaign that
will include press statements, workshops, regional
outreach, and television and radio public service
announcements targeted to consumers in general,
and more specifically persons with disabilities
and seniors, as well as first responders and state,
local and tribal governments. The outreach will
help ensure that the American public is aware that
the national test will be conducted and the benefits
of these kinds of public alerts in a real emergency.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens,
Gerry Duffy, and John Prendergast.
HOUSE
PANEL SETS HEARING ON BROADBAND STIMULUS SPENDING: According
to Broadcasting & Cable, the House Telecommunications
Subcommittee has scheduled a Feb. 10 hearing on
the billions of dollars in broadband stimulus money
distributed by Departments of Commerce and Agriculture
under the American Recovery and Reinvestment Act
(ARRA). B&C reports that the GOP leadership
is concerned about how the National Telecommunications
and Information Administration (NTIA) and the Rural
Utilities Service (RUS) administered program funds,
and protected investments from waste, fraud, and
abuse. Reportedly, the Republicans plan to circulate
draft legislation in advance of the hearing. The
draft bill would "increase accountability" for
the stimulus spending and "return unused or
reclaimed broadband stimulus funds to the U.S.
Treasury," B&C said. The hearing comes
a week before the Feb. 17 deadline for NTIA to
publish an online, interactive national broadband
map.
FCC
ADOPTS NPRMs REGARDING ITS DATA INNOVATION INITIATIVE: As
part of its Data Innovation Initiative, the FCC,
at its February 8 open meeting, launched two proceedings
to ensure that it collects the data it needs to
make policy, streamlines its data collection program,
and eliminates unneeded data collections that impose
unnecessary burdens on filers. Consistent with
those goals, the FCC approved a Notice of Proposed
Rulemaking (NPRM) to eliminate the first two programs
in a series of data collections the Commission
has identified as unnecessary, or for which the
benefits do not outweigh the burdens. This first
NPRM proposes eliminating 20-year-old requirements
for certain telephone companies to submit what
is known as comparably efficient interconnection
and open network reporting data (CEI/ONA), which
may no longer be necessary because of subsequent
policy decisions. The FCC will review similar proposals
for eliminating data collections in the coming
months. Comments on this WC Docket No.
10-132 “Review of Wireline Competition Bureau
Practices” proceeding will be due 30 days
after publication of the item in the Federal Register,
and replies will be due 15 days thereafter.
The
Commission also approved a second NPRM that seeks comment
on whether and how to reform collection of data regarding
broadband and local telephone service. Established in
2000, FCC’s Form 477 program requires broadband
service providers to report the number of subscribers
they have in each census tract they serve, and local
and mobile telephone service providers to report subscribers
at the state level. The NPRM seeks comment on whether
modifications are now needed to better serve the FCC,
consumers, and other stakeholders after more than a
decade of rapid innovation in the marketplace for these
services, while streamlining the data collection where
possible. Comments on the WC Docket No. 11-10 “Modernizing
the FCC Form 477 Data Program” will be due 30
days after publication of the item in the Federal Register,
and replies will be due 15 days thereafter.
BloostonLaw
contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
PATRIOT
ACT EXTENSION FAILS TO PASS THE HOUSE: By
a vote of 277-148, an extension of the Patriot
Act counter-terrorism provisions, which expire
at the end of this month, failed to pass the House.
The Republicans saw 26 of their colleagues join
Democrats in defeating the measure. The measure,
which President Obama supports, was brought up
under special rules which require a super majority
to pass. The GOP leadership plans to bring the
Patriot Act back to the floor later this month
under normal House rules which will require only
a simple majority to pass, according to the Washington
Post.
This
newsletter is not intended to provide legal
advice. Those interested in more information
should contact the firm. |