Welcome to the latest edition of Arent Fox’s This Week in Telecom, our weekly newsletter designed to keep you apprised of recent developments in telecommunications policy, legislation, and litigation. Follow our Telecom Group on Twitter! Click here.

Federal Communications Commission (FCC) Announcements

• The next FCC Open Meeting will be June 17, 2010. The final agenda contains the previously reported Notice of Inquiry regarding the basis of the Commission’s authority to impose Open Internet rules on broadband Internet services and the “Third Way” approach. To view the final agenda, click here.

• The FCC has set the comment cycle for the Qwest-CenturyTel merger. Docket No. WCB 10-110. Initial Comments are due July 12, 2010, and Reply Comments are due July 25, 2010. To view the Public Notice, click here. The FCC already has adopted a Protective Order for the proceeding which may be viewed here. For further information or for help in filing comments, please contact Ross Buntrock, Jon Canis, or Michael Hazzard (contact information below).

• The FCC will hold a public forum on the NBC Universal-Comcast merger July 13, 2010, from 1:00 to 8:00 p.m. Central at Northwestern University Law School. For more information, click here.

Federal Trade Commission (FTC) Developments

• The FTC has obtained a Temporary Restraining Order ceasing all calls and freezing all assets of SBN Peripherals, Inc., a telemarketer based in Los Angeles, California. The FTC alleges that SBN has made tens of millions of “robocalls” to consumers in violation of the agency’s Do Not Call Registry Rule. Under FTC rules, robocalls to consumers are illegal unless a marketer has the consumer’s prior consent in writing. In addition to the TRO, the FTC is seeking a court order permanently barring the illegal conduct and will seek consumer redress as appropriate. FTC v. SBN Peripherals, Inc., No. 10-cv-3168 (N.D. Ill.). The FTC’s press release announcing the Order and asset freeze can be viewed here.

• The FTC again has pushed back its enforcement deadline for the Red Flag Rules. It now plans to commence enforcement of the Rules on January 1, 2011. The Red Flag Rules are identity theft prevention rules which require companies that invoice for goods or services (including telecommunications companies) to implement programs designed to detect and prevent identity theft. The FTC noted in a statement that the delay was prompted by requests from “several members of Congress” who are drafting legislation to limit the scope of the Red Flag Rules which were originally intended to go into effect November 1, 2008. The FTC’s statement on the extension can be found here. Please contact Ross Buntrock, Stephanie Joyce, or Jeffrey Rummel (contact information below) for information or assistance with compliance.

• The FTC or DOJ may begin looking into Apple’s policies governing which kind of ad networks can operate on its iPhone platform. Specifically, Apple has adopted a policy banning developers from using advertising in their iPhone applications that shares analytic data with “an advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple.” An article on the potential investigation can be found here.

Developments in Intercarrier Compensation

• On June 9, 2010, the Ohio Public Utilities Commission granted the complaint of AT&T-Ohio against Global NAPs Ohio, Inc. for failing to pay reciprocal compensation and transiting charges for Voice over Internet Protocol (VoIP) traffic. AT&T alleged that Global NAPs had violated the parties’ interconnection agreement (ICA) by not paying charges associated with this traffic which AT&T claimed Global NAPs routed over trunks reserved for intraLATA traffic. Global NAPs argued that VoIP traffic was not covered by the parties’ ICA agreement. The Ohio PUC sided with AT&T, however, and ruled that the ICA did not distinguish between TDM and VoIP traffic, and as a consequence Global NAPs must pay AT&T approximately $50,000 within 30 days. Docket 08-690-TP-CSS.

• On June 8, 2010, AT&T Missouri filed a complaint with the Missouri Public Service Commission seeking over $14 million from Sprint Spectrum, L.P., d/b/a Sprint PCS and Nextel West Corp. AT&T alleges in its complaint that Sprint has refused to pay termination charges for interMTA wireless traffic since 2007 when AT&T disputed the parties’ intraMTA/interMTA billing factor. Under the parties’ ICA, intraMTA traffic must be exchanged at the reciprocal compensation rate, and interMTA traffic must be compensated at the access rate. AT&T alleges that Sprint has been delivering interMTA traffic over trunks dedicated to local traffic to skew the billing factor, and in response AT&T unilaterally instituted a new billing factor it claims accurately reflects the jurisdictional breakdown of the traffic. Sprint has refused to apply for the last two and a half years. Docket IC-2010-0358.

• June 7, 2010, the Iowa Utilities Board issued final rules in its so-called High-Volume Access Service (HVAS) rulemaking proceeding. The Board defined such traffic as that which “typically results in significant increases in interexchange call volumes and can include chat lines, conference bridges, call center operations, help desk provisioning, or similar operations.” As a practical matter, the Board defined an HVAS situation as one in which a LEC experiences a growth rate of 100% in access traffic over a six-month period. At the urging of Commissioner Krista Tanner, however, IXCs can still file a complaint against a LEC if they suspect the LEC is providing service to an HVAS customer even if the traffic increase does not reach the 100% threshold. As a result of the new rules, Iowa LECs will not be permitted to bill IXCs for HVAS traffic by simply adopting the access tariffs of a telecommunication association, but instead must negotiate a rate with affected IXCs. The Board has retained authority to set the rate if the parties cannot agree. Docket RMU-2009-0009.

Please contact Ross Buntrock, Jon Canis, Michael Hazzard or Stephanie Joyce (contact information below) for further information regarding intercarrier compensation matters.

Compliance Notes

• Carriers providing international services, including those providing service via resale, are required to make their annual Section 43.61 International Traffic Data and associated revenue filing by July 31, 2010. A copy of the Commission’s Manual for Filing Section 43.61 International Traffic Data can be found here. The FCC also has set up webpage to further assist carriers with this filing here.

• The annual reporting period for competitive local exchange carriers (CLECs) and interexchange carriers (IXCs) operating in Texas runs from June 1, 2010 to June 30, 2010. Carriers are required to file online through the Public Utility Commission of Texas website. The log in to make the filing for CLECs can be found here. The log in to make the filing for IXCs can be found here.

Please contact Ross Buntrock, Jon Canis, Michael Hazzard or Stephanie Joyce (contact information below) for further information regarding compliance matters.

Stimulus This Week

• On June 10, 2010, the National Telecommunications Information Administration (NTIA) released reporting templates in order to assist those awarded monies under the Broadband Technology Opportunities Program (BTOP) with their ongoing compliance requirements. The new templates, as well as other information regarding compliance with funding requirements, can be found here.

Please contact Ross Buntrock, Jon Canis, Alan Fishel or Jeffrey Rummel (contact information below) for further information regarding stimulus funding.

Broadband News

• Commissioner Copps spoke at Stanford Law School on June 9, 2010 on “Openness and Innovation in the Digital World.” In his speech, Commissioner Copps emphasized that ubiquitous broadband deployment is the “great infrastructure challenge of our time” and the U.S. will pay the price in jobs and development if it is not met. Commissioner Copps also argued that the lack of competition in broadband providers justified the move back to Title II consideration to regulate broadband. He also highlighted vertical integration in Internet services, stating that “the race to combine distribution with content spells economic constraint as clearly as it ever did in our nation’s history.” He urged the Silicon Valley companies in attendance to be engaged in the Open Internet proceeding in order to make sure decisions were made with them, not against them.

• Commissioner Clyburn spoke at the Mid-America Regulatory Conference in Kansas City, Mo. on June 8, 2010 about achieving universal broadband. Commissioner Clyburn addressed concerns that the proposed Connect America Fund (“CAF”) will support broadband networks that offer slower speeds by stating that “finite resources” needed to be used wisely. She also denied that the CAF will be shifting money away from rural, rate-of-return firms, to price cap carriers. The Commissioner also noted that the required minimum broadband speeds would be evaluated every four years to update the universal service requirements accordingly. Ultimately, Commissioner Clyburn identified the Notice of Inquiry and Notice of Proposed Rulemaking on universal service reform as a “good place” to begin discussing these issues and the “hard decisions” that will need to be made to connect all Americans with affordable broadband.

• Commissioner Baker spoke at the Broadband Policy Summit on June 10, 2010 on regulating broadband, stating generally that “if it isn’t broken, don’t fix it.” Commissioner Baker praised the FCC’s historically light regulation under Title I as “one of the best decisions the Commission has ever made for consumers.” She stated that the Commission should continue in that approach and that nothing in the Comcast decision altered that premise. Finally, Commissioner Baker suggested that broadband objectives can be achieved without reclassification if the FCC reforms universal service and urges carriers to follow the proposed CTIA guidelines for consumer protection.

Please contact Ross Buntrock, Alan Fishel, Michael Hazzard, or Jeffrey Rummel (contact information below) for further information.

Telecom Privacy News

• In response to a discussion draft of a new privacy bill drafted by Chairman Rick Boucher, D-Va., and Ranking Member Cliff Stearns, R-Fla., of the House Communications Subcommittee, ten privacy and consumer groups called for stronger measures to protect consumer privacy both online and off. Among other things, the group is calling for the incorporation of Fair Information Practice Principles into the bill, an expanded definition of “sensitive information,” and strict “opt-in” procedures for the collection and use of covered data. The organizations submitting the letter include the Consumer Federation of America, Electronic Frontier Foundation, Consumer Watchdog, World Privacy Forum, Consumer Action, USPIRG, Privacy Rights Clearinghouse, Privacy Times, Privacy Lives, and the Center for Digital Democracy. The letter is available here.

• 23andMe, a company that allows consumers to get portions of their DNA genome tested and to test children for predisposition to diseases, recently announced that “a number of new 23andMe customer samples were incorrectly processed” by the third-party lab that 23andMe uses. Accordingly to the company, “up to 96? customers received DNA results that were not their own. 23andMe has indicated that it has now notified all affected customers about the issue.

• The saga over Google’s collection of personal WiFi data as part of its Street View program continues, as police in New Zealand confirmed that they have launched an investigation into Google’s practices in that country, in response to a complaint from the Office of the Privacy Commissioner. Australia also launched its own criminal investigation. According to Robert McClelland, Australia’s attorney general, the inquiry will focus on whether the internet company has breached the Telecommunications Interceptions Act, which forbids gaining access to electronic communications other than for authorized purposes. Serious violations of Australia’s law are punishable by three years in prison.

In the Courts

• On June 3, 2010, a Texas appeals court in Austin affirmed the district court’s grant of summary judgment in favor of the Comptroller who rejected GTE Southwest’s claim that it was entitled to a sales tax refund. The case turned on “whether the exemption for ‘tangible personal property’ used in ‘manufacturing, processing, or fabrication of tangible personal property for ultimate sale’” applies to equipment used by a local exchange carrier in providing telecommunications to customers that is taxed as a service. GTE argued that “its product consists of voice and data transmissions in the form of electronic signals, dial tones, busy signals, ring tone signals, digital addresses, and electricity used to power the system, all of which are ‘measured,’ ‘felt,’ and ‘perceptible’” within the meaning of the manufacturing exemption. The court acknowledged that, although “GTE is correct that the exemption’s underlying policies would be advanced to some extent if the exemption was extended to inputs used in providing taxable services, the legislature, significantly, did not mention the sale of taxable services within the exemption— only ‘tangible personal property for ultimate sale.’” The court therefore denied GTE’s appeal, concluding that “if the legislature intended for the exemption to be extended to ‘tangible personal property’ included in a taxable service, notwithstanding its reference to ‘tangible personal property for ultimate sale,’ it presumably would have said so more explicitly.” GTE Sw. Inc. v. Combs, No. 03-08-00561-CV.

Legislative Outlook

• The House Communications Subcommittee will hold a hearing entitled “Legislative Hearing On Public Safety Broadband Network And H.R. 4829” on Thursday, June 17, 2010, at 10:00 am Eastern in 2322 Rayburn House Office Building. HR 4829 is the “Next Generation 911 Act of 2010” which was introduced March 11 by Rep. Anna Eshoo, D-Calif., and has eight co-sponsors. For more information about the hearing, click here.

• The Competition Subcommittee of the House Judiciary Committee will hold a hearing tomorrow, June 15, 2010, at 10:15 am Eastern entitled “Is There Life After Trinko and Credit Suisse? The Role of Antitrust in Regulated Industries” in 2327 Rayburn. For more information, click here.

• Rep. Cliff Stearns, R-Fla., has introduced legislation that would prohibit the FCC from regulating “the rates, terms, conditions, provisioning, or use of an information service or an Internet access service” without having submitted a report to Congress finding a market failure and “substantial evidence that the market failure is causing specific, identified harm to consumers.” The bill, HR 5257, entitled the “Internet Investment, Innovation, and Competition Preservation Act,” was referred to the House Commerce Committee. No hearing has been scheduled on the bill.

Upcoming Events

• The Federal Communications Bar Association will hold its Spring Reception on June 17, 2010, from 6:00 to 8:00 pm Eastern at the Washington Hilton. For more information or to register, click here.

• Telecom Group Partners Jon Canis, along with Ross Buntrock, Michael Hazzard, and Stephanie Joyce will be presenting at the COMPTEL Plus 2010 Fall Convention + Expo being held September 12-15, 2010, in Dallas, TX. For more information or to register, click here.

For further information, please contact any of our attorneys in the Arent Fox Telecommunications Group, including:

Ross A. Buntrock
buntrock.ross@arentfox.com
202.775.5734

Jonathan E. Canis
canis.jonathan@arentfox.com
202.775.5738

Alan G. Fishel
fishel.alan@arentfox.com
202.857.6450

Michael B. Hazzard
hazzard.michael@arentfox.com
202.857.6029

Stephanie A. Joyce
joyce.stephanie@arentfox.com
202.857.6081

Jeffrey E. Rummel
rummel.jeffrey@arentfox.com
202.715.8479