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 is scheduled for May 20, 2010. Items on the tentative agenda include the 14th Mobile Wireless Competition Report and a Pole Attachment Order and Further Notice of Proposed Rulemaking. To view the agenda, click here.

Federal Trade Commission (FTC) Developments

• The FTC and the US Department of Justice are reportedly debating which of the two agencies will launch an inquiry into Apple’s new policy of requiring software developers for Apple devices (including the iPhone and iPad) to use only Apple’s programming tools. Advocates favoring regulatory intervention argue that by forcing programmers to choose between developing Apple-exclusive applications and applications that can be used by other devices, Apple is hampering competition by forcing developers to focus on a single format. Apple responds that it has no obligation to make it easier for developers to port iPhone applications to other devices. An article on the potential investigation can be found here.

Developments in Intercarrier Compensation

• On May 5, 2010, the Missouri House of Representatives concurred in and adopted a Missouri Senate bill passed on May 4 that will require incumbent local exchange carriers (ILECs) in Missouri to lower their intrastate access rates to bring them closer in line with the ILECs’ interstate rates. The bill requires that by March 1, 2011, affected ILECs must reduce their composite originating and terminating switched access rates by 6 percent of the difference between their intrastate and interstate rates. The bill requires ILECs to perform additional rate reductions by March 1, 2012, and March 1, 2013. ILECs with fewer than 25,000 access lines are exempted from the required rate reductions. HB 1750.

• On May 4, 2010, the Florida Public Service Commission unanimously adopted a staff recommendation to partially dismiss the complaint of Qwest Communications Company LLC against six CLECs to the extent Qwest seeks monetary damages or an injunction. Qwest alleged in its complaint that the CLECs were engaging in unlawful discrimination by entering into off-tariff contracts with other similarly situated IXCs, and thereby withholding the advantages of these agreements from Qwest. Qwest requested that the Commission (1) “pay reparations with interest;” (2) require the CLECs to lower their intrastate access rates to be consistent with their off-tariff agreements; (3) cease and desist from offering intrastate switched access services outside of publicly available tariffs; and (4) file with the Commission all such off-tariff contracts. The staff noted that Qwest’s complaint included confusing and alternating terminology regarding the relief it was seeking, such as “reparatory refunds,” “retrospective relief,” “prospective relief,” “reparations,” and “damages.” Consistent with prior Commission decisions, the staff ruled it does not believe the Commission has the authority to award damages, but it does have the authority “to prevent anticompetitive and unlawful discrimination amongst telecommunications service providers, and to determine the amount of any refunds and applicable interest, if any, Qwest might be due.” Docket No. 090538-TP.

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

Compliance Notes

• 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 webpage to make the filing for CLECs can be found here. The webpage to make the filing for IXCs can be found here.

• Reply Comments on the FCC Notice of Proposed Rulemaking relating to the Annual Regulatory Fee are due on May 11, 2010. The proposed fees for Commercial Mobile Radio Service (CMRS) providers is $0.08 per line, which is the same as the 2009 rate. The proposed fee for Interstate Telecommunications Service Providers (ITSPs) is $0.00351 per assessable dollar, which represents a slight increase from the 2009 rate of $0.00314. ITSPs may calculate the amount that they owe by applying the proposed rate of 0.00351 to all interstate and international telecommunications services provided to end users as reported on Form 499-A. A copy of the NPRM can be found here. The FCC’s annual fees are typically due the last week in September. Please contact Ross Buntrock, Jon Canis, or Michael Hazzard (contact information below) for further information or for assistance in filing comments.

Stimulus This Week

• On May 5, 2010, the National Telecommunications and Information Administration (NTIA) posted comments it received from state governors regarding applications received for funding in the second round of the Broadband Technologies Opportunities Program (BTOP). NTIA invited comments from the governors regarding the preferred allocation of funding for projects within or affecting each state. The governors also were asked to identify the geographic areas within the each state for which NTIA should prioritize its evaluation of grant applications. The comments may 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

• On May 6, 2010, FCC Chairman Julius Genachowski announced a “Third Way” approach to regulating broadband transmission facilities. After outlining the two conventional options of using Title I and Title II, the Chairman adopted the Third Way. Calling it “narrow and tailored,” Chairman Genachowski said the approach would recognize only the transmission component of broadband access service as a telecommunications service, and apply only a handful of provisions of Title II that, prior to the Comcast decision, were widely believed to be within the Commission’s authority for broadband. The approach also requires the Commission to forbear from applying many provisions of Title II that it deems unnecessary and inappropriate for broadband access service. The Chairman stated that he has adopted this approach because it rests on sound legal footing and will restore the status quo after the Comcast decision. This Third Way approach will soon be published in a notice of rulemaking in which the FCC “will seek comment regarding the Title I and Title II options … [and] will seek input on important questions such as whether wired and wireless broadband access should be treated differently in this context….” The Chairman’s announcement is available here.

• Also on May 6, Austin Schlick, FCC General Counsel, released a more detailed explanation of the “Third Way” approach to correspond with the Chairman’s announcement. The Third Way will rely on six sections of Title II (Sections 201, 202, 208, 222, 254, and 255) in order to “sync up the Commission’s legal approach with its policy of (i) keeping the Internet unregulated while (ii) exercising some supervision of access connections.” Sections 201, 202, and 208 will “collectively forbid unreasonable denials of service and other unjust or unreasonable practices, and allow the Commission to enforce the prohibition.” Section 254 will “promote universal service goals.” Section 222 will “require[] providers of telecommunications services to protect the confidential information they receive in the course of providing service.” Finally, Section 255 provides that service providers must “make their services and equipment accessible to individuals with disabilities, unless not reasonably achievable.” The FCC will then forbear from applying other sections of Title II. Schlick, like Chairman Genachowski, stated that this Third Way approach as based on a strong legal foundation. Schlick’s announcement is available here.

• FCC Commissioners Robert M. McDowell and Meredith Attwell Baker released a joint statement on the Third Way approach to regulating broadband, calling it “neither a light-touch approach nor a third way.” The Commissioners criticized any attempt to regulate the Internet and said the FCC has ample authority to achieve the goals of the National Broadband Plan even after the Comcast decision. The statement is available here.

• Commissioner Michael J. Copps also released a statement on the Third Way approach, stating that he “welcome[s] this step toward bringing broadband back under the Title II framework where it belongs.” Commissioner Copps also warned that he is concerned that the FCC not forbear from too much regulation as technology quickly changed. This statement is available here.

Telecom Privacy News

• On May 4, 2010, Representatives Rick Boucher, D-Va., and Cliff Stearns, R-Fl., released a long-awaited draft of a Congressional privacy bill. The bill would push American privacy legislation closer to the strict rules that the European Union uses, and would extend privacy protections both on the Internet and offline. The two lawmakers will collect comments on the draft, and hope to have formal legislation introduced within a month or so. The proposed bill would require companies to post clear and understandable privacy notices when they collect information ranging from health or financial information to Internet Protocol address, name, race or ethnicity, or any preference profile the customer has filled out. Information about the bill can be found on Rep. Boucher’s website here.

• Representative Edward J. Markey, D-Mass., has asked the FTC to investigate the retention of documents on hard drives of digital copy machines. He said that such information can enable thieves to view sensitive information such as Social Security numbers and private medical and bank records. CBS News recently reported that just about every copy machine made since 2002 contains a digital hard drive, making the copy machine more like a computer than just a carbon copy machine. And CBS said companies and individuals usually do not “wipe” those hard drives before returning a leased machine or selling the machine to others. “I am very concerned that these copy machines can be a treasure trove for identity thieves, allowing criminals to easily access highly sensitive personal information,” Markey said in a release.

In the Courts

• On May 3, 2010, the United States District Court for the District of Arizona dismissed, without prejudice, a suit by North County Communications seeking tariffed charges for terminating traffic received from CLECs McLeod USA Telecommunications Services, Cox Arizona Telcom, and Electric Lightwave. The Court noted that, “[u]nder the Telecommunications Act and [the FCC’s 2005] T-Mobile [a decision denying further application of CLEC’s state tariffs to the termination of CMRS traffic, and instead subjecting CMRS carriers to the interconnection and compensation obligations of ILECs under 47 U.S.C. §§ 251-252], it appears that the negotiation and arbitration procedures are inapplicable to CLECs,” and that “it remains unclear what ‘applicable compensation regime, if any’ applies when two CLECs ‘exchange traffic without making prior arrangements with each other.’” North County sought payment under its Arizona access tariff, but the district court granted the defendants’ motion to dismiss on subject matter grounds, relying on the Ninth Circuit’s decision in California Catalog which held that North County was precluded from seeking tariffed access charges from CMRS providers or competitive LECs, but stated that North County could pursue its relief from the Arizona Corporation Commission. D. Ariz. Case No. CV-09-2063-PHX-GMS.

• On April 29, 2010, the United States Court of Appeals for the First Circuit affirmed a $58 million judgment awarded by the Massachusetts District Court in favor of Verizon New England against Global NAPs, Inc. and certain related defendants for the payment of access charges on calls to Internet Service Providers. In affirming the district court’s ruling on Verizon’s state law claims, the First Circuit reversed its prior law in holding that the supplemental jurisdiction statute, 28 U.S.C. § 1367, does give federal courts supplemental jurisdiction over both compulsory and at least some state law-based permissive counterclaims. Case Nos. 09-1308, 09-1309.

Legislative Outlook

• On May 5, 2010, House Commerce Chairman Henry Waxman, D-Calif., and Senate Commerce Chairman John D. Rockefeller IV, D-W.Va., sent an open letter to Chairman Genachowski stating that “we want the agency to use all of its existing authority to protect consumers and pursue the broad objectives of the National Broadband Plan.” They told the Chairman to consider “a change in classification, provided that doing so entails a light regulatory touch, with appropriate use of forbearance authority,” but promised that “if there is a need to rewrite the law to provide consumers, the Commission, and industry with a new framework for telecommunications policy, we are committed as Committee Chairmen to doing so.” The full letter may be viewed here.

• The House Commerce Committee will hold a hearing titled “Hearing On The National Broadband Plan: Promoting Broadband Adoption” on May 13, 2010, at 10:00 am Eastern in 2123 Rayburn House Office Building. The list of witnesses was not published at the time of this release.

Upcoming Events

• The Federal Communications Bar Association will hold its annual Robert E. Lee Memorial Golf Tournament on June 7, 2010, at The Country Club at Woodmore in Mitchellville, MD. 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