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

• At its May 20, 2010, Open Meeting, the FCC adopted the 14th Mobile Wireless Competition Report. In his prepared statement, FCC Chairman Julius Genachowski noted that the Report has changed its name from the Commercial Mobile Radio Services Report, and that change “is emblematic of an approach that is applied throughout the Report: to present information in way that will be relevant and understandable to a wide variety of audiences.” To view the report, click here.

Federal Trade Commission (FTC) Developments

• The FTC announced that it has settled its federal case against Diamond Phone Card., Inc., a calling card company. In the complaint, the FTC alleged that the company made false claims about the number of calling minutes its card delivered. The complaint also alleged that the company failed to properly disclose “maintenance fees” and other hidden fees that reduced the number of minutes on the card. The settlement agreement requires the company and its principals to pay $500,000 and to disclose clearly all fees associated with their cards. FTC v. Diamond Phone Card., Inc., Case No. 09-v-3257 (E.D.N.Y).

• At the FTC’s request, the US Court for the District of Northern California has permanently shut down 3FN.net, a rogue ISP that recruited, hosted, and actively participated in the distribution of spam, spyware, child pornography, and other illegal content. The ISP’s assets have been seized, and the operation has been ordered to turn over more than $1 million in ill-gotten gains. FTC v. Pricewert LLC, Case No. 09-cv-2407 (N.D. Cal.).

• FTC Chairman Jon Leibowitz told members of Congress that the agency will look into Google’s harvesting of data over wireless networks. Google announced last week that it had discovered that the roving cars it uses to create its online mapping services were inadvertently gathering data on people’s internet use through unsecured wireless networks. Chairman Leibowitz indicated that Google has already met with the agency’s staff to discuss the issue. An article on the potential investigation can be found here.

Developments in Intercarrier Compensation

• On May 18, 2010, AT&T Kansas filed comments with the Kansas Corporation Commission in response to an arbitrator’s order arising from a petition filed by AT&T in January against Global Crossing Telemanagement, Inc. involving a dispute over Voice over Internet Protocol (VoIP) traffic. The arbitrator agreed with AT&T that VoIP traffic originates and terminates in different exchanges and should be subject to access charges, and not reciprocal compensation as proposed by Global Crossing. AT&T called the arbitrator’s decision “well-reasoned, thorough and even-handed,” but disputed his holding that AT&T should disclose routine network maintenance charges in the parties’ interconnection agreement (ICA). Docket No. 10-SWBT-419-ARB.

• Also on May 18, Qwest Communications urged the New York Public Service Commission to take notice of an order from the Florida Public Service Commission allowing discovery to proceed in a similar complaint proceeding initiated by Qwest alleging that certain competitive local exchange carriers (CLECs) were discriminating against Qwest by entering into off-tariff arrangements with other interexchange carriers (IXCs). In both proceedings, Qwest is seeking damages measured by the difference between the rate it is paying the CLECs and the rate other IXCs are paying pursuant to the off-tariff agreements. Qwest is also seeking an order requiring the CLECs to file all of their agreements with the Commissions. Qwest highlighted the fact that the Florida PSC refused to dismiss its complaint, despite Verizon’s “assertion in its pleadings that it no longer has any undisclosed, off tariff pricing arrangements in effect for switched access services and [Verizon’s] argument that since [it] allegedly was charging Qwest its tariffed rates (and not the off tariff contract prices made available to other carriers), any claim or relief by Qwest was barred by the filed rate doctrine.” Case No. 09-C-0555.

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 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.

• All Common Carriers with sixteen (16) or more full-time employees are required to file their Annual Employment Report (Form 395) with the FCC by May 31, 2010. Form 395 also requires disclosure of any employment discrimination claims that have been made against the company in the previous year, which is applicable to most wireless license holders. A copy of Form 395 may be found here. A copy of the instructions may be found here.

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

Stimulus This Week

• On May 15, 2010, the Rural Utilities Service (RUS) posted a list of the Community Facilities Program Awardees and Applicants in order to assist applicants for funding under the Rural Library Broadband Grant Program by showing which libraries were constructed or will be constructed with funding from the Community Facilities Program. A copy of the list 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 20, 2010, the FCC adopted rules that will make available 25 megahertz of spectrum for mobile broadband service in much of the United States. The release of 25 megahertz is part of the National Broadband Plan’s recommendation to free up 500 megahertz of spectrum over the next 10 years. The Report and Order amends the Wireless Communications Service rules to immediately make the spectrum available for mobile broadband services, but does not risk harmful interference to neighboring operations like satellite radio or aeronautical mobile telemetry operations. The Report and Order is available here.

• Also on May 20, the FCC released a Report and Order, also based on recommendations in the National Broadband Plan, on pole attachments that are designed to lower the costs of broadband investment and streamline the deployment of broadband infrastructure. The R&O is intended ensures that “providers have a right to timely access and to use the same space-saving and cost-saving techniques that pole owners use, such as placing attachments on both sides of a pole,” among other items. The R&O is available here.

• The FCC also issued a Notice of Proposed Rulemaking on May 20 involving the E-rate program that seeks comment on proposals to streamline the program and application process. This NPRM ties into recommendations in the National Broadband Plan that broadband availability be improved through better access at schools and libraries. The NPRM is available here.

• Texas Republican Senator Kay Bailey Hutchison sent a letter to Chairman Genachowski on May 19, 2010, asking him to list the recommendations in the National Broadband Plan that are threatened by the D.C. Circuit’s Comcast decision. Senator Hutchison is the ranking minority member of the Senate Commerce Committee and requested the information in order to “assist the Committee in its oversight authority.” Senator Hutchison also asked Chairman Genachowski to provide additional information on the Open Internet proceeding, including how many “investigations or enforcement actions involving alleged violations of the [FCC’s August 2005] Internet Policy Statement” were pending.

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

Telecom Privacy News

• Authorities in both the United States and Germany are poised to begin inquiries into Google’s collection of Wi-Fi data by its Street View cars, which were deployed to take street-level photos and collect basic Wi-Fi information, such as the SSIDs and MAC addresses of WiFi routers. The furor erupted after Google recently admitted that its cars had been collecting more data than the company realized, stating that it had discovered a “mistake” in the code being used and that it was, in fact, collecting some information on who was visiting what websites on which Wi-Fi networks. Consumer Watchdog has demanded that the FTC look into Google’s activities, and German authorities have already demanded a copy of Google’s hard drives so that it can see for itself what has been collected. Thus far, Google has indicated it would be willing to destroy the data, but not turn it over to authorities.

• NTIA is accepting public comments on “Information Privacy and Innovation in the Internet Economy” through June 7, 2010. The Notice of Inquiry (NOI) observes that “Consumers have expressed concern regarding new or unexpected uses of their personal information by online applications,” and that “companies need clear policies that enable the continued development of new business models and the free flow of data across state and international borders in support of domestic and global trade.” Accordingly, NTIA seeks comment on whether and to what extent the existing privacy framework should be modified and how to address jurisdictional conflicts that may arise between state and federal laws. Please contact Ross Buntrock, Jon Canis, Alan Fishel or Jeffrey Rummel (contact information below) for further information. The full NOI is available online here.

In the Courts

• On May 13, 2010, the US District Court for the Southern District of California granted in part and denied in part Verizon Wireless’s motion to dismiss a consumer’s complaint challenging its practice of charging sales tax on the full retail price of telephones, rather than the actual price paid by the consumer. Verizon allegedly based the practice on false representations that California law required Verizon Wireless to collect the tax based on the full retail price. The plaintiff has asserted claims for fraud, unfair competition, and violations of California’s Consumer Legal Remedies Act and Section 201(b) of the Federal Communications Act (Act); she sought restitution and to enjoin the disputed practice. Carney v. Verizon Wireless Telecom, Inc., S.D. Cal. Case No. 09-cv-1854 DMS (AJB).

  The federal court dismissed the claims to the extent they rely on the Customer Information Overview document that she received upon purchasing the phone, which the court found not to include language that regards the initial telephone purchase, but rather related to subsequent bills. The court also dismissed plaintiff’s federal claim alleging a violation of Section 201(b) of the Act. Relying on the Ninth Circuit’s recent holding in North County Communications v. Catalog & Technology, 594 F.3d 1149 (9th Cir. 2010), the court held that, to state a 201(b) claim in federal court, the plaintiff must proffer an FCC finding confirming that the “particular practice” at issue in the case violates 201(b) and confers a private right of action. The court distinguished the FCC’s March 18, 2005 Order on the National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling, in which the FCC held that, “[c]onsistent with the Commission’s prior findings, we reiterate that it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge.” The court found that the FCC ruling is not directly on point to the facts alleged by the plaintiff, and therefore dismissed the 201(b) claim.

Legislative Outlook

• On May 20, 2010, Senate Commerce Committee Chairman John (“Jay”) Rockefeller, IV, D-W.Va., introduced S. 3386, the Restore Online Shoppers’ Confidence Act. The legislation would prohibit online retailers from sharing a customer’s billing information with third-party merchants, and would require retailers that use an opt-out system for proposing ongoing transactions to meet several disclosure requirements. The bill would be enforced under Section 18 of the FTC Act. In a prepared statement, Chmn. Rockefeller stated, “Tricking West Virginians into buying goods and services they do not want is despicable. It’s not ethical, it’s not right, and it is not the way business should be done in America.” More information on the bill is available here.

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.

• 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