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.

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FCC Announcements l The Mobile Market l FTC and Privacy Regulation l New Markets: Smart Grid and E-Health l Intercarrier Compensation l Compliance Notes l Broadband News l In the Courts l Legislative Outlook l Events

Federal Communications Commission (FCC) Announcements

• The next FCC Open Meeting will be held April 27, 2012, at 11:00 am Eastern. We will provide the Tentative Agenda when it is released.
• On March 27, 2012, the FCC announced “the retention of leading experts in auction theory and implementation, one of its first significant steps to implement new incentive auction authority passed by Congress in late February.”  The experts come from Auctionomics, Power Auctions, and MicroTech. More information is available here.

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

The Mobile Market

• Last week, the National Telecommunications and Information Administration (NTIA) suggested that the 21 jurisdictions that have waivers from the FCC to deploy a public safety broadband network on the 700 Megahertz band should suspend work on their projects in order to avoid wasting resources. The advice was relayed during a meeting with officials from the National Governors Association, which met with NTIA officials together with other state and local groups. Under the Middle Class Tax Relief and Job Creation Act of 2012, NTIA must establish the First Responder Network Authority (FirstNet) to oversee construction and maintenance of a nationwide network emergency response network using 700 Megahertz spectrum. NTIA suggested that jurisdictions that have waivers should halt work in order to avoid deploying a network that is ultimately not compatible with FirstNet.
• On March 29, 2012, during a hearing in the Senate Banking Committee on mobile payments, Senator Tim Johnson, D-SD, Chair of the Committee, stated that the Committee must take steps to protect consumers who use mobile payment systems and to “make sure that there are no gaps in the rules so that this emerging market is safe and efficient.” Senator Johnson noted that the new Consumer Financial Protection Bureau (CFPB) has the authority to extend federal consumer protection rules to mobile payment services, but that consumers who currently make payments via texts through their wireless carriers do not have the same protections as those who make payments through banks or traditional payment services. He expects to hold a hearing on the issue in the near future.
• The FCC seeks comment on the impact of a public safety network on Commercial Mobile Radio Service by April 30, 2012, with Reply Comments due May 30, 2012. The call for comments was issued in response to a decision to suspend service in San Francisco’s subway system last August. The Public Notice asks for comment on several topics, including: past practices and precedents; bases for interrupting wireless service; risks in interrupting mobile communications; scope of interruption; authority to interrupt service; and the legal constraints on service disruption. The notice is available here.

Please contact Ross Buntrock, Michael Hazzard, or G. David Carter (contact information below) for further information.

Federal Trade Commission (FTC) and Privacy Regulation

• On March 26, 2012, the FTC issued its final report on protecting consumer privacy titled “Protecting Consumer Privacy in an Era of Rapid Change”. It recommends that Congress enact general privacy legislation, as well as legislation to govern data security, breach notification, and data brokers. More information on the final report is available here.
• On May 30, 2012, the FTC will host a day-long, public “Dot Com Disclosures Workshop” addressing the need for new guidance for advertisers on appropriate disclosures for the online and mobile environment. The Workshop will concentrate on technological advancements and marketing developments that have emerged since the FTC first issued its online advertising disclosure guidelines known as “Dot Com Disclosures”. Revisions will be consistent with the goals of the original guidelines, and will continue to emphasize that general consumer protection laws apply equally to online and mobile marketers. More information on the  Workshop is available here.

Please contact Ross Buntrock, Alan Fishel, Stephanie Joyce, or Stephen Thompson (contact information below) for further information.

New Markets: Smart Grid and E-Health

• The U.S. Department of Energy (DOE) has announced a new “Apps for Energy” competition in partnership with PG&E, Itron, and Gridwise Alliance. The competition challenges application developers to use the Green Button data access program to make residential and commercial utility data more accessible and useful to the consumer. As part of DOE’s smart grid initiative, the Green Button program seeks to make energy usage data available in a streamlined and easy-to-understand format. The developers who submit the best apps will win part of a $100,000 cash prize, and the official rules and deadlines for submission will be released on April 5, 2012. More information regarding the “Apps for Energy” competition is available here. More information regarding the Green Button initiative is available here.
• The Michigan Public Service Commission (MI PSC) has opened an investigation into the deployment of smart meters by electric utilities. Noting that consumers and municipalities have expressed concern about smart meters, the MI PSC ordered all regulated electric utilities to submit information to the MI PSC by March 16, 2012, on a number of issues, including (1) the utility’s existing plans for deployment of smart meters in its service territory, (2) any scientific information known to the utility that bears on the safety of smart meters, and (3) an explanation of the steps that the utility intends to take to safeguard the privacy of the information gathered. Comments are due April 16, 2012. The MI PSC order can be found here.

Please contact Stephanie Joyce, Jeffrey Rummel, G. David Carter, or Stephen Thompson (contact information below) for further information.

Developments in Intercarrier Compensation

• On March 28, 2012, the South Dakota Public Utilities Commission granted the voluntary motion of all parties to dismiss the complaint of Midcontinent Communications against PAETEC Communications, Inc. and McLeodUSA Telecommunications Services, LLC, after the parties settled the dispute. Midcontinent filed its complaint against PAETEC in January 2012, and later added McLeodUSA as a defendant, alleging that the carriers were altering or disguising the data in the call signaling stream to mask the true origination point of the traffic sent to Midcontinent (creating so-called “phantom traffic”), thus making interexchange traffic appear to be local traffic. Midcontinent also alleged that the carriers were engaged “in activity that results in long distance calls destined for Midcontinent end user customers being delayed, dropped, blocked, and/or otherwise prevented from terminating to the Midcontinent customer.” Midcontinent sought damages and a declaratory ruling that the carriers’ alleged phantom traffic and call blocking activity violated South Dakota law. The terms of the settlement were not disclosed. Docket No. TC12-016.

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

Compliance Notes

• Incumbent and competitive LECs operating in Ohio must file revised intrastate switched access tariffs with the Public Utilities Commission of Ohio (PUCO) that are compliant with the FCC Intercarrier Compensation/Universal Service Reform Order (FCC 11-161). The FCC Order directs price-cap LECs, rate-of-return LECs, and competitive LECs with intrastate switched access rates that are above a LEC’s interstate switched access rates to reduce intrastate rates by 50 percent of the differential between the intrastate rates and the interstate rates by July 1, 2012. Incumbent LECs were required to file revised tariffs by March 21, 2012, while competitive LECs have until April 4, 2011. Any LEC not filing revised tariffs by the applicable deadline will have its current rates be deemed automatically unjust and unreasonable and such LECs “will be prohibited from charging for intrastate intercarrier traffic until they have Commission approved tariffs.” A copy of the PUCO order may be found here.
• Completed Forms 499-A for 2011 are due April 2, 2012. These forms report a carrier’s annual revenue and are required to be filed by all interstate telecommunications carriers, interconnected Voice over Internet Protocol (VoIP) providers, providers of interstate telecommunications that offer service for a fee on a non-common carrier basis (including stand-alone audio bridging companies), and payphone providers that are aggregators. Non-interconnected VoIP providers are required to file this form as well for the assessment of fees to support the Telecommunications Relay System (TRS). The revenues reported on Form 499-A provide the basis for true-up of a company’s Universal Service contributions and serve as the basis for assessing the annual fees for the TRS, Local Number Portability (LNP) fund, the North American Numbering Plan Administration fund, and the FCC’s annual fee. The FCC released the 2012 version of the Form 499-A on March 5, 2012.
  
  A copy of the Public Notice outlining the changes to the 2012 Form 499-A can be found here.
  
  A copy of the new Form 499-A can be found here.

• Facilities-based carriers that provide international telecommunications services are required to file their annual International Circuit Status Report by April 2, 2012, if they had any activated or idle circuits as of December 31, 2012. The FCC has a manual to assist carriers with the filing, but it does not include the changes that the FCC made to the reporting requirements in the recent order in IB Docket No. 04-112, Reporting Requirements for U.S. Providers of International Telecommunications Services (FCC 11-76). These changes include:
  1. Carriers are no longer required to report circuits from off-shore U.S. points separately;
  2. Carriers are no longer required to report any circuits between the U.S. and off-shore U.S. points; and
  3. Carriers are no longer required to file a Circuit Addition Report.
  Carriers should combine off-shore circuit data with domestic data. As a result, carriers should only report circuits between the U.S. and foreign points. If a carrier is unable to implement these changes prior to the reporting deadline, the carrier may request a waiver. More information about this filing requirement may be found here. The International Points Code Listing can be found here.
  
  Additional coding instructions can be found here. The filing manual can be found here. A copy of FCC 11-76 can be found here.
• The Universal Service contribution factor for the second quarter of 2012 is 17.4%. A copy of the Public Notice announcing the rate can be found here. (DA-12-396)

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

Broadband News

• On March 27, 2012, NTIA released a report on using spectrum in the 1755–1850 MHz band for private broadband services. The report notes that there are a number of challenges, but that it is possible to repurpose all 95 Mhz within the band for commercial wireless broadband. NTIA concluded that spectrum sharing between the federal government and the private sector is necessary to satisfy the demand for spectrum, and that further work is needed to develop innovative techniques for spectrum sharing. The report also states NTIA and the FCC will begin discussions about how to relocate government operations, for which costs could be up to $18 billion over 10 years. Chairman Genachowski identified the near-term ability to free up the lower 25 megahertz in the 1755-1780 MHz band, and pledged to work on long-term issues like spectrum sharing.
  
  The report is available here. Chairman Genachowski’s statement is available here.
• Two issues related to net neutrality arose last week. First, like AT&T (see March 19 edition of This Week in Telecom), Verizon is now facing a shareholder vote on applying net neutrality principles to its wireless network. Verizon has stated that the proposal, if passed, will harm its ability to provide wireless broadband to its customers. Verizon’s proxy materials, including the net neutrality proposal, are available here.
  
  Second, Comcast recently announced that it would not count its Xbox 360 video-streaming service toward a user’s 250-Gigabyte data limit. In response to complaints from groups like Consumers Union, Comcast argued that this practice does not violate net neutrality in principle or spirit, because it is no different than streaming video to Comcast’s own set top box. Critics complain that Comcast is favoring its own video offerings while including competing services like Netflix within the data limit, which is discriminatory and in violation of net neutrality principles. Comcast’s FAQ on the service is available here.

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

In the Courts

• On March 26, 2012, the United States Court of Appeals for the Fourth Circuit affirmed a Virginia federal court’s order requiring the City of Newport News to grant T-Mobile’s application for a permit to build a 135-foot wireless tower at an elementary school. Although the City’s Planning Commission unanimously recommended approval of the application, the City voted 4-3 to deny it after an open hearing at which local residents voiced concerns regarding children’s health and property values. The Court of Appeals rejected the City’s effort to focus on the adequacy of T-Mobile’s application rather than the denial of it: “we ask only whether the denial—not the application itself—is supported by substantial evidence.” It then agreed with the trial court that the limited evidence in opposition to T-Mobile’s application was simply too weak to sustain the denial, noting the “absence of ‘repeated and widespread opposition’ to the tower,” and concluding that “we—like the district court—ascribe little value to the vague and uncorroborated concerns about property values expressed in this case.” Finally, the Court held that the Telecommunications Act of 1996 requires municipalities to ignore citizens’ concerns about health effects: “Certainly, the Act does not preclude residents from expressing such concerns to their representatives. The Act is equally clear, however, that potential health effects flowing from the grant of a conditional use permit have no place in a decision to deny a permit, 47 U.S.C. § 332(c)(7)(B)(iv), nor may we consider them on appeal.” T-Mobile Ne. LLC v. City Council of City of Newport News, Va., No. 11-1293 (4th Cir.).

Please contact Ross Buntrock, Jon Canis, Michael Hazzard, Stephanie Joyce, or Joseph Bowser (contact information below) for further information.

Legislative Outlook

• As reported last week, the House Communications Subcommittee held a hearing titled “Cybersecurity: Threats to Communications Networks and Public-Sector Responses” on March 28, 2012. Witnesses included Fiona Alexander, Associate Administrator of the NTIA Office of International Affairs, and Admiral James Barnett (ret.), Chief of the FCC Public Safety and Homeland Security Bureau. In his opening remarks, Subcommittee Chair Greg Walden, R-Ore., noted that he has introduced new legislation, H.R. 3523, the Cyber Intelligence Sharing and Protection Act, to “make common sense changes to the way our government and the private sector share cyberintelligence.” The bill, introduced November 30, 2011, is available here. To view the hearing and read written testimony, click here.
• Also as reported last week, the House Subcommittee on Commerce, Manufacturing, and Trade held a hearing titled “Balancing Privacy and Innovation: Does the President's Proposal Tip the Scale?” on March 29, 2012. Witnesses included Jon Liebowitz, FTC Chair, and Justin Brookman, Director of Consumer Privacy for the Center for Democracy and Technology. In her opening remarks, Subcommittee Chair Mary Bono Mack, R-Cal., stated “I don’t believe industry is doing enough on its own to protect American consumers, while the government, as we all know, has this really bad habit of overreaching whenever it comes to new regulations.” All written remarks and witness testimony are available here.
• On March 28, 2012, Senator John “Jay” Rockefeller, D-W.Va., Chair of the Senate Commerce Committee, released a statement on AT&T’s new commitment to cease placing “misleading third-party charges” on consumer telephone bills. He began by praising AT&T for making “the right decision,” but noted that “while the decisions of AT&T and Verizon are a step in the right direction, I still believe we need to pass a bill that bans this abusive practice once and for all.” To read the full statement, click here.

Please contact Stephanie Joyce (contact information below) for further information.

Upcoming Events

• The FCBA Annual Conference will be held May 4-6, 2012, at the Hyatt Regency Chesapeake Bay. For more information, click here.

Please contact Ross Buntrock, Jonathan Canis, or Stephanie Joyce (contact information below) for further information.

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