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 Intercarrier Compensation l Compliance Notes l Broadband News l In the Courts l Legislative Outlook l Events

Federal Communications Commission (FCC) Announcements

• FCC Chairman Julius Genachowski has announced an initiative to create 100,000 “broadband-enabled, call center jobs” in the next two years. The aim is to bring these jobs back to the U.S. from foreign countries, and to use broadband connectivity to allow call center employees to work from home. To read more, click here.
• The next Open Meeting of the FCC will be September 22, 2011, at 10:30 am Eastern. We will publish the Tentative Agenda when it is released. For more information, click here.
• The FCC is seeking nominations for persons to serve on the Open Internet Advisory Group which was created by the Open Internet Order adopted in December 2010. Nominations are due September 1, 2011. For more information, click here.

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

The Mobile Market

• On July 29, 2011, the West Virginia Public Service Commission (WVPSC) voted to approve the AT&T/T-Mobile merger without any conditions. “It is reasonable to consent to the transfer of control the Petitioners proposed because the terms of the merger are reasonable, do not adversely affect the public and no party is given an undue advantage,” the order states. The WVPSC rejected Staff’s one condition, reported in the August 1 edition of This Week in Telecom, that T-Mobile customers be given a 90-day period to change carriers without incurring a termination fee. To read the WVPSC Order, click here.
• The FCC has reached agreements with Industry Canada and the Mexico Secretariat of Communications and Transportation for sharing commercial wireless broadband spectrum in the 700 MHz band along the U.S.-Canadian and U.S.-Mexican borders. The aim of the agreements is to facilitate the deployment of mobile wireless broadband systems near those borders and to provide consumers in surrounding areas with advanced opportunities for 4G high-speed mobile broadband access. The FCC and Industry Canada also have entered into an arrangement for sharing spectrum in the 800 MHz band to allow for rebanding by U.S. public safety and commercial licensees operating along the U.S.-Canadian border. Such rebranding was ordered by the FCC to alleviate interference with public safety licensees by commercial cellular licensees. “These arrangements will unleash investment and benefit consumers near the borders by enabling the rollout of 4G wireless broadband service and advanced systems for critical public safety and emergency response communications,” Chairman Julius Genachowski stated after signing the documents.
• Beginning October 1, 2011, AT&T smartphone customers with unlimited data plans who are in the top 5 percent of heaviest data users will be subject to throttling in way similar to Verizon’s throttling plan implemented earlier this year. According to the AT&T press release dated July 29, 2011, “…smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5 percent of heaviest data users. These customers can still use unlimited data and their speeds will be restored with the start of the next billing cycle. Before you are affected, we will provide multiple notices, including a grace period.” In response to the announcement, Harold Feld of Public Knowledge stated, “AT&T’s announcement that it will throttle the wireless service of so-called ‘heaviest users’ of its wireless service is simply the latest example of Internet rationing, an anti-consumer, bait-and-switch tactic being used by Internet service providers. No one knows the effect of data usage on networks, what triggers the throttling or even why, what the costs are to the network or even how it is determined that rationing schemes are to be imposed on consumers. It is all one big black box. What we do know, however, is that we reject AT&T’s assertion that only the takeover of T-Mobile will solve its spectrum issues. The $39 billion AT&T will spend for T-Mobile would go a long way to helping improve its network. We call again on the FCC to look into these tactics, which are a means for Internet service providers to charge more for less.”
• The United States Food and Drug Administration (FDA) this week announced the availability of draft guidelines for “Mobile Medical Applications”. Due to the increasing use and expansive applicability of mobile applications, the FDA has issued the draft guidance to “clarify the types of mobile apps to which FDA intends to apply” its regulatory requirements. Consumers and interested parties may submit comments on the draft through October 19, 2011. The draft guidelines are available here. Filing instructions are provided in the document.

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

Federal Trade Commission (FTC) and Privacy Regulation

• The FTC has obtained an injunction from the federal court for the Middle District of Florida against several entities, including Direct Benefits Group, LLC, charged with unlawfully debiting consumer bank accounts when they requested payday loans. According to the Complaint, several websites, including MyPaydayAngel.com, requested bank account numbers, Social Security numbers, and other information during the payday loan application process. Consumers were then automatically subscribed to any of several “programs,” such as long-distance calling plans, and charged as much as $59.90 per month or $99.90 per year. The agency seeks a permanent injunction, disgorgement of ill-gotten revenue, and restitution to the consumers. To view the FTC press release about the case, click here. To view the Complaint, click here.
• The FTC is allowing more time for public comment on a proposed safe harbor program that Aristotle International, Inc. has submitted for approval under the agency’s Children’s Online Privacy Protection Act (COPPA) rules. The rules allow industry groups and others to request FTC approval of self-regulatory guidelines that implement the protections of the Rule. Comments are now due August 15, 2011. More information is available here.

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

Developments in Intercarrier Compensation

• On August 3, 2011, a Pennsylvania Public Utility Commission (PAPUC) administrative law judge (ALJ) denied the petition for emergency relief filed by Core Communications, Inc. on which we reported in the August 1 edition of This Week in Telecom. Core sought unpaid intercarrier compensation from Verizon Pennsylvania, Inc. and Verizon North, Inc. that was invoiced pursuant to the parties’ interconnection agreement (ICA). The ALJ stated that because “the price of emergency relief is so high, it is considered to be a radical remedy and should be used quite sparingly.” The ALJ further found that the public interest was not served by granting emergency relief, ruling instead that “the public interest is served if the ICAs that two companies enter are followed and enforced, not abrogated when their terms are inconvenient. The greater interest is best served when parties are required to abide by the terms of the contracts entered voluntarily.” Although the ALJ denied the petition for emergency relief, she nevertheless certified the issue for immediate review by the full PAPUC. Docket No. P-2011-2253650.
• Also on August 3, Aventure Communication Technology LLC filed with the Iowa Utilities Board an opposition to the motion of AT&T Communications of the Midwest, Inc. and Sprint Communications Company, L.P. to suspend or modify the procedural schedule set by the Board in the complaint proceeding in which Aventure requests the establishment of an intrastate terminating access rate for so-called High-Volume Access Services (HVAS). Under the HVAS rules, a local exchange carrier (LEC) serving a high-volume customer must negotiate an access rate with interexchange carriers (IXCs) for terminating high-volume traffic. If they are not able to agree, the Board will establish a rate. Unless one of those results is obtained, however, the LEC must terminate the traffic for free. Aventure asserted in its opposition that it “is concerned that the true motive of the IXC group in this case is to prevent the Board from ever establishing a rate for intrastate HVAS traffic.” Docket No. FCU-2011-0002.

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

• The Universal Service contribution factor for the Third Quarter of 2011 is 14.4%. A copy of the notice can be found here.
• The FCC has released its Report and Order adopting rules for its collection of regulatory fees for fiscal year 2011. It has determined that it must collect a total of $335,794,000 in fees. The Report and Order sets forth filing procedures but no due date has yet been adopted. To read the item, click here.

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

Broadband News

• On August 2, 2011, the FCC released its long-awaited “Measuring Broadband America” report on residential wireline broadband speeds, finding that “[f]or most participating broadband providers, actual download speeds are substantially closer to advertised speeds than was found in data from early 2009 … though performance can vary significantly by technology and specific provider.” The study began last year and sought 10,000 volunteers to measure home broadband speed through installation of hardware that will monitor broadband speed on the volunteer’s computers. The FCC partnered with UK company SamKnows in this effort. The report also found that “[m]ost ISPs delivered actual download speeds within 20% of advertised speeds, with modest performance declines during peak periods” and that “[a]lmost all ISPs reach 90 percent or above of their advertised rate, even during peak periods.” The full report can be found here.
• The debt ceiling bill ultimately passed by Congress and signed by the President on August 2, 2011 did not include provisions for a spectrum auction that were in earlier drafts of the legislation. Senator Rockefeller (D-WV) expressed disappointed, but vowed to push for action on a stand-alone spectrum bill by September 11, 2011. More information 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 August 3, 2011, the United States Court of Appeals for the Second Circuit affirmed the Southern District of New York’s dismissal of Siti-Sites.com’s antitrust suit against, among others, Verizon Communications and Allied Security Trust for allegedly conspiring to block companies from licensing or selling products using certain telecommunications patents in which Siti-Sites has a financial interest. Pursuant to a settlement agreement with MLR LLC, Siti-Sites had acquired 40 percent of the gross proceeds that would be earned by MLR LLC through the sale or licensing of the patents in question. In its suit, Siti-Sites alleged that the telecommunications companies were consolidating patents under Allied Security Trust in an effort to freeze out smaller patent holders like MLR and Siti-Sites. The Second Circuit agreed that such a derivative financial interest was not enough to give Siti-Sites standing to sue for alleged antitrust violations relating to MLR’s patents. The court ruled that “it is plain from its pleadings that any alleged antitrust injury Siti suffered is derivative” in that “Siti owns only the contractual right to a percentage of MLR’s gross proceeds.” Siti-Sites, Inc. v. Verizon Commc’ns, Inc., No. 11-65 (2d Cir.).
• On July 29, 2011, the United States District Court for the District of Columbia dismissed the complaint of Sandwich Isles Communications against the National Exchange Carrier Association (NECA) on the ground that it lacks jurisdiction over the case. Sandwich Isles had sued NECA for its refusal to include certain costs in NECA’s Traffic Sensitive Pool. But it already had filed a Petition for Declaratory Ruling at the FCC Wireline Competition Bureau on the same matter. The Bureau agreed that NECA should have included some, but not all, of the costs, and Sandwich Isles then filed a petition for reconsideration in October 2010, to seek full reimbursement of those costs. In the federal suit, the district court agreed with NECA that “plaintiffs are seeking review of an FCC order, and since the court of appeals has exclusive jurisdiction to review final orders of the agency, this Court lacks jurisdiction to hear the case.” The court found it immaterial that the court case “raises different claims, … includes new parties, and much of the relief sought cannot be obtained in the FCC proceeding.” The court also held that, even if it had jurisdiction, it would still have dismissed the case under the doctrine of primary jurisdiction. The dismissal was without prejudice, in that Sandwich Isles may bring future claims “should they be viable, after the FCC proceedings, and any appeals, are final.” Sandwich Isles Commc’ns, Inc. v. Nat’l Exch. Carrier Ass’n, No. 10-02341 (D.D.C.).

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

Legislative Outlook

• On August 3, 2011, Rep. Greg Walden, R-Ore., Chair of the House Communications Subcommittee, released a statement partially in response to the FCC’s “Measuring Broadband America” report, noting that “The process leading to the FCC's report on ‘Measuring Broadband America’ was exemplary. … As a result, the Commission and its partners designed and completed a path-breaking study helpful to all broadband consumers.” He criticized, however, the order on program-carriage rules also adopted on August 2, stating that “the process leading to the FCC’s decision to adopt standstill rules for program-carriage complaints leaves much to be desired. The FCC based these rules on a four-year-old Notice of Proposed Rule Making that did not provide the text of a single proposed rule and did not clearly indicate a standstill rule was on the table.” To read the full statement, click here.
• Both the House and the Senate are on August Recess through September 5, 2011.

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

Upcoming Events

• Jeffrey Rummel, a Partner in our Group, will speak at the 8th Military Antennas Summit held by the Institute for Defense & Government Advancement September 12-15, 2011, in Washington, DC. For more information, click here.
• Jonathan Canis and Ross Buntrock, Partners in our Group, will speak at CompTel Plus in Orlando, Florida on October 3, 2011, on a topic titled “Mediation, Complaints and Referrals: What Does It Take to Get Disputes Resolved Before the FCC?” For further information, click here.

Please contact Ross Buntrock, Jonathan Canis, or Jeffrey Rummel (contact information below) for further information.

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