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, compliance, legislation, and litigation. Follow our Telecom Group on Twitter. Click here.

We have launched a new webpage for our Public Safety, Homeland Security, and Defense Practice Area headed by Telecom Group Partner Jeffrey Rummel (contact information below) which is a dedicated practice area focused on issues related to public safety, homeland security and defense, representing a wide range of clients that include manufacturers, aerospace companies and defense contractors. To view the page, click here.

FCC

• The FCC has released the final Agenda for its next Open Meeting to be held December 21, 2010, at 10:30 am Eastern. It contains the two items previously noticed: the much-publicized Open Internet order; and a Notice of Inquiry on broadband-enabled Next Generation 911 service. To view the agenda, click here.
• The FCC has released a Notice of Proposed Rulemaking seeking comment on proposed changes to the Commission’s Registration System, or “CORES”. Comments are due 30 days after publication in the Federal Register, and Reply Comments are due 15 days thereafter. MD Docket No. 10-234. To view the item, click here.
• Comment dates have been set for the FCC’s “bill shock” proceeding. CG Docket Nos. 10–207 and 09–158, Empowering Consumers to Avoid Bill Shock; Consumer Information and Disclosure, Notice of Proposed Rulemaking, FCC 10–180 (rel. Oct. 14, 2010). Comments are due December 27, 2010, and Reply Comments are due January 25, 2011. More information may be found here.

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

FTC

• On December 8, 2010, the US House of Representatives passed S. 3987, the Red Flag Program Clarification Act of 2010. The House version of the bill was not passed. This legislation amends the FTC’s Red Flag Rule which requires “creditors,” such as companies that invoice for goods or services (including most telecommunications companies), to develop and implement a written Identity Theft Prevention Program. Specifically, the legislation narrows the definition of “creditor” to include only service providers that (1) regularly and in the ordinary course of its business obtain or use consumer reports in connection with a credit transaction, (2) furnish information to consumer reporting agencies in connection with a credit transaction, (3) advance funds or credit to the consumer, or (4) maintain accounts that are subject to a reasonably foreseeable risk of identity theft. The new Red Flag law will go into effect on January 1, 2011, or upon the Clarification Act being signed by the President, whichever is earlier. Businesses that have not yet developed a written Program are encouraged to do so before the enforcement date. The FTC has prepared a Frequently Asked Questions document regarding the rules that can be found here.
• Comments on the FTC’s Caller ID Advanced Notice of Proposed Rulemaking are due January 28, 2011. A link to the NPRM can be found here.
• Comments on the privacy report issued December 1, 2010, by FTC staff are due January 31, 2011. A copy of the report can be found here.

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

Intercarrier Comp

• On December 16, 2010, the New York Public Service Commission (NY PSC) voted unanimously to initiate an investigation into Verizon’s intrastate access rates. The decision arises from the high-cost fund proceeding in which several carriers argued that any reform must address Verizon’s intrastate rates which Sprint claims are four times higher than Verizon’s interstate rates. Hal Lenox, president of AT&T New York, stated that the NY PSC’s “examination of this issue represents a major step towards ensuring that today’s regulatory landscape is in keeping with the state’s competitive environment…. Updating intrastate access rates is critical to enhancing competition. The Commission’s decision today is an important step toward ensuring that rates accurately reflect the choices available to New Yorkers in today’s competitive market.” NY PSC staff will shortly issue a notice on the investigation, and interested parties are expected to convene early in 2011 to begin examining Verizon’s intrastate rates. Docket No. 09-M-0527.
• Also on December 16, 2010, the Pennsylvania Public Utilities Commission (PA PUC) voted to defer its consideration of an administrative law judge’s decision in a complaint case initiated by Verizon Pennsylvania against three CLECs. The Commission now will review the decision at its next meeting on January 13, 2011. The 2007 complaint names Choice One Communications of Pennsylvania, Inc., FiberNet Telecommunications of Pennsylvania LLC, and CTC Communications Corp. and alleges that the intrastate access rates of those carriers are impermissibly higher than their interstate rates. All parties’ claims and defenses rest on Pennsylvania statute 66 Pa. C.S. § 3017(c) which permits CLECs to charge rates above those charged by ILECs if the higher rates are “cost justified.” The ALJ’s decision found that the CLECs’ rates were not cost justified and proposes that Choice One issue a refund to Verizon of over $2 million dollars for charges imposed prior to 2007. In addition, all three CLECs would be required to issue refunds of charges imposed after July 1, 2007 based upon an overcharge percentage. Docket Nos. C-20077672, C-20077674 and C-20077676.

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

Compliance

• On December 13, 2010, the FCC announced that the universal service contribution factor for the first quarter of 2011 will be 15.5 percent. A copy of the notice can be found here. DA 10-2344.
• All providers of interconnected fixed or non-nomadic Voice over Internet Protocol (VoIP) services as of December 1, 2010 will be required to register with the Illinois Commerce Commission (ICC) by January 1, 2011, in accordance with 220 ILCS 5/13?401.1. Thereafter, new providers will be required to register with the ICC at least 30 days prior to their provision of service within Illinois. The ICC has posted a copy of the registration form here.

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

Stimulus

• On December 14, 2010, the National Telecommunications and Information Administration (NTIA) released a report providing an overview of the grants awarded under the Broadband Technology Opportunities Program (BTOP). The report also highlights a few illustrative infrastructure projects, public computer center projects, and sustainable broadband initiatives, and describes the impact of these projects and initiatives on schools, libraries, small businesses, and other stakeholder groups. A copy of the report 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

• The dispute between Comcast and Level 3 continues, with both companies having met repeatedly with the FCC to discuss their side of the issue over the past weeks. They each have issued “Frequently Asked Questions” on the issue as well. Comcast maintains that this is a simple peering dispute between two private companies regarding charges for the amount of traffic exchanged, while Level 3 maintains that Comcast is violating Open Internet principles by seeking to charge more for traffic because it is coming from Netflix. This week, Comcast announced that its engineers will meet with Level 3’s engineers to discuss a proposal by Level 3 for the exchange of traffic. Level 3’s proposal would “use Level 3’s own IP backbone to carry content right to the edge of the Comcast local Internet access markets where the substantial majority of Comcast’s subscribers reside, at no charge to Comcast.” Level 3 has stated that the meeting of the engineers does not mean that the dispute is near resolution, because Comcast appears to reserve the right to charge Level 3 for the delivery of traffic.
  
  Other companies have commented on the dispute. For example, AT&T has criticized Level 3 in a blog post, pointing to Level 3’s termination of a contract with Cogent when Cogent increased the amount of traffic it sent to Level 3.
  • Level 3’s FAQ is available here
  • Comcast’s FAQ is available here
  • Level 3’s recent ex parte is available here
  • Comcast’s recent ex parte is available here
  • AT&T’s blog post is available here.
• A government watchdog group in France has found that Google accounts for 90 percent of searches in France and that Google has a “dominant” position in online advertising. The study was requested by the French government, and although it has no present legal implication, the President of the watchdog group said that the study should be a warning to Google that it could face antitrust complaints. Google called the study “flawed” because it does not take into account the competition created by advertisers’ choice of online and offline formats for advertising.
• FCC Chairman Julius Genachowski gave two speeches this past week. The first was at the FCC’s “Generation Mobile” forum on December 14, 2010, where he touted the benefits of digital literacy and broadband, but highlighted the dangers of distracting technology. On December 15, 2010, the Chairman spoke at the National Press Club on the release of the Communications Workers of America’s “Speed Matters” Report. He stated that the Open Internet rules will increase the speed of broadband as well as create jobs by fostering broadband investment. The text of the speeches are available here and here.

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

Privacy

• The Department of Commerce Internet Policy Task Force unveiled last week a report titled “Commercial Data Privacy and Innovation in the Internet Economy: A Dynamic Policy Framework.” The report explores ways to enhance consumer privacy while still enabling online innovation. It recommends the development of “Fair Information Privacy Principles,” the creation of a privacy office within the agency, and consideration of a national data security breach notification law. The report also seeks comment on a number of additional issues, including whether a proposed “privacy bill of rights” should be implemented through legislation and how privacy principles should be enforced. Potential enforcement measures include more detailed rules and oversight by the FTC and a private right of action for consumers. A federal data breach notification law, which would be enforced by state authorities and the FTC, could set national standards and preempt "inconsistent" state laws, the report says. In addition, the report also calls for greater international cooperation on privacy. It notes that the EU and several countries around the world have adopted omnibus privacy laws. The full report is available here.
• The California Department of Public Health (CDPH) announced last week that a magnetic tape containing the sensitive medical information of as many as 2,550 residents and employees in 600 California skilled nursing facilities has gone missing in the US Mail. The tape reportedly contains e-mail addresses, investigative reports, background information on healthcare workers, names of health care facility residents, medical diagnoses, and the social security numbers of CDPH employees and residents dating from 2003. A CDPH spokesperson acknowledged that “this is definitely the largest breach of confidential and private information we’ve had at the Department of Public Health.” The incident arose from a violation of protocol that requires the state to use a private courier instead of the US Postal Service for the delivery of sensitive material. When a CDPH office in West Covina, near Los Angeles, sent the tape via the US Postal Service to the Sacramento central office for backup, the Sacramento office received the mailed envelope “which was reported to be unsealed and empty,” the state said.

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

In the Courts

• On December 16, 2010, the US Court of Appeals for the Fourth Circuit affirmed the Maryland Public Service Commission’s determination that Verizon Maryland violated section 251 of the Communications Act and the FCC’s implementing rules, and breached its interconnection agreement with CLEC Core Communications, by delaying Core’s request for interconnection in Baltimore in 1999. In the process, the Fourth Circuit reversed a grant of summary judgment that Verizon received from the United States District Court for the District of Maryland following Verizon’s 2008 action for review of the Maryland PSC decision. The federal trial court had found that the Maryland PSC erred in finding that Verizon was obligated to interconnect with Core via an OC-12 loop facility. The Fourth Circuit reversed that holding based on evidence that Verizon had used that same type of interconnection elsewhere for both Core and other carriers, and on its conclusion that the FCC’s rules “reflect a clear and unequivocal intention that the requesting telecommunications carrier is to play a significant role in determining the type and quality of interconnection it received from the ILEC.” The Fourth Circuit concluded the “district court’s finding that the loop facility was lesser in quality to the other potential methods of interconnection … was not based on evidence in the record.” The case was remanded to the trial court to determine whether Verizon also breached the duty of good faith and fair dealing, and for a calculation of Core’s damages. Verizon Md., Inc. v. Core Commc’ns, Inc., No. 09-1839 (4th Cir.).
• On December 10, 2010, the US Supreme Court agreed to hear an appeal sought by the Michigan Public Service Commission and Talk America, Inc. as to whether ILECs may charge CLECs higher, non-cost-based rates for so-called “entrance facilities” – the cables that connect the ILEC network to the CLEC’s switch. The US Court of Appeals for the Sixth Circuit, in a split decision, had created a rift in existing federal law with its February 2010 decision finding that ILECs could indeed charge CLECs those higher rates, in contrast to FCC and other federal appellate courts’ decisions holding that ILECs must offer those facilities to CLECs at cost-based rates. The Supreme Court has allotted one hour for argument. Talk America, Inc. v. Michigan Bell Tel. Co., No. 10-313; Isiogu v. Michigan Bell Tel. Co., No. 10-329.

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

Legislative

• On December 16, 2010, Senator John (“Jay”) Rockefeller IV (D), Chair of the Senate Commerce Committee issued a statement on the Department of Commerce privacy “green paper” (see Privacy News). Sen. Rockefeller stated that the report “highlights the need for greater privacy protections for Americans,” noting that “there are no baseline privacy protections for most consumer online activity.” He hopes “that the Department of Commerce in its final report will reach the conclusion that legislation is necessary to protect consumers.”
  
  Sen. Rockefeller’s statement is available here.

Upcoming Events

• The Federal Communications Bar Association is hosting a breakfast with Scott Blake Harris, General Counsel of the Department of Energy, on January 18, 2011, and a luncheon with Commissioner Michael Copps on February 15, 2011. For more information or to register, click here.

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