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.

Federal Communications Commission (FCC) Announcements

• The FCC has released the Tentative Agenda for its next Open Meeting to be held December 21, 2010. It contains two items: the much-publicized Open Internet order (see further details below in Broadband News); and a Notice of Inquiry on broadband-enabled Next Generation 911 service. To view the agenda, click here.
• On December 14, 2010, the FCC will hold the Generation Mobile Forum “to discuss the opportunities and challenges around mobile technology use by adolescents.” It will be held from 10:30 am to 1:30 pm Eastern at McKinley Technology High School Auditorium, 151 T Street, NE, Washington, D.C. 20002. Registration is required – send your name, organizational affiliation, and phone number to generationmobile@fcc.gov. For further information, 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, Jon Canis, Michael Hazzard, or Stephanie Joyce (contact information below) for further information.

Federal Trade Commission (FTC) Developments

• On December 1, 2010, the FTC released its much-anticipated staff report on online privacy which proposes a broad framework for regulating the commercial use of information gathered from consumers’ online activities. The report calls upon the FTC to develop rules that (1) provide additional privacy and data security protections for consumers, (2) allow consumers to choose whether they want companies to collect information about their online browsing habits (e.g., consumers should have access to a universal “Do Not Track” mechanism), and (3) give individual consumers the right to access and review information about themselves collected by online companies and data aggregators. As drafted, many of the report’s recommendations would require Congress to pass new legislation or require the industry to develop new processes for self-regulation. Comments on the report are due to the FTC before or on January 31, 2011.
  
  A copy of the report can be found here.
• On December 2, 2010, the FTC revealed that it is engaged in discussions with Adobe on how to curb the use of “Flash cookies” for tracking consumers’ online activity. Flash cookies, which Adobe refers to as “local shared objects,” are chunks of data embedded in the Adobe Flash Payer in web browsers that cannot be eliminated with standard privacy controls. Adobe’s Flash software is embedded in 98 percent of computers, and is necessary to watch online video at sites like YouTube. Because Flash cookies cannot be easily removed from browsers, privacy advocates have expressed grave concerns about their use. In addition, Adobe has repeatedly condemned the use of Flash cookies by developers for tracking purposes.

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

Developments in Intercarrier Compensation

• On December 2, 2010, the California Public Utility Commission (CPUC) extended the procedural deadline from December 9, 2010, to December 9, 2011, in the complaint proceedings initiated by Pac-West Telecomm, Inc. against wireless carriers Sprint Spectrum, L.P., Cricket Communications, Inc., T-Mobile West Corp., and Verizon Wireless. Pac-West alleged in its complaints that these carriers were unlawfully withholding compensation for the work Pac-West performs in terminating their intrastate, intraMTA traffic. The Administrative Law Judge hearing these consolidated cases previously recommended postponing decision pending the DC Circuit Court’s resolution of the MetroPCS petition to review the FCC’s refusal to set a rate for intraMTA traffic termination by CLECs. In deciding to extend the deadlines, the CPUC stated that Pac-West’s complaints raise “complex issues concerning the interaction of state and federal telecommunications law.” Docket Nos. C0912014, C1001019, C1001020, and C1001021.
• On November 30, 2010, CLECs Westelcom Network, Inc. and DFT Local Service Corp. filed a formal complaint with the New York Public Service Commission against Verizon New York alleging that it has been charging the CLECs improper dedicated transport charges under the parties’ interconnection agreements. Westelcom alleges that it is directly interconnected with Verizon at two Verizon’s central offices, while DFT alleges that it is directly interconnected with Verizon at the latter’s tandem switch in Buffalo. Because the CLECs are directly interconnected with Verizon, they argue that there can be no dedicated transport “when a CLEC collocates in a Verizon office and connects to Verizon in that same office, because all that is involved is a simple cross-connection between the POT bay and Verizon’s frame.” The CLECs are seeking a declaratory ruling that they are not liable to Verizon for these dedicated transport charges and a refund of all such charges previously paid. Docket No. 10-C-0604.

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

Compliance Notes

• 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 This Week

• On November 24, 2010, the National Association of Utility Regulatory Commissioners (NARUC) sent a letter to US House and Senate leadership with a copy of its resolution adopted at NARUC’s 2010 Annual Meeting on November 17, 2010, supporting adequate funding for the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) to perform oversight of the Broadband Technology Opportunities Program (BTOP) and the Broadband Initiatives Program (BIP). A copy of the letter 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 December 1, 2010, FCC Chairman Julius Genachowski revealed his draft Open Internet order which will be voted on at the FCC’s planned December 21 meeting. Although the order has not been publicly released, the Chairman outlined its principles in a speech Wednesday morning. The order would require transparency and prohibit blocking for both wireless and wireline broadband Internet access, and will apply a nondiscrimination rule to wireline broadband. The order also focuses on “lawful content,” a seeming concession to groups like the Motion Picture Association of America which has concerns about copyright violations through file-sharing services. “Reasonable network management” was highlighted in his remarks as a way for broadband providers to “deal with traffic that’s harmful to the network or unwanted by users, and to address the effects of congestion.” The order also includes usage-based pricing as a possible model to match price to cost, a billing method already in place for mobile broadband, but one that has not gained much traction for wireline services. The order does not reclassify broadband as a Title II service, but officials have suggested that it relies at least in part on Section 706 of the Communications Act which requires the FCC to take steps if broadband is not being deployed to all Americans in a reasonable and timely manner. The most recent 706 report, released on July 20, 2010, had found that broadband deployment to all Americans was not reasonable and timely, and the FCC has already accepted comments on next year’s report.
• Reaction to the Open Internet order across the industry was mixed, as reflected in statements from the other Commissioners. The draft order has angered both those who wanted more regulation and those who wanted no regulation. Republican Commissioners criticized the plan, with Commissioner Meredith Attwell Baker stating the FCC did not have authority to act and that it should wait until the new Congress convenes. Commissioner Robert M. McDowell stated that he “strongly oppose[s] this ill-advised maneuver.” On the other hand, Commissioners Mignon Clyburn and Michael J. Copps expressed general support for the measure, although Mr. Copps did say he supported “the strongest protections we can get.”
  
  Chairman Genachowski’s speech is available here.
  Commissioner Baker’s statement is here.
  Commissioner McDowell’s statement is here.
  Commissioner Copps’ statement is here.
  Commissioner Clyburn’s statement is here.
• The European Union (EU) has opened an antitrust investigation into whether Google manipulated its search results such that smaller search competitors were “downgraded” while giving its own services “preferential placement.” The investigation will also examine whether Google demanded exclusive deals with companies using Google’s advertising services, such that those companies could not advertise with other search engines. Google promised to cooperate in the investigation “to address any concerns.”
• The dispute between Comcast and Level 3 heated up this week, and the FCC is looking into the matter. Level 3 seeks relief from Comcast’s imposing additional charges for the broadband connections between the two companies due to the expected increased traffic from Level 3’s carriage of Netflix streaming. Level 3 argues that the charges have net neutrality implications, because Comcast is creating a “toll booth” for Internet traffic and Comcast has a competing video product. Comcast has stated that the dispute has nothing to do with net neutrality. Level 3’s press statements are available here. Comcast’s FCC filing on the matter is available here.

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

Telecom Privacy News

• During a hearing before the US House Consumer Protection Subcommittee on November 30, 2010, lawmakers debated the creation of “do-not-track” requirements designed to protect consumers who do not want their online activities monitored. A number of members raised concerns about the potential impact such a mandate would have on online advertising and the viability of free, ad-supported websites. David Vladeck, director of the FTC’s Bureau of Consumer Protection, stated that there is “no need for a do-not-track mechanism to be administered by the federal government.” Neither the FTC nor the Obama administration has taken a position on whether Congress should enact do-not-track legislation. Rep. Edward J. Markey, D- Mass., stated that he plans to introduce legislation in the next session of Congress to mandate do-not-track for children, “so that kids do not have their online behavior tracked or their personal information collected or profiled.” To view all witness testimony and additional statements, click here.
• A new proposed agreement was filed recently in the US District Court for the Northern District of California to settle privacy claims against online brokerage TD Ameritrade Inc. by some 6 million customers. The new agreement comes just over a year after the court refused to give final approval to a prior proposed settlement on the grounds that it paid large attorneys’ fees to class counsel without providing any real benefits to the class and that the remedial data security measures agreed to by Ameritrade were insignificant. The new proposed settlement reduces the attorneys’ fees from by approximately $1.4 million to $500,000, creates a $6.5 million fund to make payments to class members, and requires an independent data security review of the company. In re TD Ameritrade Accountholder Litig., No. 3:07-cv-02852-VRW (ND Cal.).
• A new report from the EU Committee on the Internal Market and Consumer Protection calls for tougher rules to govern Internet behavioral advertising. The report calls for targeted online advertisements to alert consumers that the ads are targeted based on their Internet activity. It also calls on the European Commission to develop a website labeling system, similar to the European Privacy Seal, that would certify that a site meets standard data protection requirements. The report will eventually be voted on by the entire House and calls on the Commission to carry out an in-depth study of new advertising practices, including those using online communication and portable devices. The full report is available here.

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

In the Courts

• On November 23, 2010, the US District Court for the Middle District of Pennsylvania denied a Pennsylvania township’s motion to dismiss a zoning-related suit brought by wireless tower developer Global Tower LLC under section 704 of the Telecommunications Act. The suit arises out of the zoning board’s denial of Global Tower’s 2009 application for a special-use permit to build and lease a cell tower in commercially zoned property. The zoning board, after twenty hearings on the matter, denied Global Tower’s application because, it found, the leased area was a new “lot” requiring “subdivision”. As the court explained, this led the zoning board to conclude that the “leased area should therefore be subject to requirements of the Zoning Ordinance only applicable to new and distinct lots.” The township argued that it should be dismissed from the suit because it was a distinct legal entity from the zoning board and has no authority to resolve a special-use application. The court disagreed, reasoning that “one of the Defendant Zoning Board’s central findings in denying Plaintiff’s ‘special use’ application was that the leased property on which Plaintiff wishes to build the radio tower is a ‘subdivision,’ a finding which alters the Plaintiff’s obligations under the Zoning Ordinance. All subdivision approval issues are within the exclusive jurisdiction of the Defendant Hamilton Township. If this Court was to dismiss the Defendant and then determine that the Zoning Board had erred and the leased property is not a ‘subdivision,’ the Defendant could then simply turn around and declare that it is.” Global Tower LLC v. Hamilton Township, et al., No. 3:10-cv-1705 (M.D. Pa.).
• Also on November 23, 2010, the US District Court for the District of Kansas dismissed a request for declaratory judgment that a non-profit Kansas cable purchasing cooperative did not violate the Communications Act by denying the application for membership of Lafayette, Louisiana. The court dismissed the case on the ground that the FCC has exclusive jurisdiction to resolve the parties’ dispute. As the court found, “[b]ecause Congress designed Section 628 to bring FCC expertise to bear, and because the statutory scheme displays a ‘fairly discernable’ [sic] intent to limit jurisdiction, the FCC has exclusive original jurisdiction over plaintiff's claim.” The court also concluded that it did not have Article III jurisdiction to issue declaratory relief relating to federal or state unfair competition laws or claims of malicious prosecution. National Cable Television Co-op., Inc. v. Lafayette City-Parish Consol. Government of Lafayette, La., No. 10-2254 (D. Kan.).

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

Legislative Outlook

• Rep. Cliff Stearns, R-Fla., and Joe Barton, R-Texas., have sent a letter to Chairman Genachowski to “request [his] analysis of the FCC’s authority under Title I to issue the proposed” Open Internet rules. His response is due December 10, 2010. To view the letter, click here.
• Rep. Edward J. Markey, D-Mass., member of the House Commerce Committee and Chair of the Energy Subcommittee, has released a statement offering cautious praise to the Chairman on the draft Open Internet order. Though he is pleased that the order is “taking this important next step towards preservation of a free and open Internet,” he stated that “[a]n explicit ban on paid prioritization is needed” and that “a common policy framework for wireless and wireline broadband services should be a core component of the final open Internet order.” Rep. Markey also stated that he supports the reclassification of broadband Internet access to a Title II service. The full statement is available here.

Upcoming Events

• Telecom Group Partner Jeffrey Rummel (contact information below) will present a speech titled “FCC Licensing/Regulation of the Manufacture, Development and Testing of Military Communications Systems; Public Safety/Cybersecurity Regulatory Update” at the Military Wireless Convention in Las Vegas. The convention will take place December 15 and 16, 2010. For more information, click here.
• The Federal Communications Bar Association will hold the 24th Annual Chairman’s Dinner on Thursday, December 9, 2010, at the Washington Hilton. For more information or to register, click here.

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