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

• The FCC has released the tentative Agenda for the Open Meeting to be held March 3, 2011. The Agenda contains seven Notices of Proposed Rulemaking, four of which regard improving communications services on tribal lands. Other topics include reforming the Lifeline and Link Up programs and implementing the Twenty-First Century Communications and Video Accessibility Act of 2010. To view the tentative Agenda, click here.
• The Notice of Inquiry in ET Docket No. 10-237, Promoting More Efficient Use of Spectrum Through Dynamic Spectrum Use Technologies, has been published in the Federal Register. Comments are due February 28, 2011, and Reply Comments are due March 28, 2011. Our summary of this item, released December 1, 2010, is available here. To view the Notice of Inquiry, click here. To view the Federal Register entry, click here.
• Comments on the FCC’s Notice of Proposed Rulemaking proposing changes to the Commission’s Registration System, or “CORES”, are due March 3, 2011, Reply Comments are due March 18, 2011, and Comments on the method of data collection under the Paperwork Reduction Act are due April 4, 2011. MD Docket No. 10-234. To view the item, click here. To view the Federal Register notice, click here.

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

Federal Trade Commission (FTC) Developments

• On February 8, 2011, Rep. Edward Markey, D-Mass., sent a letter to the FTC asking it to investigate the in-app purchase processes that Apple and Google provide on their respective smart phones. The letter was prompted by an article in the Washington Post describing how children are buying hundreds or thousands of dollars’ worth of applications or virtual items that are being sold within games. Rep. Markey expressed particular concern about how these applications are being promoted and delivered to children “who are unlikely to understand the ramifications of in-app purchases.” A copy of Rep. Markey’s letter can be found here.
• The FTC will host a forum on May 11, 2011, in Washington, DC to examine how the government, businesses, and consumer protection organizations can work together to prevent consumers from receiving unauthorized third-party charges on their phone bills — a practice known as “cramming.” The forum, which will be held at the FTC’s satellite building conference center, will be open to the public. Any persons interested in appearing on the panel must submit requests to the FTC no later than March 4, 2011. The FTC also invites interested parties to submit comments on cramming prevention through the FTC’s online comment form no later than April 27, 2011. The FTC’s Press Release on the Cramming Forum can be found here. Comments can be submitted to the FTC here.

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

Developments in Intercarrier Compensation

• On February 9, 2011, the Federal Communications Commission released a Notice and Further Notice of Proposed Rulemaking (FNPRM) addressing Universal Service Fund (USF) and Intercarrier Compensation (ICC) reform. The Commission stated that its proposals are guided by four principles: (1) modernizing USF and ICC to support broadband deployment; (2) encouraging fiscal responsibility by controlling the size of the USF and by reducing waste and inefficiency; (3) requiring accountability from companies receiving support; and (4) transitioning to market-driven and incentive-based policies that will maximize the value of scarce resources. Comments with respect to the proposals contained in Section XV, Reducing Inefficiencies and Waste by Curbing Arbitrage Opportunities, are due 30 days after publication in the Federal Register, with Reply Comments due 15 days thereafter. Comments on the remaining sections of the FNPRM are due 45 days after publication in the Federal Register, with Reply Comments due 35 days thereafter. WC Docket Nos. 10-90, et al. To view our Client Alert regarding the item, click here.
• On February 4, 2011, the Iowa Utilities Board (IUB) held that Voice-over-Internet-Protocol (VoIP) calls carried by Sprint in conjunction with its cable partner, MCC Telephony of Iowa, Inc., are jurisdictionally intrastate calls for which Sprint must pay intrastate access charges to Iowa Telecommunications Services, Inc. under its tariff. The IUB rejected Sprint’s arguments that state regulation of its VoIP traffic is preempted by federal law and that VoIP calls constitute information services that the FCC exempts from the intercarrier compensation regime. The order states that the parties must file a status report today, and Sprint must pay the billed access charges by March 7, 2011. To view the order, click here.

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 deadline for filing annual certificates of compliance with the Customer Proprietary Network Information (CPNI) rules is March 1, 2011. The FCC includes the following types of carriers in its non-exhaustive list of entities that must file certificates: telecommunications carriers; interconnected Voice over Internet Protocol (VoIP) providers; commercial mobile radio service (CMRS) providers; interexchange carriers (IXCs); prepaid calling card providers; resellers; and calling card providers.
  
  Certificates must contain an officer’s signature attesting that he or she has personal knowledge that the company has established procedures to protect CPNI and must provide a description of those procedures. Further, the company must describe any actions taken against data brokers in 2010 and any customer complaints received regarding CPNI. The FCC encourages filers to file their certificates electronically via either the Electronic Comment Filing System (ECFS), identifying EB Docket No. 06-36, or through its new web-based application, which can be found here. Filers may also submit certificates in hard copy through the Secretary’s office. More information about the filing can be found in the Public Notice here.
• The Universal Service contribution factor for the first quarter of 2011 will be 15.5%. A copy of the notice can be found here. DA 10-2344.

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

Stimulus This Week

• On February 10, 2011, the House Communications Subcommittee held a hearing that focused on continuing oversight of funds disbursed by the National Telecommunications and Information Administration (NTIA) under the Broadband Technology Opportunities Program (BTOP) and the Rural Utilities Service (RUS) under the Broadband Initiatives Program (BIP). The Inspectors General for both the Department of Commerce, the agency that oversees NTIA, and the Department of Agriculture, the agency that oversees RUS, were among the witnesses. In addition, Gary Shoreman, Chief Executive Officer of Eagle Communications, testified at the hearing.
  
  U.S. Department of Commerce Inspector General Todd Zinser testified that “BTOP represents the largest and most complex grant program NTIA has ever overseen. The grant awards went to a diverse group of recipients, and conditions surround the awards themselves vary widely.” Zinser further stated that “The potential for fraud, waste, and abuse will increase substantially over the next 5 years as spending by BTOP grant recipients rises.”
  
  Another subject of this hearing was a proposed bill, drafted by Subcommittee Chairman Gary Walden, D-Ore., that would require reclaimed or unused funds to be returned to the Treasury Department. Chairman Walden stated that the proposed legislation “would ensure that the NTIA and the RUS report to Congress on any red flags the inspectors general find, as well as on what they propose to do about it. It would also help ensure that any money that is returned reclaimed, or goes unused is put back in the U.S. Treasury.” Gary Shoreman testified as to how the stimulus programs have impacted his company, and he urged the consideration of legislation that would require any wasteful funding to be returned to the Treasury. Chairman Walden stated that he expects to have another hearing regarding BTOP and BIP oversight that will include the administrators of NTIA and RUS.
  
  Mr. Zinser’s testimony can be found here.
  
  Chairman Walden’s opening statement can be found here.
  
  The Subcommittee’s press release on the hearing can be found here.

Please contact Ross Buntrock, Jon Canis, Alan Fishel, Jeffrey Rummel, or Katherine Barker Marshall (contact information below) for further information regarding stimulus funding.

Broadband News

• On February 10, 2011, President Obama announced a plan to spend $18 billion on mobile broadband, $5 billion of which would be spent in rural areas and $3 billion of which would be spent on government research in new wireless technologies. This announcement follows the President’s State of the Union address last month in which he stated a goal that 98% of Americans will have mobile broadband access in the next 5 years. President Obama stated that the plan could be financed through spectrum auctions, which he indicated could fetch $27 billion. House Republicans, including House Commerce Committee Chair Fred Upton, D-Mich., have already expressed concerns with the proposal. “Before we target any more of our scarce taxpayer dollars for broadband, it is critical to examine whether the money already spent is having an impact,” Upton noted.
• On February 4, 2011, Global Crossing filed an ex parte in the FCC’s Open Internet docket disclosing meetings with representatives of the Wireline Competition Bureau and Office of Strategic Policy over the dispute between Level 3 and Comcast. Global Crossing stated that “Since carriers are no longer of relatively equal size and now compete much more directly with each other, the historical cooperative practices that formed the Internet are breaking down and being replaced with more commercially driven tactics such as charging for access to last-mile facilities.” Characterizing the broadband ISPs’ last-mile services as a monopoly service, the company noted that the “predicament faced by parties that send traffic to a broadband ISP’s subscribers today is substantially similar to those which the Commission has not hesitated to remedy in the past. Like CLECs and wireless carriers before them, broadband ISPs enjoy a termination monopoly for their customers.” GN Docket No. 09-191. To read the ex parte, click here.
• On January 5, 2011, the FCC announced the Open Internet Challenge designed to encourage the public to create applications to monitor Internet providers’ compliance with the Open Internet rules and to encourage research into the same. One winner will get a trip to Washington, DC and will be honored at an FCC Chairman’s reception. The submission deadline is June 1, 2011, and winners will be chosen by a public vote and a panel of experts. More information can be found here.

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

Telecom Privacy News

• The American Civil Liberties Union (ACLU) announced last week that it has settled its lawsuit against the North Carolina Department of Revenue. The ACLU, which joined a federal suit filed by online retailer Amazon last year, argued against the state’s efforts to gain access to personal information from those who purchased products from Amazon’s online store. As part of the settlement, the state will no longer ask for information that could be used to tie people to the books, music and movies they buy online. Amazon had already won a decision in October 2010 from a federal judge in Seattle holding that the First Amendment forbids tax agencies from knowing the books, music and movies that customers buy from websites. Rather than fight the decision, North Carolina agreed to change its data demands, and the case was closed in late January 2011. Though the privacy issue in the case has been resolved, the larger question of whether the Amazon should collect state sales tax remains open. Under a 1992 U.S. Supreme Court decision, a state cannot force Internet retailers to collect its sales tax unless they have a physical presence in that state and, as such, Amazon collects sales taxes in only Kansas, Kentucky, New York, North Dakota, and Washington. Amazon.com, Inc. v. Kenneth R. Lay, 10-cv-00664 (W.D. Wa.).

Please contact Ross Buntrock, Jon Canis, Alan Fishel, Michael Hazzard, Jeffrey Rummel, or G. David Carter (contact information below) for further information.

In the Courts

• On February 3, 2011, the United States District Court for the Northern District of California provisionally denied approval for a proposed settlement of the class action brought against Hughes Communications regarding early termination fees and download limits, as well as claims for violation of California’s false advertising and unfair competition laws. Chiding plaintiffs’ counsel, the court noted that “Information fundamental to class certification and settlement, such as the size of the class and amount of the award, has not been provided.” The court also ruled that “the parties should ensure the notice and summary of notice, in clear and plain language, communicates to class members their rights and responsibilities under the proposed settlement.” Walter v. Hughes Communications Inc., No. 09-2136 (N.D. Cal.).
• On February 3, 2011, the United States Court of Appeals for the Fourth Circuit affirmed the North Carolina Utilities Commission’s and federal district court’s rulings that AT&T North Carolina did not breach its interconnection agreement (ICA) with dPi Teleconnect. dPi, a reseller of prepaid retail telephone services, sought promotional credits for the Line Connection Charge Waiver, which AT&T denied based on language in the parties’ ICA that “promotions will be made available only to end users who would have qualified for the promotion had it been provided by [AT&T] directly.” AT&T had submitted unrebutted testimony that only customers purchasing certain features qualified for the promotion, whereas dPi argued that its customers qualified because several charge-per-use features were blocked. Rejecting dPi’s argument, the court of appeals concluded that “the promotion refers to “‘purchase[d]’ features – not the costless deactivation of charge-per-use features.” dPi Teleconnect LLC v. Owens, Nos. 07-2066, et al. (4th Cir.).

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

Legislative Outlook

• Senator Harry Reid, D-Nev., has introduced S. 21, the Cyber Security and American Cyber Competitiveness Act of 2011, which states that “Congress should enact, and the President should sign, bipartisan legislation to secure the United States against cyber attack, to enhance American competitiveness and create jobs in the information technology industry, and to protect the identities and sensitive information of American citizens and businesses.” The bill has 11 co-sponsors, including Senator John (“Jay”) Rockefeller IV, D-W.Va., Chair of the Senate Commerce Committee, and has been referred to the Senate Committee on Homeland Security and Governmental Affairs.

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

Upcoming Events

• The Federal Communications Bar Association is hosting a luncheon with Commissioner Michael Copps tomorrow, February 15, 2011. For more information or to register, click here.
• The CompTel PLUS Spring Convention will be held March 20-23, 2011, in Las Vegas. For further information or to register, click here.
• The Federal Communications Bar Association’s 2011 Annual Seminar is scheduled for April 29-May 1, 2011, at the Nemacolin Woodlands Resort in Farmington, Pennsylvania. For more information or to register, click here.

Please contact Stephanie Joyce or Marcia Durkin (contact information below) for further information.

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