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: SmartGrid 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 March 21, 2012, at 10:30 am Eastern. We will provide the Tentative Agenda when it has been released.
• At its Open Meeting held February 15, 2012, the FCC adopted rules for “robocalls”. To read the Arent Fox summary of the order, click here.
• Comments on the CenturyLink Petition for Waiver from portions of the FCC Intercarrier Compensation/Universal Service Reform Order (FCC 11-161) are due February 29, 2012, and Reply Comments are due March 15, 2012. The Order establishes rules designed to eliminate “Phantom Traffic” — telephone traffic that lacks information necessary for carriers to determine how that traffic is classified — and determines what intercarrier charges apply to it. Specifically, it requires that carriers include the Calling Party Number, and the Charge Number if it is different, whenever they hand off a call to another carrier. On January 23, CenturyLink filed a Petition for Limited Waiver, asking to be exempted from these requirements when (1) it is acting as a long-distance carrier, and 2) it uses Multi-Frequency signaling instead of SS7. A copy of the petition can be found here. The Public Notice announcing the comment deadlines can be found here.

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

The Mobile Market

• At its February Open Meeting, the FCC also approved a Notice of Proposed Rulemaking and Order (NPRM) aimed at modernizing its cellular licensing rules by transitioning from site-based to geographically-based licensing. According to the Commission, “The proposal for a geographically-based model would bring the Cellular Service into harmony with more flexible licensing schemes used successfully by other similar mobile services, such as PCS, the 700 MHz Service, and AWS.” In the NPRM, the FCC imposes “a freeze on the filing of certain Cellular applications while establishing interim procedures for currently pending applications.” Comments are due 60 days after the NPRM is published in the Federal Register, and replies are due 30 days later. Comments should be filed in WT Docket No. 12-40. The NPRM is available here.
• On February 15, 2012, President Obama signed the Federal Aviation Administration reauthorization bill into law. The new law requires the agency to conduct a study on the impact of mobile phone use for voice communications on foreign airlines during flight and submit a report to Congress. Arent Fox released a Legislative Alert on the final version of the bill, available here.
• Google received approval last week from both the European Commission and the U.S. Department of Justice to acquire Motorola Mobility. Both agencies determined that the merger will not significantly change the markets for operation systems and patents for smartphones and tablets, despite the significant patent portfolio that Google will acquire as a result of the transaction. Both agencies also indicated, however, that they will continue to examine the results of the transaction and to ensure that Google fulfills its commitments to make certain patents available to third parties on fair and reasonable terms. They also indicated that they anticipate that Google will continue to make its Android operating system available to other device manufacturers, which will minimize the merger’s effects on competition in the device market.

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

Federal Trade Commission (FTC) and Privacy Regulation

• On February 16, 2012, the FTC issued a report titled “Mobile Apps for Kids: Current Privacy Disclosures Are Disappointing”. The report finds widespread failure among app stores and app developers to provide information to parents about the collection and use of children’s data. The report also notes that there are currently more than 500,000 apps in the Apple App Store and 380,000 in the Android Market, and that young children and teens are increasingly using smartphones for entertainment and educational purposes. The report recommends that apps provide simple, short disclosures about their information collection and use practices, and that app stores assume greater role in providing information about the apps that they sell. Finally, the report warns that over the next six months, FTC staff will conduct an additional review of the mobile app marketplace to determine whether some apps are violating the Children’s Online Privacy Protection Rule. The full report is available here.

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

New Markets: SmartGrid and E-Health

• On February 1, 2012, the California Public Utilities Commission (CPUC) approved a smart meter opt-out plan proposed by PG&E in response to numerous customer complaints regarding the potentially harmful effects and data privacy issues allegedly caused by smart meters. The plan will allow customers, for any reason, to opt out of receiving a smart meter or to have their current smart meter replaced with an older analog meter. Many in the industry see such opt-out plans as a step back for smart grid implementation. Customers electing to opt out will pay an initial fee of $75.00 and a monthly charge of $10.00 to cover PG&E’s added costs for replacement and physical meter reading. The CPUC’s order 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 has 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.
• Applications for the Department of Energy (DOE) “Smart Grid Data Access” Funding Opportunity Announcement (FOA) are due March 1, 2012. DOE will provide up to $8 million to promote partnerships between utilities and third-party technology innovators for the development and implementation of applications that provide access to electricity consumption data. More information is available here.

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

Developments in Intercarrier Compensation

• On February 10, 2011, the Washington Utilities and Transportation Commission (WUTC) denied a joint petition for reconsideration filed by Pac-West Telecomm, Inc. and Level 3 Communications, LLC in a consolidated complaint proceeding against Qwest. Pac-West and Level 3 filed complaints against Qwest in 2005 alleging that it was violating the parties’ interconnection agreements (ICAs) and the FCC’s intercarrier compensation rules for ISP-bound traffic by refusing to pay reciprocal compensation for the “Virtual NXX” (VNXX) ISP-bound traffic that Qwest customers originated and Pac-West or Level 3 then terminated. In 2006, the WUTC initially ruled that Qwest was required to pay reciprocal compensation for such traffic, without regard to whether such calls were considered local or interexchange. Qwest, however, appealed that decision to the United States District Court for the Western District of Washington, which remanded the case back to the WUTC in 2007 and directed it to classify VNXX ISP-bound traffic as either within or without a local calling area under the FCC’s analysis in the ISP Remand Order.
  
  In its final order following the remand and again in its order denying reconsideration, the WUTC found that Pac-West and Level 3 are entitled to neither reciprocal compensation nor the rate established in the FCC’s ISP Remand Order for intrastate VNXX ISP-bound traffic. Specifically, the WUTC determined that the FCC’s orders address only compensation for traffic within a local calling area, and not intrastate, interexchange traffic. The WUTC found that states retain authority under Section 251(g) of the Telecommunications Act to apply access or toll charges to intrastate interexchange traffic. Further, the WUTC determined that the parties’ ICAs do not require Qwest to compensate Pac-West or Level 3 for the VNXX traffic under either the FCC’s ISP-bound traffic rate or Section 251(b)(5) of the Act. Rather, the WUTC determined that the parties’ ICAs likely require the LECs to pay Qwest originating access charges for this interexchange traffic. Docket Nos. UT-053036 and UT-053039.

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, 2012. 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. The FCC’s Enforcement Bureau issued a Public Notice reminding carriers and other entities of the filing requirement on February 16, 2012, which may be found here.
  
  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 2011 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 the FCC’s web-based application, which can be found here. Filers may also file certificates in hard copy through the Secretary’s office. (DA 12-170, Enforcement Advisory No. 2012-01).
• The Local Competition and Broadband Report, commonly known as FCC Form 477, is also due on March 1, 2012. This filing applies to: facilities-based providers of broadband connections to end user locations; providers of wired or fixed wireless local exchange telephone service; providers of interconnected Voice over Internet Protocol (interconnected VoIP) service (including both service retailers and service wholesalers); and facilities-based providers of mobile telephony service. FCC Form 477 collects data concerning broadband connections to end user locations, wired and wireless local telephone services, and interconnected Voice over Internet Protocol (VoIP) services, in individual states and territories, which will be used to describe competition for local telecommunications services and broadband deployment. Filers must report data as of December 31, 2011. More information about FCC Form 477, including filing instructions, may be found here and here.
  
  Filers must use 2010 Census Tract Data in this filing. The Public Notice describing this requirement can be found here. (DA 11-1937, WC Docket No. 07-38)
• The Universal Service contribution factor for the First Quarter of 2012 is 17.9%. A copy of the notice can be found here.

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

Broadband News

• On February 13, 2012, both the Obama Administration and FCC unveiled budgets in which broadband played important roles. The FCC is requesting $346.8 million to support strategic goals that include “[m]aximiz[ing] Americans’ access to — and the adoption of — affordable fixed and mobile broadband where they live, work, and travel.” The budget request notes that “Our country faces a number of significant challenges and opportunities for which communications — and broadband Internet in particular — play an essential role: our economy, education, health care, energy, and public safety, to name a few. If we can harness the power of broadband to tackle these challenges and seize these opportunities, we will make a positive difference in the lives of this and future generations.” The Obama Administration’s budget also identifies broadband as an important goal, identifying the construction of “a next-generation, wireless broadband network for public safety users” that “is fully paid for, and the sale of spectrum provides nearly $21 billion for deficit reduction.” In other words, the budget again proposes legislation for voluntary incentive auctions to free up spectrum. The FCC’s budget request is available here. The Obama Administration’s budget 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 February 10, 2011, the United States Court of Appeals for the Eleventh Circuit certified to the Georgia Supreme Court the following question in MCI’s lawsuit against CMES, Inc.: “Under Georgia law, may a telecommunications service provider whose cable is severed recover loss-of-use damages measured by the rental value of substitute cable when it has not rented such cable or otherwise incurred any monetary loss apart from the cost of repair?” CMES had severed one of Verizon’s underground fiber-optic cables while performing excavation work. Although some customers had complained, “MCI did not issue any customer refunds or credits, lose any customers, or lose any profits. MCI also did not rent substitute capacity from any other carrier.” Verizon sued CMES for alleged loss-of-use damages, which it valued at over $350,000. The trial court rejected the claim as a matter of law, and the appellate court, finding the question unsettled under Georgia law, certified it directly to the Georgia Supreme Court. MCI Commc’ns Servs. v. CMES, Inc., No. 11-12807.

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

Legislative Outlook

• As we reported last week, the House Communications Subcommittee held a hearing on the FCC’s budget on February 16, 2012. Subcommittee Chair Greg Walden, R-Ore., began the proceedings with remarks, stating “It is high time someone looked at how the Commission spends money outside of the yearly appropriations process.” Chairman Genachowski’s written testimony began by noting “the FCC creates tremendous value for our economy and the American people.” David Hunt, Inspector General for the FCC, and Scott Barash, CEO of the Universal Service Administration Company, also testified. All written statements and testimony are available here.
• The payroll tax compromise reached last week includes provisions to fund a nationwide public safety network and to authorize new spectrum actions, drawing praise from House Commerce Committee Chair Fred Upton, R-Mich., and Subcommittee Chair Greg Walden, R-Ore., who issued a joint statement that “With 13 million Americans still seeking employment, job creation is a driving force behind efforts to expand wireless broadband. … The hundreds of thousands of jobs that are created as a result will be an economic game-changer.” To read the full statement, click here.
• Senator John “Jay” Rockefeller IV, D-W.Va., Chair of the Senate Commerce Committee, also issued a joint statement with several other Senate democrats praising the payroll tax deal struck with the House. He stated that “This agreement will allow us to build a nationwide, interoperable communications network that is as reliable as the first responders that protect us. It will quite literally save lives.” To read the full joint statement, click here.

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

Upcoming Events

• The Federal Communications Bar Association will hold its 7th Annual Privacy and Data Security Symposium, together with the ABA Communications Law Forum, on March 21, 2012, from 2:00 to 6:00 pm Eastern at Arnold & Porter LLP, 555 12th Street NW, Washington, DC. CLE credits will be available. 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.