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

• On February 1, 2012, FCC Chairman Julius Genachowski and Secretary of Education Arne Duncan spoke at the first-ever Digital Learning Day Town Hall in Washington, DC. The Digital Textbook Collaborative presented them with the “Digital Textbook Playbook”, which is “a blueprint to help transition American schools to digital textbooks.” Chmn. Genachowski announced that he will meet with several CEOs in the digital learning industry to discuss how to ensure nationwide adoption of digital textbooks within the next five years. To read the Fact Sheet on the Town Hall event, 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 Calling Party Number and the Charge Number information 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 (1) in some cases when CenturyLink is acting as a long-distance carrier, and 2) in two cases in which CenturyLink 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.

• The FCC will hold its next Open Meeting on February 15, 2012, at 10:30 am Eastern. The Tentative Agenda contains three items: a Report and Order adopting rules for “robocalls”; a Notice of Proposed Rulemaking on streamlining cellular service licensing rules; and a Report and Order on outage reporting requirements for interconnected Voice-over-Internet Protocol (VoIP) service. To view the Tentative Agenda, click here.
• Reply Comments on the FCC Notice of Proposed Rulemaking on Next-Generation 911 (NG911) service are due February 9, 2012. To view the Federal Register notice on the NPRM, click here. To read the NPRM, click here. To view the order granting requests for extension, click here.

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

The Mobile Market

• The House has passed the Federal Aviation Administration (FAA) reauthorization bill that would require the agency to prepare and submit to Congress a report on the impact of mobile phone use during flight. The FAA would have 120 days to draft the report, which would then be published in the Federal Register for public comment. Currently, 23 foreign airlines allow passengers to make mobile phone calls during flight. The FCC had initiated a proceeding in 2007 to consider authorizing the use of cell phones on planes, but subsequently terminated the proceeding without action, citing a lack of necessary data. The reauthorization bill also would restrict the use of wireless communication devices and laptops by aircraft crew members, including pilots, except for work purposes. That restriction was spurred by a 2009 incident in which two Northwest Airlines pilots said they had their laptops on when they flew 150 miles past their intended destination, the Minneapolis-St. Paul International Airport.
  
  The Senate is schedule to vote the reauthorization bill today.
• Rep. Edward J. Markey, D-Mass., Co-Chair of the Bi-Partisan Congressional Privacy Caucus, released draft legislation last week called the “Mobile Device Privacy Act”, which would require “express consent” before monitoring software could be activated on a person’s mobile phone. The legislation was drafted in response to reports that Carrier IQ software, which is found on many smartphones, can relay information about the user’s calling and online activities. T-Mobile, AT&T, and Sprint Nextel have admitted to using Carrier IQ software to improve service for their customers, but each has denied using it to track their customers’ behavior. In announcing the bill, Rep. Markey stated, “Consumers have the right to know and to say no to the presence of software on their mobile devices that can collect and transmit their personal and sensitive information.” The bill would require the FTC to consult with the FCC in developing the implementing regulations. The draft bill is available here.

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

Federal Trade Commission (FTC) and Privacy Regulation

• In response to Google’s recent announcement that it will combine the privacy policies and data from over 60 different Google products and services, eight members of Congress wrote to Google asking it to explain the “steps [that] are being taken to ensure the protection of consumers’ privacy rights.” The letter includes 11 questions ranging from the ways in which Google collects information to how the change will impact Android phone users. The products and services at issue include Gmail, Google+, Youtube, and the Android mobile operating system. The congressional letter can be found here.
  
  On January 31, 2012, Google responded, defending its decision by stating that its approach to privacy has not changed, that users still have control over how they use the company’s various online services, and that private information remains private. Google’s response can be found here (you may need to enable Google Docs first).
• On February 1, 2012, the FTC entered into a settlement with entities that marketed prepaid calling cards to immigrants. The defendants agreed to pay $2.32 million in order to resolve charges that they made false claims to consumers about the number of minutes of talk time their prepaid calling cards would deliver. The settlement is part of an ongoing FTC effort to address deceptive advertising and marketing practices in the prepaid calling card industry, which sells billions of dollars worth of cards a year, many of them to immigrants. More information is available here.

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

New Markets: SmartGrid and E-Health

• The Institute of Medicine and the National Academy of Engineering have announced their second annual contest aimed at encouraging undergraduate and graduate students to create health-related mobile applications. The contest has a total of $18,000 in prizes. The team that designs the best app will receive a $10,000 prize and the opportunity to demonstrate their app during the plenary session of Health Datapalooza to be held June 5-6, 2012, in Washington, D.C. Additional eligibility criteria and terms are described 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 1, 2012, Sprint Communications Company L.P. filed a letter with the New York Public Service Commission objecting to the new intrastate switched access tariff submitted by XO Communications Services. Sprint asserts that XO’s tariff applies standards to Voice-over-Internet Protocol (VoIP) traffic terminating on XO’s network that are different from the standards it applies to VoIP calls originating on XO’s network and sent to other carriers. Sprint argues that the FCC’s recent Intercarrier Compensation Reform Order requires carriers to treat originating and terminating VoIP traffic equally, but that XO’s tariff favors VoIP traffic originated on XO’s network by mandating that other carriers submit a Percentage VoIP Usage factor within fifteen days of receiving VoIP traffic from XO. In its letter objecting to XO’s tariff, Sprint stated that it “agrees with Verizon that XO’s tariff revisions are at best ambiguous, and at worst outright contrary to the FCC order.” Verizon had also challenged XO’s VoIP tariff language on January 25, 2012, asserting that the tariff gives XO unilateral authority to jurisdictionalize VoIP traffic. Docket Nos. 12-00054, 12-00056.

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

• Under the FCC’s new access tariff rules adopted November 18, 2011 (FCC 11-161), see December 5 client alert here, all local exchange carriers (LECs) that trigger the “access stimulation” criteria are required to cap their switched access rates to the lowest incumbent carrier in the LEC’s service area. Affected LECs are required to update their federal switched access tariff rates by February 13, 2012.
  
  A copy of FCC 11-161 may be found here (WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-45; and WT Docket No. 10-208).
• 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. 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 regarding CPNI.
  
  The FCC encourages companies 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. Certificates also may be filed in hard copy with the Secretary’s office.
• 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 January 31, 2012, the FCC announced several changes to the Lifeline program, including a “Broadband Adoption Pilot Program” to ensure broadband availability for low-income Americans. In addition to several changes designed to reduce waste and save $200 million, the Broadband Pilot Program will use up to $25 million of the savings to test how Lifeline can increase broadband adoption among Lifeline-eligible consumers. It will also aim to increase digital literacy and allow bundling of voice and broadband packages. Commissioner McDowell dissented to the item based on its reliance on Section 706 as authority to make the changes to Lifeline and creating pilot programs without first reducing the costs.
  
  Chairman Genachowski praised the changes and highlighted the need to expand the availability of broadband. The changes to Lifeline are outlined here. Commissioner McDowell’s statement is available here. Chairman Genachowski’s statement is available here.
• On February 15, 2012, the FCC is participating in a series of workshops at the Washington D.C. Convention Center focused on broadband tools for small businesses. Commissioner Clyburn will speak. The workshops are being hosted by OCBO and the E-Business Now Consortium, the Small Business Administration, the Service Corps of Retired Executives, and the Maryland Hispanic Chamber of Commerce. 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 January 31, 2012, a New York appeals court affirmed a trial court’s sanctions against EchoStar Satellite for its failure to preserve documents relating to Cablevision’s $2.5 billion breach-of-contract action against it. The appellate court agreed that EchoStar’s duty to preserve relevant emails and other records arose once it threatened to terminate its contract with Cablevision, which made a lawsuit foreseeable, and certainly once Cablevision filed the suit. EchoStar was deemed grossly negligent for failing to issue the litigation hold until four months after litigation began. The court also affirmed the “adverse inference” sanction against EchoStar, which essentially allows the trial court to instruct the jurors that EchoStar’s now-missing evidence was going to be harmful to EchoStar’s case. As the Court of Appeals noted, “Although [Cablevision] may have other evidence to point to, the missing evidence is from a crucial period during which EchoStar appears to have been searching for a way out of its contract.” Voom HD Holdings LLC v. EchoStar Satellite LLC, No. 600292-2008 (N.Y. S. Ct., App. Div.).
• On February 1, 2012, the Second Circuit Court of Appeals held – for the third time, and despite the Supreme Court’s recent decisions in Stolt-Nielsen and Concepcion – that American Express’s no-class-suit-or-arbitration clause in its merchant agreements is not enforceable because it would effectively preclude claimants’ ability to obtain relief. The court distinguished the Supreme Court decisions, stating “It is tempting to give both Concepcion and Stolt-Nielsen such a facile reading, and find that the cases render class action arbitration waivers per se enforceable. But a careful reading of the cases demonstrates that neither one addresses the issue presented here: whether a class-action arbitration waiver clause is enforceable even if the plaintiffs are able to demonstrate that the practical effect of enforcement would be to preclude their ability to vindicate their federal statutory rights.” The plaintiffs had provided expert proof from an economist that no sensible plaintiff or competent attorney would prosecute the antitrust claim at issue against American Express as an individual claimant, which American Express did not rebut. In re American Express Merchants’ Litigation, No. 06-1871.

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

Legislative Outlook

• On February 8, 2012, the House Communications Subcommittee will hold a hearing titled “Cybersecurity: Threats to Communications Networks and Private-Sector Responses” at 9:30 am Eastern in Room 2322 of the Rayburn House Office Building. For more information, click here.
• On January 31, 2012, Senator John “Jay” Rockefeller IV, D-W.Va., Chair of the Senate Commerce Committee, spoke to the Senate Intelligence Committee on the importance of federal cybersecurity legislation. He stated that “Congress needs to act on comprehensive cybersecurity legislation immediately. We can and should create a public-private partnership to combat cyber-attacks.” To read the full 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.