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 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 tomorrow July 12, 2011, at 10:30 am Eastern. The final Agenda contains the same three items previously noticed: a Notice of Proposed Rulemaking on the impact of the Local Community Radio Act on low-power FM licensing; a Notice of Proposed Rulemaking on "cramming"; and a Report and Order on E911 location information. To view the tentative Agenda, click here.
• The FCC is seeking nominations for persons to serve on the Open Internet Advisory Group which was created by the Open Internet Order adopted in December 2010. Nominations are due September 1, 2011. For more information, click here.

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

The Mobile Market

• eBay, Inc. has announced plans to acquire Zong, a mobile payments company, for $240 million in cash in a transaction that is expected to close in the third quarter of this year. Zong has been a pioneer in the mobile payments space, allowing consumers to pay for goods online via direct billing through a mobile phone bill. The company has partnered with over 250 carriers worldwide to offer the technology to mobile phone users. eBay has stated that Zong will add 'complementary technology and talent' to its PayPal division, giving consumers more ways to pay for virtual goods and products online. Zong was founded in 2008 by entrepreneur David Marcus.
• An associate professor of law at Stanford University has called on the FCC to reclassify a restricted proceeding involving the practice of Verizon Wireless to require Google, Inc. to deactivate "tethering" applications on their Droid smartphones. Tethering applications allows users to use laptops or other devices over their mobile Internet connection by attaching them to their smartphones. The complaint, which was filed in June by the public advocacy group Free Press, alleges that Verizon violated Open Internet conditions that are imposed on 700 megahertz band C-block licenses. By making the proceeding a permit-but-disclose proceeding, rather than its current "restricted" status, the FCC would be able to hear from other interested parties, rather than just Free Press and Verizon Wireless. "Verizon Wireless's practice and Free Press's complaint raise fundamental issues of Internet openness policy," said Professor Barbara van Schewick said. "While only two parties are named in the complaint proceeding, the outcome of the proceeding will have a far-reaching impact on many businesses, innovators, and users in the Internet ecosystem."
  
  To read Professor van Schewick's full letter to the FCC, click here.

Federal Trade Commission (FTC) and Privacy Regulation

• The social network gaming company Zynga, which created games such as "Farmville", has introduced an innovative way of explaining its privacy policies in a new game called "Privacyville". The game takes about 5 minutes to explain how Zynga uses information, and provides other privacy-related information as well.
• On June 29, 2011, the public interest group Consumer Watch filed an antitrust complaint against Facebook at the FTC alleging that Facebook's new policy of requiring all games to use Facebook Credits is anticompetitive. As of July 1, 2011, Facebook is requiring all purchasers of virtual games via Facebook to use Facebook Credits. Consumer Watch alleges that "game developers using the Facebook platform must exclusively utilize Facebook Credits in the operation of their games; such developers must agree not to charge lower prices to consumers outside of Facebook; and game developers must pay a 30% service fee for all Facebook Credits purchases." The complaint may be found here.
• The FTC and the Department of Justice Office for Victims of Crime will host "Stolen Futures: A Forum on Child Identity Theft," tomorrow, July 12, 2011, at the FTC Conference facility at 601 New Jersey Avenue N.W., Washington DC, 20001. The forum will run from 8:30 am to 5:00 pm Eastern, and according to the tentative agenda will feature several guest speakers, including Kathleen Styles, Chief Privacy Officer of the U.S. Department of Education. For more information, click here. To view the agenda, click here.
• Comments on the FTC report titled "Dot Com Disclosures: Information About Online Advertising" are due today, July 11, 2011.
  
  A copy of the Staff Invitation for comments on the Dot Com Disclosure Business Guidance Publication can be found here.
  
  A copy of the FTC's 2000 guide, "Dot Com Disclosures," can be found here.
  
  Interested parties may be submit comments electronically here.

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

Developments in Intercarrier Compensation

• On June 29, 2011, the Colorado Public Utilities Commission (CPUC) denied the motion of Qwest Corp. and CenturyLink, Inc. to dismiss a complaint filed by Eschelon Telecom of Colorado, Inc., d/b/a Integra Telecom. Integra alleges that Qwest and CenturyLink are not complying with conditions contained in a multi-state merger settlement agreement related to the carriers' Operational Support Systems (OSS). Integra had asserted in a letter to the CPUC that Qwest announced to CLECs in its service territory that it plans to retire and replace its OSS for repairs with a new repair system before the end of 2011, despite the fact that the terms of the settlement agreement require Qwest to use and offer the legacy Qwest OSS for a two-year period. Qwest and CenturyLink moved to dismiss the action on the ground that the letter could not properly be converted into a formal complaint. The CPUC, however, rejected that argument, stating that "Qwest/CenturyLink certainly understood this to be the key issue" in Integra's letter to the Commission and put the carriers on notice of their alleged violations of the merger agreement. The CPUC also established a prehearing conference for tomorrow, July 12, 2011. Docket Nos. 10A-350T and 11F-436T.

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

• FCC Form 499-Q is due August 1, 2011 for all filers that are not considered to be de minimis for Universal Service filing purposes. This filing encompasses historical revenues from the second quarter of 2011 and projected revenues for the fourth quarter of 2011. A copy of the current FCC Form 499-Q can be found here.
• Carriers certified in California having gross annual intrastate revenues exceeding $750,000 are required to submit their quarterly PUC User Fee by July 15, 2011. Gross intrastate revenues exclude inter-carrier sales, directory listings, and equipment sales. More information on this filing may be found here.
• The Universal Service contribution factor for the Third Quarter of 2011 is 14.4%. A copy of the notice can be found here.
• Carriers that provided service between the United States and foreign points in the 2010 calendar year are required to file their annual International Traffic Data report by July 31, 2011. Carriers required to file this report include resellers that bill for international service that was handled by an underlying carrier. Information regarding this filing, including past reports and the filing manual, may be found here.
• Carriers that are certified in California and have annual gross intrastate revenues in excess of $750,000 are required to pay the California Public Utilities Commission's Annual User fee on a quarterly basis. The filing for the second quarter of 2011 is due July 15, 2011. More information on this filing may be found here.
• Voice over Internet Protocol (VoIP) providers and Commercial Mobile Radio Service (CMRS) providers who rely on traffic studies to report interstate revenues on FCC Form 499-Q must submit these studies by August 1, 2011 to the Universal Service Administrative Company (USAC) and the Chief, Industry Analysis and Technology Division of the FCC. The instructions to Form 499-A, which lists filing deadlines at page 5, can be found here.
• Quarterly financial reports and Performance Progress Reports (PPR) for Broadband Technology Opportunities Program (BTOP) grant recipients are due July 30, 2011 for the second quarter of 2011.
  
  The quarterly Performance Progress Reports for Broadband Sustainability Projects can be found here.
  
  The quarterly Performance Progress Reports for projects involving Public Computer Centers can be found here.
  
  The quarterly Performance Progress Reports for Broadband Infrastructure Projects can be found here.

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

Broadband News

• On July 7, 2011, two notices were issued in the Federal Register related to the FCC's Open Internet Order, which could signal that the Order itself will be published in the Federal Register soon. The FCC seeks comment on the burden of the transparency requirement in the Open Internet Order, specifically the burden of disclosing "accurate information regarding the network management practices, performance, and commercial terms of their broadband Internet access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings." The FCC also seeks comment on the burden associated with the complaint procedure established for violations of the order. Comments on both issues are due August 8, 2011. The notice regarding the transparency requirement is available here. The notice regarding complaint procedures is available here.
• The Columbia Institute for Tele-Information (CITI) has released an update to its "Broadband in America" report, the first edition of which was released in November 2009. The update confirms many of the conclusions of the first edition, and further found that broadband providers expect to serve 95% of the population in all, with advertised speeds of 50 Mbps downstream to 90% of users. The update also predicts 4G wireless coverage for the majority of Americans by 2013. The report can be found here.

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

In the Courts

• On July 7, 2011, the United States Court of Appeals for the Third Circuit held that the FCC must revisit its 2008 order that lifted a ban on companies owning newspaper and broadcast stations in the same market. The appeals court found that the "procedures followed by the Commission were irregular" and did not comply with the Administrative Procedures Act (APA), in that interested parties were not given adequate notice and opportunity to comment. The court did not reach the merits of the rules, but instead remanded the issue to the agency for further proceedings that should follow the APA. The court also, however, denied the appeal challenging the FCC's rules limiting cross-ownership of radio and television stations. With respect to that aspect of the FCC's rules, the court concluded that the "FCC plausibly justified its position that diversification of ownership would enhance the possibility of achieving greater diversity of viewpoints." The court likewise rejected the media companies' challenge to the media-ownership rules on First and Fifth Amendment grounds, finding that the FCC's rules satisfy the applicable constitutional test under First Amendment jurisprudence. Prometheus Radio Project v. FCC, Nos. 08-3078 et al. (3d Cir.).
• On July 1, 2011, the United States District Court for the Western District of Kentucky issued another ruling in the suit between TracFone Wireless and the Kentucky Commercial Mobile Radio Service Emergency Telecommunications Board over whether, in what manner, and for how long TracFone should have collected and paid state-mandated service fees to the Board. After ruling in August 2010 that TracFone owes the fees on its resale and prepaid customers, the court now has ruled that TracFone is entitled to choose the method for collecting the fee from among the statute's three choices, stating "[e]ven after the Board promulgates regulations under Option C, three options should remain under the terms of the statute." In a blow to TracFone, however, the court agreed with the Board that "none of its actions to date estop it from now requiring TracFone to remit the past payments that the statute required." The court concluded that TracFone owes fees back to 2006, because "[e]ven though the CMRS Board initially failed to follow the procedures which this Court has ultimately required, that failure is not sufficient reason to conclude that TracFone can escape the broad statutory mandate." The court gave the Board until July 18, 2011 to submit its motion for a specific judgment amount, including any requests for interest and attorneys' fees. Kentucky Commercial Mobile Radio Serv. Emergency Telecomms. Bd. v. TracFone Wireless, Inc., No. 3:08-cv-660-H (W.D. Ky.).
• On June 30, 2011, the Court of Appeals of Michigan affirmed a Michigan trial court's grant of summary judgment to Genoa Township and Verizon Wireless, among others, in a case brought by condominium owners seeking to enjoin the Township from allowing Verizon Wireless to install an antenna on top of the water tower in their complex. The homeowners argued that the developer's original deed allowing installation of the water tower, which labeled the easement an "Easement for Public Utilities (Water Tower Easement)", did not extend to the facilities Verizon sought to erect on the tower. The court of appeals concluded that "[b]ased on the plain and unambiguous language in … the deed," the relevant easement "includes utilities for telephone and telecommunications systems and their supporting equipment." The court also dismissed the owners' argument that the tower was not designed for the primary benefit of the owners, concluding that the deed did not turn on "whether the tower and accessory building are necessary for the benefit of the [condominium complex]." Copeland v. Genoa Township, No. 301442 (Mich. Ct. App.).

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

Legislative Outlook

• The full Senate Commerce Committee will hold a hearing titled "Unauthorized Charges on Telephone Bills: Why Crammers Win and Consumers Lose" on July 13, 2011, at 10:00 am Eastern in 253 Russell Senate Office Building. For more information, click here.
• Rep. Bono-Mack, R-Cal., and Rep. Greg Walden, R-Ore., are spearheading this Congress's review of privacy issues at the request of House Commerce Committee Chair Fred Upton, R-Mich., and have announced a series of hearings to begin with a session on July 14, 2011, titled "Internet Privacy: The Views of the FTC, the FCC, and NTIA." For more information about this initiative, click here.
• Rep. Fred Upton, R-Mich., Chair of the House Commerce Committee, and Rep. Greg Walden, R-Ore., Chair of the House Communications Subcommittee, have issued a joint statement regarding the FCC's submission of the Open Internet Order to the Office of Management and Budget. They state that "The House has already disapproved these rules and now we are one step closer to review of these job-crushing regulations by the Senate and the courts." To view the full statement, click here.
• The House Judiciary Committee has approved HR 966, the Lawsuit Abuse Reduction Act, by a 20-13 vote. The bill would require, among other things, monetary sanctions against attorneys found to have filed frivolous claims, and removes the 21-day window to withdraw claims after a motion for sanctions has been filed. To view the bill, click here.

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

Upcoming Events

• Jeffrey Rummel, a Partner in our Group, will speak at the 8th Military Antennas Summit held by the Institute for Defense & Government Advancement September 12-15, 2011, in Washington, DC. For more information, click here.

Please contact Stephanie Joyce or Jeffrey Rummel (contact information below) for further information.

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