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 next FCC Open Meeting will be July 15, 2010, at 10:30 a.m. Eastern. The final agenda, available here, lists the same three items previously noticed, including the Notice of Proposed Rulemaking regarding rural health care reform, and the Notice of Inquiry and Notice of Proposed Rulemaking regarding spectrum flexibility in satellite services.
• The FCC will hold a public forum on the NBC Universal-Comcast merger tomorrow, July 13, 2010, from 1:00 p.m. to 8:00 p.m. Central at Northwestern University Law School. The Media Bureau has released an agenda for the event, available here.
• On July 26 and 27, 2010, the FCC and the Food and Drug Administration (FDA) will hold a public meeting on the “Impact on Regulation of Converged Communications and Health Care Devices” as part of the National Broadband Plan’s recommendation to use the power of broadband to improve health care. The meeting is scheduled for 8:00 a.m. to 5:30 p.m. each day in the FCC Commission Room, located at 445 12th Street, SW, Washington, DC.

Federal Trade Commission (FTC) Developments

• A number of child advocacy groups have filled comments at the FTC in response to its request for comment on its Children’s Online Privacy Protection Act (COPPA) rules. In their comments, the advocacy groups request that the FTC place new restrictions on children’s online activities. Specifically, the groups urge the FTC to expand the COPPA rules to include video game consoles (including online environments), mobile phones, and interactive television. The groups also urge the FTC to broaden the definition of prohibited personal information to include data such as zip codes, IP addresses, gender, and other pieces of information that are used to track customer behavior. Comments are due July 12, 2010. Docket P104503, COPPA Rule Review. To view the FTC public notice, click here.

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

Developments in Intercarrier Compensation

• On July 8, 2010, the Kentucky Public Service Commission (KY PSC) directed Brandenburg Telephone Company to refund to AT&T Kentucky overcharges related to terminating wireline and wireless traffic. In a complaint proceeding initiated in 2006, AT&T alleged that it had previously remitted payment to Brandenburg based upon its own netting calculations of the traffic exchanged between the carriers from 1985 to 1998. In 1998, however, Brandenburg implemented its own carrier access billing systems (CABS) process and thereafter billed AT&T directly. AT&T nevertheless continued to remit payment to Brandenburg under the carriers’ previous arrangement until 2004, when it discovered it had been making double payments for six years. Upon discovery, AT&T demanded repayment for all overcharges made since 2002, which Brandenburg refused to do. AT&T demonstrated during the proceeding that Brandenburg inquired into AT&T’s continued payments when Brandenburg instituted its own CABS billing, but did not object when AT&T finally ceased making separate payments. “Such behavior is puzzling if Brandenburg believed it was entitled to payment through” the old payment process, said the KY PSC in its ruling. The KY PSC ordered Brandenburg to refund a confidential amount of overcharges to AT&T. Docket No. 2006-00546.

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

Compliance Notes

• FCC Form 499-Q is due August 1, 2010 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 2010 and projected revenues for the fourth quarter of 2010. A copy of the current version of the form can be found here.
• Carriers providing international services, including those providing service via resale, are required to make their annual Section 43.61 International Traffic Data and associated revenue filing by July 31, 2010. A copy of the Commission’s Manual for Filing Section 43.61 International Traffic Data can be found here. The FCC also has set up a webpage to assist carriers with this filing which is available here.
• On June 28, 2010, the Universal Service Administrative Company (USAC) issued a reminder to service providers that receive Universal Service Fund (USF) support that all payments will be made by electronic funds transfer starting August 31, 2010. This requirement was mandated by the Wireline Competition Bureau in Public Notice DA 10-270, released on June 2, 2010. Providers must confirm that USAC has electronic banking information on file or payments will be withheld. Providers may update or add electronic banking information with USAC by filing FCC Form 498, available here, via USAC’s electronic filing system. Providers that have questions may contact USAC’s Customer Operations as (888) 641-8722 or may e-mail customersupport@usac.org.

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

Stimulus This Week

• On July 2, 2010, President Barack Obama, along with Secretary of Agriculture Tom Vilsack and Secretary of Commerce Gary Locke, announced the funding of 66 broadband projects under the American Recovery and Reinvestment Act (ARRA). These projects are expected to create approximately 5000 jobs. Thirty-seven projects in twenty-three states will be funded through the Broadband Initiatives Program (BIP) administered by the Rural Utilities Service (RUS). These projects will receive approximately $391 million in grants and loans under BIP. Specific information about the projects selected for funding may be found here.
• Another twenty-nine projects will be funded under the Broadband Technology Opportunities Program (BTOP) administered by the National Telecommunications and Information Administration (NTIA). These projects are in twenty-one states and will be funded with over $404 million in grants. The projects selected for funding focus on Comprehensive Community Infrastructure and Public Computer Centers. More information about these projects may be found here. One project, filed by Internet2, also known as University Corporation for Advanced Internet Development, received an award of over $62.5 million to interconnect more than thirty existing research and educational networks, creating a nationwide high-capacity network that will enable advanced networking features for more than 100,000 community anchor institutions. Internet2 was assisted in the applications process by Arent Fox, led by Telecommunications Partner Alan Fishel. See our press release on the award here.

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

Broadband News

• The FCC held its previously announced meeting on July 7, 2010 “to discuss technical methods for performance testing of residential fixed Internet service and procedures to remotely acquire and analyze such data” regarding the measurement of broadband speeds. CG Docket No. 09-158, CC docket No. 98-170, WC Docket No. 04-36; Comment Sought on Residential Fixed Broadband Services Testing and Measurement Solution, Public Notice (rel. 4/20/2010). The FCC will partner with Sam Knows to recruit 10,000 volunteers to collect data on residential broadband speeds. During the meeting, the FCC acknowledged that it might need to alert ISPs to the identity of the volunteers in the speed tests, and thus ISPs could skew the results by increasing the capacity to the identified volunteers. But FCC officials also noted that an ISP would not risk the negative publicity such a move would inevitably cause. Data collection is expected to start towards the end of the year.
• The Pew Research Center’s Internet & American Life Project recently released a paper finding that “six in ten Americans go online wirelessly using a laptop or cell phone.” Roughly half of all adults (47%) go online with a laptop using a Wi-Fi connection or mobile broadband card, while 40% of adults use a cell phone for Internet, email, and instant messaging. The study also found that African-Americans and Latinos are more likely to own a cell phone and to take advantage of a “much wider array of their phones’ data functions compared to white cell phone owners.” The study can be found here.

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

Telecom Privacy News

• Following its recent decision to stop automatically redirecting Chinese users to the uncensored version of its site in Hong Kong, Google announced on Friday that its license to operate in China has been renewed. “We are very pleased that the government has renewed our ICP license and we look forward to continuing to provide web search and local products to our users in China.” The tension between Google and China began in January, when Google said it would no longer self-censor its local Chinese search site, Google.cn, and later started directing users to Google.hk.
• The Department of Health and Human Services (HHS) has issued a notice of proposed rulemaking to modify its Health Insurance Portability and Accounting Act (HIPAA) Privacy, Security, and Enforcement Rules. The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted in 2009, requires HHS to strengthen the privacy and security protections for health information. The proposed modifications to the HIPAA Rules include extending the applicability of certain requirements to the business associates of covered entities, establishing new limitations on the use and disclosure of protected health information for marketing and fundraising purposes, prohibiting the sale of protected health information, and expanding individuals’ rights to access their information and restrict disclosures of certain information to health plans. The proposed rules would also strengthen enforcement provisions. To view the Notice of Proposed Rulemaking, click here.

In the Courts

• On July 8, 2010, at the US Court of Appeals for the DC Circuit, the FCC defended its adoption of the Enforcement Bureau’s decision that “the California PUC is the more appropriate forum for determining the reasonable compensation rate for [CLEC] North County’s termination of intrastate, intraMTA traffic originated by [CMRS provider] MetroPCS.” In its brief, the FCC argued that it reasonably interpreted its own rules, particularly Rule 20.11(b), and precedent, and that it is entitled to the Court’s substantial deference. The FCC also argued that MetroPCS’s argument surrounding the Commission’s duty to resolve the parties’ rate dispute under 47 U.S.C. § 208 is barred because it did not have an “opportunity to pass” on that question in the case below, “as required by 47 U.S.C. § 405.” While this appeal has been pending, the California PUC has denied MetroPCS’s and North County’s request that it set the rate that the FCC expected it to set, insisting that it would not set a rate until it received assurance from the FCC that it will actually use the rate. MetroPCS California, LLC v. FCC, DC Cir. Case No. 10-1003.
• On July 2, 2010, the Iowa Supreme Court affirmed an Iowa trial court’s ruling that Iowa Network Services (INS) is not entitled to a tax refund on sales and use taxes it paid for central office equipment, support computers and other computer-related work equipment. INS had sought a refund based on an exemption for “[c]omputers used in the processing or storage of data or information by … [a] commercial enterprise.” An Administrative Law Judge in the Iowa Revenue Department denied the refund claim, noting that, effective 2007, the Iowa legislature specifically passed a law that removes competitive carriers’ equipment from the exemption, from which the ALJ inferred that the equipment is taxable. The Director of the Revenue Department affirmed, and was upheld by the trial court. Relying on the doctrine that “taxation is the rule, exemption is the exception,” the Iowa Supreme Court found that INS had not met its heavy burden of proving that it was entitled to the tax exemption. Iowa Network Services, Inc. v. Iowa Dept. of Revenue, Iowa S. Ct. No. 09-0166.

Legislative Outlook

• The Senate reconvenes today, and the House reconvenes tomorrow.
• The House Commerce Committee has released the Universal Service data provided to it by the FCC in response to a June 15 letter request. The Committee had requested a list of the top recipients of Universal Service high-cost funding. The data indicates that in the last three years, AT&T, Verizon, and CenturyTel were the top three recipients, obtaining more than $3.6 Billion collectively. All of the data is available on the Committee’s website here.
• On July 15, 2010, the Senate Commerce Committee will hold a hearing titled “Protecting Youths in an Online World” at 2:00 p.m. Eastern in 253 Russell Senate Office Building. For more information, click here.

Upcoming Events

• Telecom Group Partners Jon Canis, along with Ross Buntrock, Michael Hazzard, and Stephanie Joyce will be presenting at the COMPTEL Plus 2010 Fall Convention + Expo being held September 12-15, 2010, in Dallas. For more information or to register, click here.

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

Ross A. Buntrock
buntrock.ross@arentfox.com
202.775.5734

Jonathan E. Canis
canis.jonathan@arentfox.com
202.775.5738

Alan G. Fishel
fishel.alan@arentfox.com
202.857.6450

Michael B. Hazzard
hazzard.michael@arentfox.com
202.857.6029

Stephanie A. Joyce
joyce.stephanie@arentfox.com
202.857.6081

Jeffrey E. Rummel
rummel.jeffrey@arentfox.com
202.715.8479