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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

• This week is the second annual FCC “Wireless World Travel Week” (July 18-22, 2011). The Chiefs of the International Bureau and the Consumer and Governmental Affairs Bureau will blog throughout the week to provide tips for travelers needing to stay connected. For more information, 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

• The FCC has announced grants of approximately $9 million to 20 schools and libraries to provide wireless Internet to students. It builds on the FCC’s modernization of the E-rate program last fall, which previously supported “on-campus” connectivity only. Projects selected for funding include off-campus access to e-textbooks, connectivity for netbooks for students living in remote areas, and access to flexible, online education programs for home-bound students. The projects will be funded in the 2011-12 school year. For more information, including a complete list of the schools selected, click here.
• State and local interest groups have come out in opposition to HR 1002, the Wireless Tax Fairness Act of 2011, which is currently under consideration in the House Judiciary Committee. The bill would impose a five-year moratorium on “discriminatory” wireless taxes imposed by states and localities. In a letter to Rep. Lamar Smith, R-Tex., Chair of the Committee, the National Association of Counties, National League of Cities, the United States Conference of Mayors, the International City/County Management Association, Government Finance Officers Association, and National Association of Telecommunications Officers and Advisors wrote that it would be unfair to give preferential treatment to the wireless industry, and that the legislation would negatively impact state and local budgets. “This legislation represents an unwarranted federal intrusion, as it carves out one sector of the communications industry for favorable tax treatment. It creates an uneven playing field and unfair competition for other communications service providers,” the letter states. The wireless industry, including its trade association, CTIA, supports the bill, arguing that the nationwide average tax and fee rate for wireless products and services is 16.3% - more than twice the 7% tax rate for general goods and services. To read HR 1002, click here.
• The U.S. Army is completing a pilot program to test the use of smartphones and tablets in combat situations. The six-week trial began on June 6 in training areas of New Mexico and Texas, with over 300 Android, iPhone and Windows Phone devices and Apple, Dell, and Hewlett-Packard tablets being tested. Troops participating in the program are using smartphones to text message updates about their surroundings, send pictures with an attached GPS location, view maps, and fill out reports. Though there have been a few hiccups with some of the devices, including connection failure due to poor service in remote areas and operating system bugs, the devices have been well-received by the test users and have proven resilient in sandstorms and under other harsh conditions. Ed Mazzanti, Deputy Director of Requirements Integration for the Army Capabilities Integration Center, acknowledged that at the current time the Army does not have the level of encryption needed to fully integrate the phones and tablets into mission-command systems. He stated, however, that “there could be some limited deployments even this year, tied to tactical radios that supply the encryption that’s needed.”

Federal Trade Commission (FTC) and Privacy Regulation

• As previously reported, on July 12, 2011, the FTC and the Department of Justice Office for Victims of Crime held a forum titled “Stolen Futures: A Forum on Child Identity Theft.” At the forum, it was revealed that 140,000 children are victims of identity fraud annually in the United States and children are targeted 51 times more than adults. The fact that the child’s social security number has not been used for very long makes it a target to associate another name with the same social security number. More information on the forum is available here.
• On July 14, 2011, Commissioner Edith Ramirez of the FTC testified before the House Communications Subcommittee in a hearing on Internet privacy. Commissioner Ramirez emphasized the FTC’s commitment to privacy and highlighted the enforcement and education steps the FTC has taken to protect consumer privacy. More information can be found here. Chairman Genachowski also spoke at the hearing and agreed that privacy protections were critical to the development of new technologies, because those technologies would not be used if there are privacy concerns. She also emphasized the need to strike a balance between privacy protections and new innovations. The FCC’s privacy policy centers on three goals: “1) consumer control and choice; 2) business transparency about privacy practices, and 3) data security.” Chairman Genachowski’s prepared testimony is available here.

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

Developments in Intercarrier Compensation

• On July 12, 2011, the Nebraska Public Service Commission agreed to partially dismiss a complaint filed by AT&T Communications of the Midwest, Inc. against two Nebraska rural local exchange carriers (RLECs), Hooper Telephone Company and Hartington Telecommunications Co., Inc., with which it has reached a settlement agreement over an access charge dispute. AT&T filed a complaint against 17 Nebraska RLECs on November 17, 2010, alleging that the carriers were seeking to collect an unreasonable increase in access charges resulting from what the RLECs described as “network restructuring.” On February 4, 2011, the RLECs filed formal complaints against AT&T alleging that it was unlawfully refusing to pay their tariffed access charges. Of the 17 RLECs, Hooper and Hartington were able to reach a settlement agreement with AT&T, the terms of which were not disclosed, but the claims of the remaining 15 RLECs and AT&T still remain pending. Docket Nos. FC-1348, FC-1350, FC-1352, FC-1353, FC-1354, and FC-1356.
• On July 7, 2011, the Illinois Commerce Commission (ICC) denied a motion filed by Cbeyond Communications, LLC to voluntarily dismiss its complaint against AT&T Illinois, but ordered that it would permit the record to be reopened and allow Cbeyond to file an amended complaint. Cbeyond alleged in its March 9, 2010 complaint that AT&T was violating the parties' interconnection agreement (ICA) by unlawfully imposing non-recurring charges when Cbeyond was using a third-party carrier to transport its high-capacity enhanced extended links (EELs), as well as unlawfully charging Cbeyond when it reconfigured transport facilities associated with those EELs. An Administrative Law Judge preliminarily ruled, however, that AT&T was abiding by the terms of the ICA when imposing the charges, after which Cbeyond filed its motion to voluntarily dismiss the complaint. AT&T opposed the motion, asserting it would be unfairly prejudiced by Cbeyond’s attempt to circumvent the established procedural schedule. In its ruling, the ICC stated that “This complaint is about money and nothing else. There is no allegation and no evidence that AT&T is refusing to provide service or that AT&T is providing substandard service to Cbeyond. The only question is how much Cbeyond should pay for the service it orders, and receives, from AT&T.” The ICC disagreed, however, with AT&T’s argument and will permit Cbeyond to amend its complaint, stating that “while it is clear that Cbeyond should have made this filing earlier, it is not prejudicial to AT&T to allow this filing.” Docket No. 10-0188.

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.
• 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.
• 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 13, 2011, the FCC announced the opening of the Technology Experience Center (TEC) at its headquarters, which is designed to allow “FCC employees to experience the latest in communications technology around important issues such as education, telemedicine, small business productivity, public safety and more.” Speaking at the event, Chairman Genachowski tied the creation of the TEC to the Commission’s goal to “help drive innovation in the broadband ecosystem.” More information is available here.
• On July 12, 2011, Senator Dean Heller, R-Nev., sent a letter to Chairman Genachowski to “request the FCC apply a retrospective review towards the Internet network regulatory regime approved by a vote of 3-2 by the FCC on December 21, 2010.” Senator Heller’s request is based on a recent Executive Order in which President Obama asked independent agencies like the FCC to review the burdens imposed by their regulations. Senator Heller asked Chairman Genachowski whether he would undertake such a review and, if not, to explain why. The letter 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 July 11, 2011, the United States District Court for the Western District of Michigan, on its own motion, stayed the access charge litigation between Lucre, Inc., a local exchange carrier, and Qwest’s long-distance entity, rather than address Qwest’s motion to dismiss several claims in Lucre’s complaint. Lucre sued Qwest for unpaid access charges, but Qwest maintains that Lucre’s provision of services to free conferencing service providers renders the calls non-compensable. Qwest moved to dismiss most claims in Lucre’s complaint, arguing that the filed tariff doctrine precludes Lucre’s claims for equitable relief and declaratory judgment. The court identified numerous other cases raising similar issues that have been referred to the FCC or stayed pending FCC action on the pending Notice of Proposed Rulemaking on intercarrier compensation reform. The court held that on “the basis of the primary jurisdiction doctrine, the need for FCC expertise on these issues, and the substantial risk of inconsistent rulings, this Court will issue a stay to afford the FCC the opportunity to resolve the issues referred to it by the courts in several of the cases cited above ... .” The court denied Qwest’s motion to dismiss without prejudice as premature. Lucre, Inc. v. Qwest Commc’ns Co., No. 1:09-cv-902 (W.D. Mich.).

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

Legislative Outlook

• The Senate Commerce Committee held its hearing titled “Unauthorized Charges on Telephone Bills: Why Crammers Win and Consumers Lose” on July 13, 2011, at which the report of Senate Staff on the breadth of the cramming problem (click here) was discussed. Witnesses included Lisa Madigan, Attorney General of Illinois, who testified that “with a few exceptions … it is time to put an end to third party billing on telephone bills by banning them at the state and/or federal level.” For more information and to view witnesses’ written testimony, 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: