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

• At its Open Meeting held June 9, 2011, the FCC adopted a Report and Order enabling use of the Electronic Tariff Filing System (ETFS) for all tariffs. The order will be effective 120 days after the latter of publication in the Federal Register or Office of Management and Budget approval of the order. Nondominant carriers will be required to file their tariffs via ETFS within 60 days after the order is effective. WC Docket No. 10-141, Electronic Tariff Filing System (ETFS), Report and Order, FCC 11-92 (rel. June 9, 2011). To view the order, click here. To view the Public Notice summarizing the order, click here.
• Replies in support of Petitions to Deny the AT&T/T-Mobile merger are due June 20, 2011. Docket No. WT 11-65. To see the Public Notice, click here.
• Reply Comments on the “need for speed” inquiry are due June 16, 2011. The Public Notice is available here.

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

The Mobile Market

• Some lawmakers are concerned about the FCC’s approval of a waiver requested by LightSquared, Inc. to utilize spectrum in what is known as the L-band to create a wholesale 4G wireless network that is “complemented by satellite coverage.” LightSquared plans to cover 90% of the US population by 2015. Sixty-six House members wrote FCC Chairman Julius Genachowski last week to state that LightSquared’s use of the L-band could cause interference with Global Positioning Systems (GPS) service, which utilizes adjacent spectrum, thus impacting the military, emergency responders, and others that rely on GPS. Chairman Genachowski previously has deflected criticism of the waiver, writing to Sen. Charles Grassley, R-Iowa, that the Commission will not allow LightSquared to deploy its network until the agency is satisfied that concerns about potential interference have been adequately addressed. A working group established by the FCC is studying the interference issue and is slated to complete a final report by June 15, 2011.
• In response to a request for comment released by the FCC Wireline Competition Bureau, several national wireless service providers filed comments on June 6, 2011, asking the FCC not to impose Universal Service Fund (USF) contribution requirements on text messages. Several parties specifically urged the Commission not to classify text messages as a telecommunications service, which would likely bring with it a host of “common carrier” obligations such as anti-blocking rules. CTIA, a trade association representing wireless carriers, argued that text messaging should be understood as an “information service,” rather than a telecommunications service. AT&T, T-Mobile, Sprint, and Verizon echoed these sentiments. Public Knowledge and the National Hispanic Media Coalition urged the Commission in a joint filing to declare text messages to be “telecommunications service,” noting that the term does not mean only voice telephone calls. The National Telecommunications Cooperative Association also argued that text messaging revenue should be subject to USF contribution requirements. WC Docket No. 06-122.

Activity in Federal Trade Commission (FTC) and Privacy Regulation

• On June 9, 2011, the FTC announced its settlement with California Internet marketer Jaivin Karnani and his company, Balls of Kryptonite, as well as several associated companies, to settle charges that the defendants tricked British consumers into believing that the defendants were based in the United Kingdom by using foreign websites ending in “.co.uk”. According to the FTC’s complaint, by using “.co.uk” domain names, the defendants misled consumers into believing that they were buying from a company operating in the United Kingdom, and were therefore protected by manufacturer warranties that were valid there. The Complaint also alleges that the defendants imposed unexpected import duties as well as draconian cancellation and refund fees. The settlement order prohibits the defendants from misrepresenting the products they sell as well or their return policies, and imposes a $500,000 compensatory judgment. FTC v. Karnani, No. 09-cv-5276 (C.D. Cal, filed Jul. 20, 2009); FTC File No. 092 3081.

  A copy of the press release announcing the settlement can be found here.

  A copy of the settlement agreement can be found here.

• On June 2, 2011, the California State Senate rejected an Internet privacy bill that would have prevented websites from displaying users’ personal information without permission and would have required websites to remove information upon request within 96 hours or face a $10,000 fine. The bill was defeated following heavy lobbying from Facebook, Twitter, and other social networking sites. Opponents of the bill argued that it would have forced consumers to make privacy decisions before they even use a service. In addition to opposition from social networking sites, Internet companies such as Google, Yahoo, and Skype argued that the legislation is unnecessary, because companies already go to great lengths to protect individuals’ privacy.

  A copy of the defeated bill can be found here.

• The FTC and the Department of Justice’s Office for Victims of Crime will host “Stolen Futures: A Forum on Child Identity Theft,” on July 12, 2011, at the FTC Conference facility at 601 New Jersey Avenue NW, 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 US Department of Education. For more information, click here. To view the agenda, click here.

• On May 26, 2011, the FTC announced that it will be updating its advisory guide on how federal advertising law applies to marketing and sales on the Internet. It last issued guidance on the topic in 2000, in a document entitled “Dot Com Disclosures: Information About Online Advertising.” The agency seeks public comment on possible revisions to the guide, particularly on the technical and legal issues that marketing entities and consumer advocates would like to see addressed. Comments may be submitted until 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, Stephanie Joyce, or J. Isaac Himowitz (contact information below) for further information.

Developments in Intercarrier Compensation

• On June 7, 2011, the Indiana Telecommunications Association (ITA) filed a proposal to streamline intrastate switched access tariff amendments with the Indiana Utility Regulatory Commission (IURC) in its investigation into simplifying the regulatory burdens facing carriers. Under the IURC’s current rules, there is a 30-day filing process when a LEC seeks to revise its rates. Under ITA’s proposal, if a LEC maintains its intrastate access rates at its interstate levels, the LEC’s intrastate rates would “instantly mirror” its interstate rates. ITA stated that “[r]ather than following the 30-day filing requirements for mirrored intrastate access charges … the ITA seeks Commission approval for all LECs to utilize the ‘instant mirroring’ tariff filing procedures…. [Instant mirroring] would provide simplicity, consistency, and administrative efficiency for the Commission, the carriers filing intrastate access tariffs, and for intrastate access customers.” Docket No. 44004.
• A further development on our North Carolina story from the June 6 edition: The North Carolina Utilities Commission (NCUC) has initiated the formal investigation requested by Staff on whether LECs should be compelled to reduce their intrastate access rates, and if so, whether a state Universal Service Fund (USF) should be established. The NCUC has been considering intrastate access charge reform through the informal “Access Charges Working Group” that was established after Sprint petitioned it in 2009 to direct North Carolina ILECs to reduce their intrastate access rates, which Sprint called “anti-competitive and antiquated” subsidies. On March 15, 2011, the Commission had held that the state legislature had implicitly granted it the authority to establish a state USF. A hearing has been scheduled for October 18, 2011, with direct testimony due August 10, and rebuttal testimony due by September 27. Docket No. P-100, Sub 167.

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

• 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.
• The Universal Service contribution factor for the second quarter of 2011 is 14.9%. A copy of the notice can 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, Michael Hazzard, or J. Isaac Himowitz (contact information below) for further information regarding compliance matters.

Broadband News

• The Senate Commerce Committee approved S. 911, the Public Safety Spectrum and Wireless Innovation Act, by a vote of 21 to 4 during its Executive Session on June 8, 2011. The bill would create the incentive auctions for broadcast spectrum long advocated by Chairman Genachowski, along with other initiatives related to public safety, including allocation of 10 megahertz of spectrum, known as the “D-block,” to public safety. The bill also would require that surplus revenue from spectrum auctions, estimated to be more than $10 billion, would be directed to the US Treasury for deficit reduction. The bill now goes to the full Senate. To view a press release about the bill, click here. To view the bill, click here.

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

In the Courts

• On June 9, 2011, the United States Supreme Court reversed a Sixth Circuit decision that AT&T could charge higher, “competitive” rates to CLECs for interconnection facilities, rather than the lower, cost-based rates the FCC ordered ILECs to charge CLECs for such facilities. The Court found that “although the FCC concedes that it is advancing a novel interpretation of its longstanding interconnection regulations, novelty alone is not a reason to refuse deference.” The Court accorded deference to the agency on the ground that Section 251 of the Communications Act is unclear. The Court roundly rejected AT&T’s arguments that the Commission had impermissibly changed the rules, finding that, “[m]ore importantly, AT&T’s characterization of what the Commission has done, and is doing, is inaccurate.” Justice Scalia concurred in the decision, writing separately to note that “Deferring to an agency’s interpretation of a statute does not encourage Congress, out of a desire to expand its power, to enact vague statutes; the vagueness effectively cedes power to the Executive. By contrast, deferring to an agency’s interpretation of its own rule encourages the agency to enact vague rules which give it the power, in future adjudications, to do what it pleases. This frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government.” Talk America, Inc. v. Michigan Bell Tel. Co., No. 10-313.
• On June 7, 2011, the federal court for the Northern District of California dismissed Sprint from the putative class action suit alleging false and misleading claims about Sprint’s “4G” wireless service. The court dismissed Sprint on personal jurisdiction grounds, although the company has over 200 subsidiaries operating in California. “As a general rule, the activities of a subsidiary are insufficient to establish personal jurisdiction over a separate parent entity.” Device maker HTC remains in the case. Coronado v. Sprint Nextel Corp., No. 3:11-cv-00706 (N.D. Cal.).

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

Legislative Outlook

• The House Manufacturing and Trade Subcommittee will hold a hearing on June 15, 2011, at 10:00 am Eastern in 2322 Rayburn House Office Building to consider legislation requiring greater protection of consumer information and notification of security breaches. The name and number of the bill have not yet been released. For further information, click here.

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

Upcoming Events

• The Federal Communications Bar Association (FCBA) 15th Annual Golf Tournament will take place on June 20, 2011 at the Country Club at Woodmore in Mitchellville, Maryland. For more information or to register, please click here.
• Telecom Group Partner Jeffrey Rummel will be speaking on the topic of “FCC Licensing/Regulation of the Manufacture, Development and Testing of Military Communications Systems” during the Military Wireless Conference to be held June 27-29, 2011, at the Sheraton National Hotel in Arlington, VA. For information about this conference, 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.