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 FCC has sent Notices of Apparent Liability to several carriers for alleged “cramming” activity, with proposed fines totaling $11.7 million. The targets are Main Street Telephone, VoiceNet Telephone, Cheap2Dial Telephone, and Norristown Telephone. With these Notices, the FCC is sending a message: “No Mystery Fees”.  To view the Public Notice summarizing this action, click here.
• Replies in support of Petitions to Deny the AT&T/T-Mobile merger are due today, June 20, 2011. WT Docket No. 11-65. To see the Public Notice, click here.

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

The Mobile Market

• AT&T, Inc., Deutsche Telekom AG, and its T-Mobile USA, Inc., filed a brief in support of AT&T’s  proposed $39 billion acquisition of T-Mobile on June 10, 2011. The brief argues that the deal is necessary to alleviate spectrum constraints and that opponents of the merger “would simply prefer to compete against a capacity-constrained AT&T and a standalone T-Mobile USA without financial backing from its parent and no clear path to LTE.” The companies urge the FCC and Department of Justice (DOJ) to consider the wireless market on a local level, rather than nationally, and to deny requests for conditions on resale, handsets, pricing, universal service funding, and early termination fees. Nokia, Inc., also filed comments supporting the proposed merger. In its comments, Nokia said it disagreed with merger opponents that contend the deal would give AT&T a virtual lock on devices in the GSM (Global System for Mobile communications) market. 18 governors, as well as labor unions, minority and disability rights groups, rural organizations, and equipment and handset makers, were among those cited as supporting the merger. WT Docket No. 11-65.
  
  AT&T and T-Mobile have also submitted responses to specific questions posed by the FCC Wireless Telecommunications Bureau, and state that they have submitted about 1.2 million documents to DOJ.
• Supporters of the FCC’s recently adopted data roaming rules have intervened in support of the FCC in Verizon’s appeal of those rules in the U.S. Court of Appeals for the District of Columbia Circuit. Verizon appeals on on a variety of grounds, including that the order “is in excess of the Commission’s statutory authority.” Among those that filed to intervene are Cincinnati Bell Wireless LLC, MetroPCS Communications, Inc., the Rural Cellular Association, Leap Wireless International, Inc., and Cricket Communications, Inc., the Rural Telecommunications Group, T-Mobile USA, Inc., and the National Telecommunications Cooperative Association. Cellco Partnership v. FCC, Case Nos. 11-1135, et al. (D.C. Cir., filed May 25, 2011).

Activity in Federal Trade Commission (FTC) and Privacy Regulation

• On June 15, 2011, FTC Chairman Liebowitz spoke at a policy luncheon at the National Cable & Telecommunications Association Cable (NCTA) Cable Show in Chicago, and provided updates on a number of issues pending at the agency. For example, Chairman Liebowitz stated that the FTC will issue a final draft of its privacy report by the end of the year, after it is able to meet with stakeholders, and that new draft rules for child online privacy will likely be released in Fall 2011.
• On June 14, 2011, FTC Commissioner Edith Ramirez spoke at the 21st annual Computers, Freedom, and Privacy Conference at Georgetown University Law Center, stating that the privacy of smartphone users must be more secure. Citing the sophistication and “always on” capabilities of smartphones, Commissioner Ramirez stated that teenage use of smartphones is of particular concern. She suggested adoption of a “Privacy by design” policy, which means that the smartphone should “collect only the data they need for a specific business purpose” and “only keep that information for as long as it is needed.”
• 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 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.
• 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, or Stephanie Joyce (contact information below) for further information.

Developments in Intercarrier Compensation

• On June 10, 2011, Verizon Florida LLC filed a second motion to dismiss a complaint filed against it by Bright House Networks Information Services with the Florida Public Service Commission (FPSC). The complaint, which also names long-distance company Verizon Business Services as a defendant, includes allegations that the Verizon entities are refusing to pay intrastate access charges to Bright House for VoIP traffic. Verizon previously moved to dismiss the complaint against both Verizon entities on the ground that the Commission does not have jurisdiction over VoIP traffic. After Verizon filed that motion, Bright House and Verizon Florida, the local exchange carrier (LEC) entity, entered into an interconnection agreement (ICA), which set a rate of $0.0007 for all VoIP traffic exchanged between the two LECs.
  
  Verizon then filed a supplemental motion to dismiss, arguing that Bright House has implicitly conceded that its complaint against Verizon is without merit, arguing that “if Bright House believed that applying a $0.0007 rate to IP-format traffic was ‘unfair and unreasonable’, Bright House would not have agreed to that rate in its agreement with Verizon Florida.” In its response, Bright House denied that the ICA represents any concession, stating that “We settled with Verizon-ILEC only because, as to Verizon-ILEC, we exchange only local and intraLATA traffic, which we think should all be rated as local in any event. That has nothing to do with Verizon Business's obligation to pay access charges on intrastate, interLATA traffic.” Docket No. 110056-TP.

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

• On June 14, 2011, the FCC announced that 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 June 15, 2011, Chairman Genachowski spoke at the National Cable & Telecommunications Association Cable (NCTA) Show in Chicago and discussed broadband adoption in the United States, which he characterized as “far from good enough.” The Chairman praised the cable companies for increasing broadband adoption, but called on them to step up their efforts “a few notches.” He also announced a Broadband Adoption Task Force which will bring together FCC, private, and public representatives to brainstorm strategies for increasing broadband adoption.
  
  More information on the Chairman’s remarks is available here.
  
  More information on the Broadband Adoption Task Force is available here.
• FTC Chairman Liebowitz spoke during a policy luncheon also held at the NCTA Show and endorsed metered pay for broadband. Noting that most products operate as “pay for what you use,” Chairman Liebowitz expressed surprise that metering was not used by broadband operators, especially when heavy users can slow service for other users of the same system.

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

In the Courts

• On June 15, 2011, Facebook lost its motion to dismiss Lamebook LLC’s declaratory judgment action in Texas federal court. Lamebook filed its Texas case approximately eight months after Facebook sent it a cease-and-desist letter claiming that the site, which parodies content posted by Facebook users, infringes Facebook’s trademark. Four days after Lamebook filed its complaint, Facebook filed a competing lawsuit against Lamebook in California federal court, and then moved to dismiss Lamebook’s Texas case. The U.S. District Court for the Western District of Texas held that Lamebook gets to keep its case in Texas. The court noted that the “question comes down to whether Lamebook filed its declaratory judgment action in order to prevent Facebook from enforcing its rights in its forum of choice – an improper reason for filing a declaratory judgment suit warranting dismissal – or Lamebook filed its suit to clear up an eight-month dispute about Lamebook’s right – a proper reason for filing.” The court concluded that “This is a textbook case of the purpose of a declaratory judgment suit – to clear up a cloud of unresolved dispute.” Lamebook, LLC v. Facebook, Inc., W.D. Tex. No. 10-cv-00833-SS.
• On June 10, 2011, the U.S. Court of Appeals D.C. Circuit largely upheld the FCC’s order preventing cable companies, like appellant Cablevision, from blocking competitors’ access to programming delivered terrestrially, such as local sports programming. The order implements the Cable Television Consumer Protection and Competition Act, which makes it unlawful for cable companies to refuse to sell satellite-delivered content to competitors. The challenged FCC rules essentially close the so-called “terrestrial loophole” in that law by making the ban apply regardless of whether the content was distributed via satellite or terrestrially. The Court of Appeals affirmed the bulk of the order, but found the portion stating that all exclusive territorial distribution programs are “unfair” was arbitrary and capricious. That issue was remanded back to the FCC for further proceedings. Cablevisions Systems Corp. v. FCC, No. 10-1062.

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

Legislative Outlook

• As reported in the June 13 edition, the House Manufacturing and Trade Subcommittee held a hearing on June 15, 2011, to consider consumer protection legislation. The bill is called the Secure and Fortify Data Act (SAFE Data Act) and was introduced by Rep. Mary Bono Mack, R-Cal., to create uniform national standards for data security and notification of data breaches. In support of the bill, Rep. Bono Mack has stated that “E-commerce is a vital and growing part of our economy. We should take steps to embrace and protect it – and that starts with robust cyber security.” For further information about the bill, which is not yet publicly available, click here.

• On June 16, 2011, Senator John “Jay” Rockefeller IV, D-W.Va., Chair of the Senate Commerce Committee, released a statement regarding the FCC’s investigation of “cramming” that commenced with $11.7 million in Notices of Apparent Liability (see FCC Announcements above). He stated that he is “pleased to hear that the FCC is making progress in the fight against mystery fees on phone bills, … However, I don’t believe it will be enough to stop the problem.” He noted that recent enhancements to FCC disclosure rules also have not resolved the problem of “cramming,” and that his Committee will hold a hearing on this matter and release a report soon. To view the Senator’s full statement, click here.
• The Senate Crime and Terrorism Subcommittee will hold a hearing titled “Cybersecurity: Evaluating the Administration’s Proposals” on June 21, 2011, at 2:30 pm Eastern in 226 Dirksen Senate Office Building. Scheduled witnesses include James A. Baker, Associate Deputy Attorney General, and Ari Schwartz, Senior Internet Policy Advisor, National Institute of Standards and Technology (NIST). For more 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 today, 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, including: