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, compliance, legislation, and litigation. Follow our Telecom Group on Twitter. Click here.

Federal Communications Commission (FCC) Announcements

• The Further Inquiry into Two Under-Developed Issues in the Open Internet Proceeding has been published in the Federal Register. Comments are due October 12, 2010, and Reply Comments are due November 4, 2010. The Arent Fox Client Alert on the item is available here. The Further Inquiry is available here. Chairman Julius Genachowski’s written statement is available here. Please contact Ross Buntrock, Jon Canis, Michael Hazzard, or Stephanie Joyce (contact information below) for further information.
• The FCC has released the Tentative Agenda for the next Open Meeting to be held September 23, 2010. The agenda, available here, contains four items, including a Memorandum Opinion and Order on TV White Spaces and an Order designed to streamline the E-Rate Program.

Federal Trade Commission (FTC) Developments

• Beginning September 9, 2010, a claims administrator working for the Federal Trade Commission will mail checks to 22,154 consumers who were determined to be victims of a telemarketing operation targeted at Hispanics via ads on Telemundo, Telefutura, Galavision, and other Spanish-language networks. The telemarketers were working on behalf of an operation called Remote Response which claimed to provide pre-approved Amerikash Mastercards, as well as discount health insurance plans, free ATM cards, and phone cards. The FTC’s investigation into Remote Response revealed that many of the consumers never received some or all of the products they purchased, hindered consumers’ attempts to cancel their subscriptions during the free trial period, and billed consumers for unauthorized charges. Remote Response settled the charges with the FTC, and as a condition of the settlement the company is banned from further telemarketing operations.

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 September 9, 2010, the South Carolina Public Service Commission (SC PSC) unanimously dismissed a petition for rehearing filed by Genesis Telecommunications LLC in an interconnection dispute proceeding it initiated against CenturyLink. In its July 2009 complaint, Genesis alleged that the unbundled DS1 loops it leased from CenturyLink provided only 12.5 percent of the maximum speeds outlined in the parties’ interconnection agreement. The SC PSC dismissed Genesis’s complaint in August, ruling that Genesis failed to meet its burden of proof, and ordered Genesis to pay the full contract rates. In denying Genesis’s petition for rehearing, the SC PSC concluded that “Genesis has identified no point of fact or law that this Commission overlooked or misapprehended in rendering the decision.” Docket No. 2009-311-C.
• On September 3, 2010, the Indiana Utility Regulatory Commission (IURC) set November 4, 2010 for the public evidentiary hearing in a complaint proceeding brought by AT&T Indiana against Sprint PCS and Nextel West Corp. AT&T alleged in its complaint that Sprint is improperly delivering interLATA interMTA traffic over trunks dedicated for local traffic and is failing to pay the appropriate charges for such traffic. Sprint countered that AT&T unilaterally changed the parties’ billing factor contained in their interconnection agreement, and it seeks an order requiring AT&T to refund all payments Sprint has made above the “just and reasonable rate” that Sprint is requesting the IURC to set for this traffic. Docket No. 43890.

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 November 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 third quarter of 2010 and projected revenues for the first quarter of 2011. A copy of the current FCC Form 499-Q can be found here.

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

Stimulus This Week

• On September 7, 2010, the US Department of Agriculture announced two broadband projects funded under the American Recovery and Reinvestment Act (ARRA) in rural Virginia. Scott County Telephone Cooperative will receive a $7.45 million loan and a $17.4 million grant to deploy Fiber-to-the-Premises (FTTP) infrastructure which will provide broadband access to 80 businesses, 16 community institutions, and approximately 12,000 residents. The Lenowisco Planning District Commission will receive a $6.06 million loan and a $14.16 million grant to build a fiber optic network in rural southwest Virginia. This project will result in broadband access for 1,550 businesses, 100 community institutions, and 42,000 residents. These grants are part of the second round of broadband funding available under the ARRA. All monies under this program are required to be allocated by September 30, 2010. More information about these projects may be found here.

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

Broadband News

• On September 7, 2010, the FCC announced a number of new tools to access FCC broadband data. In remarks to the Gov 2.0 Summit, Chairman Genachowski stated that the tools will “empower innovators and developers across the country to leverage government data in ways never imagined, creating immense value for the American public.” The tools can be accessed here.
• Reply Comments on the Seventh Broadband Notice of Inquiry (NOI), in which the FCC seeks comment on the definition of “advanced telecommunications” and the proper metrics for evaluating broadband deployment, are due October 5, 2010. The NOI is available here.
  
  Initial Comments on the NOI, filed September 7, have been split. Broadband ISPs have urged the FCC to back away from last year’s report which found that broadband deployment to all Americans was not reasonable or timely. For example, AT&T argued that the logic of the previous report was too restrictive, because it ignored the fact that 95 percent of households have access to wireline broadband, and 98 percent have access to 3G wireless broadband services. The comments of Verizon and Verizon Wireless criticized the FCC’s having compared data from 2008 with the FCC’s “newly-minted and forward-looking benchmark that builds in anticipated future increases in demand for broadband capabilities (4 Mbps downstream and 1 Mbps upstream).”
  
  In contrast, advocacy groups and state commissions urged the FCC to continue to follow its present course. For example, Free Press said in comments that “The Commission’s sixth inquiry represented a welcome and significant shift away from the predicative claims in its previous decisions towards a more data-driven analysis. With the Sixth Report, the Commission correctly found that the deployment of advanced telecommunications capability was not occurring in a reasonable and timely fashion.”

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

Telecom Privacy News

• On September 8, 2010, The Washington Times reported on the growing number of legal cases challenging the use of GPS information by law enforcement. For example, in the appeal of an Oregon case involving the use of GPS by federal agents to surreptitiously monitor a suspected drug dealer’s car without a warrant, Chief Judge Alex Kozinski of the 9th US Circuit Court of Appeals wrote in his dissenting opinion that there was “something creepy and un-American about [the] clandestine and underhanded behavior” of the police in the case. In a similar case decided last week, the Virginia Court of Appeals ruled that Fairfax County police did not need a warrant to secretly install a GPS device on the work van of convicted sex offender. Virginia Court of Appeals Judge Randolph A. Beales wrote that planting the device “conveyed no private information to the police” and “the bumper of a van parked on a public street ... does not provide the setting for those intimate activities that the [Fourth] Amendment is intended to shelter from government interference or surveillance.” But the Court of Appeals for the District of Columbia has reached the opposite conclusion, ruling that police must obtain warrants to use GPS tracking devices. Because appeals courts across the country are split on the issue, the US Supreme Court is thought more likely to hear such a case. In the past, the Supreme Court has held that police do not need a warrant to employ so-called “beeper” technology that uses a small radio device to indicate how close police are to a pursued vehicle. Law enforcement advocates argue that a GPS device used to follow a vehicle on a public road is simply a substitute for a surveillance tail which does not require a warrant.
• The draft privacy legislation circulated by Reps. Rick Boucher, D-Va., and Cliff Stearns, R-Fla., that would address online data collection is at the top of the NetChoice Internet Advocates’ Watchlist for Ugly Laws (iAWFUL). According to NetChoice, it has serious concerns about the potential negative impact that these privacy bills will have on the Internet commerce community. The group’s website includes a statement that the Boucher/Stearns proposal would broadly regulate “covered information” in a way that would unduly restrict the flow of useful information and harm the development of ad-supported content and services.

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

In the Courts

• On September 7, 2010, the US Court of Appeals for the Third Circuit was presented with its “first opportunity to review whether a court can deny a Government application under 18 U.S.C. § 2703(d) [of the Stored Communications Act] after the Government has satisfied its burden of proof under that provision, a task that to our knowledge has not been performed by any other court of appeals.” The Government had applied for a federal court order compelling an unnamed cell phone provider to produce a customer’s “historical cellular tower data,” or cell site location information (CSLI). The magistrate judge, in an opinion joined by all her fellow magistrate judges and affirmed by the district court, denied the application on the ground that the government had failed to make a showing of probable cause. The Government argued that it did not need to make such a showing under § 2703(d), which by its terms requires simply a showing of “specific and articulable facts establishing reasonable grounds” that the information sought is “relevant and material to an ongoing criminal investigation.” The Third Circuit agreed that the “standard is governed by the text of § 2703(d),” which the court acknowledged was a “lesser [standard] than probable cause.” Nevertheless, the court of appeals reasoned that the statute in this case may require an extra showing of probable cause. The Third Circuit remanded the matter for a fuller explanation for why that additional showing was required in this particular case: “Because the statute as presently written gives the [magistrate] the option to require a warrant showing probable cause, we are unwilling to remove that option although it is an option to be used sparingly because Congress also included the option of a § 2703(d) order. However, should the [magistrate] conclude that a warrant is required rather than a § 2703(d) order, on remand it is imperative that the [magistrate] make fact findings and give a full explanation that balances the Government’s need (not merely desire) for the information with the privacy interests of cell phone users.” In re Application of the United States of America for an Order Directing a Provider of Electronic Communication Service to Disclose Records to the Government, No. 08-4227 (3d Cir.).
• On August 30, 2010, the US District Court for the District of Delaware largely denied the motion to dismiss of the City of Wilmington against the complaint of Clear Wireless that appealed from the Zoning Board’s denial of a zoning variance. Similar applications had been granted to Sprint, T-Mobile, Cricket and MetroPCS to install similar equipment. The court held that Clear Wireless has stated a valid discrimination claim under 47 U.S.C. § 332(c)(7)(B)(i)(I), rejecting the city’s argument that Clear will render the property over-saturated with equipment and is more intrusive than the other carriers’ equipment. Perhaps most significantly, the court also held that Clear has stated a claim under 47 U.S.C. § 332(c)(7)(B)(i)(II) for “prohibiting the provision of personal wireless services.” The Third Circuit Court of Appeals, which includes Delaware in its circuit, held in 1999 that only the first would-be provider could seek relief under this subsection of the Act, but the Delaware court noted that that holding was superseded by a November 2009 FCC decision stating that this statutory section applies to subsequent carriers as well. The court denied as moot Clear’s claims stemming from the City’s failure to issue a written zoning decision. Clear Wireless, LLC v. City of Wilmington, C.A. No. 10-218-MPT.

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

Legislative Outlook

• The Senate returns today, September 13, 2010, and the House returns September 14, 2010.
• The House Communications Subcommittee will hold a hearing on H.R. 5828, the Universal Service Reform Act Of 2010, on Thursday, September 16, 2010, at 10:00 am in 2322 Rayburn.
• The Senate Judiciary Committee will hold a hearing titled “The Electronic Communications Privacy Act: Promoting Security and Protecting Privacy in the Digital Age” on Wednesday, September 22, 2010, at 10:00 a.m. in 226 Dirksen Senate Office Building. Scheduled witnesses are: James Baker, Associate Deputy Attorney General at the Justice Department; Cameron Kerry, General Counsel at the Commerce Department; James Dempsey, Vice President-Public Policy at the Center for Democracy and Technology; and Brad Smith, General Counsel and Senior VP-Legal and Corporate Affairs for Microsoft Corporation.

Upcoming Events

• On September 23, 2010, in the Arent Fox DC Office, Telecom Group Partner Ross Buntrock will present the regulatory framework that the European Union adopted in 2009 for telecommunications services. Joining Ross will be Laurent Garzaniti and Matthew O’Regan of Freshfields Bruckhaus Deringer. The new regulatory package, which will be implemented in May 2011, will bring significant changes to the shape of regulation in the telecommunications, media and technology sector in Europe. Registration information is provided 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