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 its next Open Meeting to be held October 14, 2010. It contains three items: a Notice of Proposed Rulemaking on the matter of wireless service “bill shock”; a Notice of Proposed Rulemaking on the plan to designate Universal Service funds for the wireless service Mobility Fund; and an order on reconsideration regarding the CableCARD rules. The Agenda is available here.

Federal Trade Commission (FTC) Developments

• On September 22, 2010, Maneesha Mithal, Associate Director for Privacy and Identity Protection at the FTC, testified before the Senate Subcommittee on Consumer Protection, Product Safety, and Insurance in support of S. 3742, the Data Security Breach and Notification Act. Introduced on August 5, 2010 by Sen. Mark Pryor, D-Ark., and Commerce Committee Chair Sen. John “Jay” Rockefeller IV, D-W.Va., the bill would require most companies that store personal information to (1) develop written policies and procedures regarding information security practices, and (2) notify consumers when a security breach occurs. In addition to supporting the current draft of the bill, Ms. Mithal outlined several additional items the FTC would like to see included, such as extending the bill to cover telephone companies and expanding the data breach notification requirements to cover all data, not just data stored in an electronic form. Also testifying was Symantec CTO Mark Bergman, who urged the bill’s quick passage.
  
  A copy of S. 3742 can be found here. The FTC’s press release on the hearing can be found here. The text of the FTC’s written testimony can be found here.

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

Developments in Intercarrier Compensation

• On September 22, 2010, the Wisconsin Public Service Commission (WI PSC) announced that it will be holding a technical conference on October 12, 2010, to continue its investigation into the intrastate access charges assessed by Wisconsin incumbent local exchange carriers (ILECs). The WI PSC established this docket on its own motion last September to investigate ILEC rate structures and to seek industry comment on preventing “unreasonable and unjust” access rates. At the conference, WI PSC Staff will “present a new strawman proposal, then answer questions and discuss the proposal. The technical conference will conclude with a discussion of how to proceed in the docket.” Docket 5-TR-105.
• Also on September 22, 2010, the Michigan Public Service Commission (MI PSC) scheduled a prehearing conference in the complaint proceeding initiated by B&S Telecom, Inc. against AT&T Michigan. B&S alleged in its complaint that AT&T was violating the Michigan Telecommunications Act by failing to provide it wholesale Centrex access services at nondiscriminatory rates and terms. B&S is requesting that the MI PSC issue an order requiring AT&T to file a tariff of its wholesale Centrex service or to otherwise make a schedule of its rates and terms for Centrex service publicly available. Docket No. U-16444.

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

Compliance Notes

• On September 10, 2010, the FCC announced that the proposed Universal Service Contribution Factor for the fourth quarter of 2010 will be 12.9 percent (DA 10-1716). A copy of the Public Notice can be found here.
• 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

• The Rural Utilities Service (RUS) has posted a sample grant agreement for its Broadband Initiatives Program (BIP) on September 17, 2010. A copy of the agreement can be found here.
• On September 23, 2010, RUS posted a reminder to BIP funding recipients regarding the Davis-Bacon Act requirements in the American Recovery and Reinvestment Act (ARRA). It reminds BIP recipients that they are required maintain payroll records, including those prepared by subrecipients, contractors, and subcontractors. Recipients are not required to file the payroll records, but must have them easily accessible for RUS review upon request. A copy of the posting can 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

• At its Open Meeting on September 23, 2010, the FCC adopted the Second Memorandum Opinion and Order on TV “white spaces” that is intended to free up this unlicensed spectrum for the development of new technologies like “super Wi-Fi.” The order, available here, also resolves several technical issues, such as how to reserve channels for wireless microphones. Chairman Genachowski praised the order as “the first significant release of unlicensed spectrum in 25 years” that would “unleash American ingenuity.” His remarks are available here.
• Also during the Open Meeting, the FCC adopted a Report and Order on the E-Rate program designed to “upgrade[] and modernize[] the E-rate program to bring fast, affordable Internet access to schools and libraries across the country.” The changes will allow schools and libraries to use dark fiber and to remain open after school hours to allow community use of their Internet access, will index the $2.25 billion program for inflation, and will streamline the application process. Chairman Genachowski stated that the upgrades will “provide economic opportunity now and in the future.” The news release on the Report and Order is available here. Chairman Genachowski’s statement is available 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.

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

Telecom Privacy News

• As previously reported, the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties held a hearing titled “ECPA Reform and the Revolution in Cloud Computing” on September 23, 2010. Among the 11 witnesses were Edward Felten, Ph.D., Director of the Center for Information Technology Policy, and Paul Misener, Vice President of Global Policy for Amazon.com. In his written testimony, Dr. Felten stated that “From the standpoint of technical and economic efficiency, the cloud offers substantial advantages for at least some users and businesses. ... To the extent that ECPA considerations dictate decisions to use the cloud or not, this makes computing less efficient and impedes progress toward better technology.” Mr. Misener stated in his written testimony that “[W]e believe that ECPA requires law enforcement authorities to obtain a search warrant to compel disclosure. ... If there is any significant ambiguity in ECPA, ... we would support legislation to clarify that compelled disclosure of content may only come as a result of a search warrant, regardless of the age of the communication.” The written testimony of each witness is available here.

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

In the Courts

• On September 20, 2010, the US Court of Appeals for the Tenth Circuit affirmed a $16.5 million verdict against AT&T in favor of its long-distance customers in California who were overcharged for Universal Service Fund (USF) contributions. The court of appeals first had to resolve whether the federal Communications Act of 1934 preempts California’s state unconscionability law that could have invalidated the mandatory arbitration provision in AT&T’s customer contract. On that issue, the court found that “although detariffing ended the strict uniformity imposed by § 203’s filed-rate doctrine, it did not lessen the preemptive force of the uniformity requirements that remained in §§ 201 and 202. The district court’s deferral to the FCC’s order, and its resulting determination that the FCA preempted the non-California residential plaintiffs’ substantive unconscionability claims, but not their procedural unconscionability claims, is therefore correct.” On the merits, the appeals court agreed that AT&T had overcharged for its USF contribution, finding that its contracts did not allow “repeatedly overcollecting [such] charges without timely issuing refunds or revising its UCC rate to compensate for its overbilling.” In re Universal Service Fund Telephone Billing Practice Litigation, Nos. 09-3059 et al. (10th Cir.).
• On September 17, 2010, the US Court of Appeals for the Fifth Circuit affirmed a trial court’s grant of summary judgment in favor of Ingenio, a unit of AT&T, in a patent infringement suit brought by inventor DuVal Wiedmann. The court of appeals found that AT&T’s termination of a licensing agreement with Wiedmann did not constitute a breach. “We agree with the district court that ‘strict compliance with the contract’s notice provisions was not required,’ because DuVal received actual notice and was not ‘in any way prejudiced as a result of this minimal deviation’” from the notice provision, the appeals court said. The court remanded the case back to the trial court to examine the question whether AT&T owes Wiedmann royalties for the period between the contract termination and when the inventor sought re-examination from the US Patent and Trademark Office. DuVal Wiedmann LLC v. InfoRocket.com Inc., No. 09-50787 (5th Cir.).
• Clarification: On September 2, 2010, the US District Court for the Northern District of Illinois granted summary judgment in favor of defendant Peerless Network and related defendants against plaintiff Neutral Tandem in a patent-infringement and antitrust case, and invalidated Neutral Tandem’s local transit traffic patent in the process. The court rejected Peerless’s argument that the challenged services were already provided (by Focal and INS, among others) before Neutral Tandem filed its patent, but held that an earlier patent had disclosed the terms of Neutral Tandem’s patent, rendering the patent invalid as a matter of law. Neutral Tandem, Inc. v. Peerless Network, LLC, No. 08 C 3402 (N.D. Ill.).

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

Legislative Outlook

• The House is presently scheduled to go into recess for the elections on October 1, 2010, and the Senate is scheduled to go out October 8, 2010.
• The Senate Commerce Committee held a hearing on September 23, 2010, titled “Keeping Us Safe - The Need for a Nationwide Public Safety Network.” Witnesses included Mr. Robert Davis, the San Jose Chief of Police and President of the Major Cities Chiefs Association, and Ret. Admiral James Barnett, Jr., Chief of the Public Safety Bureau of the FCC. In his prepared remarks, Committee Chair Sen. John “Jay” Rockefeller IV, D-W.Va., stated that “The grim reality is that in every state represented in this Congress, there are emergencies and crises. This is why I firmly believe that our public safety officials are owed the resources they need to do their job. And this is why nine years after September 11th, we should be ashamed that they lack a nationwide, interoperable wireless broadband communications system.” Additional remarks from the hearing are available in this Committee press release.

Upcoming Events

• The Broadband Expo, Connecting Rural America to the World, will be held November 1-3, 2010, at the Gaylord Texan resort in Dallas, Texas. Information about the event is available 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