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Federal Communications Commission (FCC) Announcements

• The FCC has released a Further Inquiry into Two Under-Developed Issues in the Open Internet Proceeding. The Commission is seeking comment on seven issues regarding the proposed Open Internet principles that require further discussion. Comments are due 30 days after the item is published in the Federal Register, and Reply Comments are due 25 days thereafter. 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. We will send a further Client Alert apprising you of the comment deadlines after publication.
• 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

• The FTC has released a pamphlet titled Net Cetera: Chatting With Kids About Being Online that “helps parents protect their kids and talk to them about living their lives online.” It is available here.
• On August 26, the FTC announced the settlement of its case against Reverb Communications, Inc., a marketing company, in which it claimed that the company had engaged in deceptive advertising practices by having employees pose as ordinary consumers and post reviews of iPhone applications. Specifically, the complaint alleged that Reverb employees posted favorable reviews of their clients’ games to the iTunes site without disclosing their connection to the developers of the games. In its guide issued last year, the FTC stated that online posts by a person connected to the seller of a product or service must disclose their connection to the seller. In re Matter of Reverb Commc’ns, Inc., et al., FTC File No. 092 3199. A copy of the complaint can be found here. A copy of the press release can be found here.

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 1, 2010, the Idaho Public Utilities Commission reaffirmed its February 2010 order denying Time Warner Cable Information Services, LLC a certificate of public convenience and necessity (CPCN). In Time Warner’s original petition, the company requested the authority to provide “retail and wholesale facilities-based intrastate telecommunications services to commercial customers in all existing telephone exchanges in Idaho.” With a more developed factual record, however, the Commission ruled that Time Warner “will essentially be a carrier’s carrier,” and will not offer service directly to end users. As a result, the Commission asserted it does not have jurisdiction to grant Time Warner a CPCN, but that Time Warner nonetheless may offer its VoIP services within the state on a wholesale basis. The Commission further ruled that if “any Idaho local exchange company refuses to enter into an interconnection agreement with Time Warner, Time Warner’s remedy is to file a complaint with the Commission.” Docket No. TIM-T-08-1.
• On August 30, 2010, AT&T Florida filed a notice with the Florida Public Service Commission stating that it has voluntarily dismissed its complaint against Grande Communications Networks LLC and Grande Communications Networks, Inc with prejudice. AT&T had asserted in its complaint that Grande breached the parties’ interconnection agreement (ICA) by refusing to pay nearly $290,000 in reciprocal compensation charges. In its answer to AT&T’s complaint, Grande claimed that the traffic in question was VoIP traffic and therefore fell outside the parties’ ICA. AT&T did not disclose whether the parties had settled their dispute for the treatment of VoIP traffic going forward. Docket No. 100275-TP.

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

Compliance Notes

• Completed Universal Service Form 499Qs, for the reporting of historical revenue for the Third Quarter of 2010 and projected revenue for the Fourth Quarter of 2010, are due November 1, 2010. The form is available 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 August 31, 2010, the Rural Utilities Service (RUS) released a directory of applications received for Satellite, Rural Library and Technical Assistance under the Broadband Initiatives Program (BIP) in the second round of funding. The directory 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 August 27, 2010, the FCC released its first International Broadband Data Report pursuant to Section 1303 of the Broadband Data Improvement Act. The report includes a spreadsheet detailing the typical broadband speeds and costs in 37 countries. The report is available here.
• On Thursday, September 2, 2010, the FCC released a report on “high speed” Internet access service in the United States as of June 2009 based on Form 477 data. The report is entitled Internet Access Services: Status as of June 2009 and contains information from Form 477 about availability and broadband speeds, among other information. Some of the most interesting statistics in the report include that only 44 percent of fixed connections (as opposed to mobile) met or exceeded the speed tier that most closely approximates the universal availability target set in the National Broadband Plan of 4 megabits per second (Mbps) downstream and 1 Mbps upstream. The report is available here. The press release on the report is available here.
• The FCC has released the Seventh Broadband Notice of Inquiry in which it seeks comment on the definition of “advanced telecommunications” as well as the proper metrics for evaluating broadband and whether broadband has been deployed sufficiently. Comments are due today, September 7, 2010, and Reply Comments 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

• The US Second Circuit Court of Appeals has agreed with the US District Court for the District of Connecticut that using an iPhone to record a conversation, when such recording is not for an otherwise tortious or criminal act, does not violate the Wiretap Act, 18 U.S.C. § 2510. In Caro v. Weintraub et al., No. 09-3685, 2010 WL 3191353 (2d Cir. Aug. 13, 2010), a three-judge panel upheld the lower court’s dismissal of a suit brought by Marshall Caro against his stepchildren and their lawyers. The case involves a dispute over the estate of Caro’s wife, Elizabeth. One of Caro’s stepsons allegedly used a “recorder” application on the iPhone to surreptitiously record part of a heated conversation between himself, Caro and others about Elizabeth’s signing of a will before her death. Three days later, Elizabeth died without a will. Caro filed suit when the recordings were introduced as evidence in subsequent probate proceedings. US District Judge Peter C. Dorsey dismissed Caro’s suit with prejudice, concluding that the recording was legal because the Wiretap Act permits the recording of a conversation if one party consents to it. On appeal, Caro argued that the recording was made with tortious intent, that is, invasion of privacy, and was thus actionable. The Second Circuit upheld Judge Dorsey’s ruling, finding that Caro’s failure to allege that Weintraub intended to use the recording for any tortious purpose beyond the recording itself, such as extortion, bribery or theft of trade secrets, was fatal to his claim. “[T]o bring a claim under the Wiretap Act, the offender must intercept with tortious intent that relates to a tort independent from the act of recording itself,” the panel stated.
• The Foreign Intelligence Surveillance Court is proposing new rules that would give both telecommunications providers and the federal government new rights under the revised Foreign Intelligence Surveillance Act approved two years ago. In a final draft of court rules made late last month, a provider who receives a directive from the federal government related to surveillance would be allowed to file a petition to modify or set aside the directive. If a carrier fails to comply with a government directive, however, federal officials would be allowed to file a petition to compel the company to comply with the order. The court is currently accepting comment on the proposed rules until October 4, 2010. The proposed rules are available here.

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

In the Courts

• On August 27, 2010, the US District Court for the Southern District of California denied the City of San Diego’s motion to dismiss various claims brought by Verizon Wireless, AT&T (New Cingular Wireless), American Tower Corporation, and Crown Castle Company. The plaintiffs challenged San Diego’s denial of their applications to renew conditional use permits for various monopoles in the city. They alleged that the “City delayed decisions on the applications for years,” and that the applications were “[u]ltimately ... denied for failing to comply with the City’s current requirements,” notwithstanding that the city allegedly “has approved permits for and granted extensions for monopoles or monopole-like structures in the City under nearly identical circumstances[.]” The court denied the city’s motion to dismiss in its entirety, and held that the carrier plaintiffs have stated claims for relief on the following theories: unreasonable discrimination under 47 U.S.C. § 332(c)(7)(B)(i), violations of California Code of Civil Procedure § 1094.5 (state and local zoning laws), unlawful barrier to competition under 47 U.S.C. § 253, and violations of the Equal Protection Clause of the United States Constitution, California’s Permit Streamlining Act, and the Dormant Commerce Clause. The court ordered the city to answer the pending complaints within 10 days. In re Cell Tower Litig., Nos. 07-cv-399 BEN (WVG), et al. (S.D. Cal.).
• On August 25, 2010, the US Court of Appeals for the Second Circuit denied an appeal by Global NAPs and several related entities that challenged the entry of summary judgment by the US District Court for the District of Connecticut in favor of Southern New England Telephone (SNET) on its claims to recover tariffed charges from Global NAPs for special access services. The underlying dispute arose when SNET demanded payment for the provision of the special access circuits; Global NAPs demurred, insisting that the parties’ interconnection agreement (ICA) required SNET to provide those facilities at its cost. The Second Circuit rejected Global NAPs’ argument that the federal district court lacked subject matter jurisdiction to resolve the dispute because it required the interpretation of the parties’ ICA. The court held that SNET’s claim for recovery under its federal special access tariff was enough to vest subject matter jurisdiction in the federal court. The court distinguished opinions from other courts holding that actions – as opposed to defenses – that require the interpretation of an ICA should first be heard by the state public utility commission that approved the ICA. The court found that this case presented a different question which it answered in the negative: “whether a district court, presented with a case involving a federal claim properly within its jurisdiction in which the defendant raises a question of ICA interpretation as a defense, loses federal jurisdiction because the ICA issue was not presented to a state PUC.” The appeals court also held that the district court did not abuse its discretion in granting default judgment against the Global NAPs entities “for failure to comply with various discovery orders related to their corporate structure and financial information.” Southern New England Tel. Co. v. Global NAPs Inc., No. 08-4518-cv (2d Circuit).

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

Legislative Outlook

• The US House of Representatives and the US Senate are out of session. The Senate returns September 13, 2010, and the House returns September 14, 2010.
• A few members of Congress have issued statements reacting to the FCC’s Further Inquiry in the Open Internet proceeding. Rep. Edward Markey, D-Mass., stated that “It is my hope that the FCC will move quickly to complete its ‘Third Way’ proceeding in order to protect consumers, safeguard fair competition, and preserve the openness that has enabled the Internet to become the most successful communications and commercial medium in history.” Sen. John Ensign, R-Nev., stated that “considering that net neutrality is the primary reason for the Chairman’s misguided attempt to re-regulate the internet under heavy-handed monopoly rules, I hope he puts his reclassification plans on the shelf indefinitely. It would be a mistake for the FCC to go down the Title II rabbit hole when it doesn’t even fully understand where it wants to go on net neutrality. Either way, the FCC should avoid taking a heavy-handed approach to the Internet that might stifle innovation and investment in broadband services.”

Upcoming Events

• Telecom Group Partners Jon Canis and Ross Buntrock will be presenting at the COMPTEL Plus 2010 Fall Convention + Expo being held September 12-15, 2010, in Dallas. For more information or to register, click here.
• 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