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.

Federal Communications Commission (FCC) Announcements

  • The FCC has released the Final Agenda for its next Open Meeting on June 27, 2013, at 10:30 am Eastern. It contains the same five items previously noticed, including a Declaratory Ruling to clarify how customer proprietary network information (CPNI) rules apply to mobile devices, as well as Staff presentations on the status of Universal Service reform and the broadcast spectrum incentive auctions. To read the full Final Agenda, click here.
  • The FCC’s Office of Communications Business Opportunities will hold an Access to Capital Conference and Workshop on July 11, 2013, from 9:00 am to 4:30 pm. The morning session will feature a panel discussion, and the afternoon session will consist of one-on-one meetings where small businesses can discuss funding opportunities with the panelists. For more information, click here.

The Mobile Market

  • The last FirstNet Workshop will be in Memphis on June 26-27, 2013. FirstNet is the organization charged with building a nationwide public safety broadband network. (See May 20 edition of This Week in Telecom.) For more information, click here.
  • The FCC Notice of Proposed Rulemaking on contraband cellphones in prisons has been published in the Federal Register. Comments are due July 18, 2013, and Reply Comments are due August 2, 2013. In the NPRM, the FCC states that “[p]risoners’ use of contraband wireless devices to engage in criminal activity is a serious threat to the safety of prison employees, other prisoners, and the general public.” The proposed rules would make it easier for correctional facilities to enter into leases or spectrum management agreements, allowing them to control which wireless devices were able to access the network. In addition, the proposed rules would “require wireless providers to terminate service, if technically feasible, to a contraband wireless device if an authorized correctional facility official notifies the wireless provider of the presence of the contraband wireless device”. The Commission also invites comment on “other technological approaches for addressing the problem of contraband wireless device usage in correctional facilities.” The NPRM is available here. GN Docket No. 13-111; ET Docket No. 08-73; WT Docket No. 10-4.

Federal Trade Commission (FTC) and Privacy Regulation

  • The Federal Trade Commission is seeking public comment on proposed amendments to strengthen the Telemarketing Sales Rule (TSR) protections against fraudulent charges and services. In particular, the FTC seeks to curtail the use of a number of payment methods favored by unscrupulous entities, including (i) “stop[ping] telemarketers from dipping directly into consumer bank accounts by using unsigned checks and ‘payment orders’ that have been ‘remotely created’” and (ii) “bar[ring] telemarketers from getting paid with traditional ‘cash-to-cash’ money transfers, as well as ‘cash reload’ mechanisms.” Public comments on the proposed amendments to the TSR will be accepted until July 29, 2013. More information is available here.
  • The FTC has announced a public workshop to be held on November 21, 2013, in Washington, DC to address the consumer privacy and security issues raised by the growing connectivity of consumer devices such as smart phones, cars, appliances, and medical devices, also commonly referred to as “The Internet of Things”. More information regarding the “Internet of Things” workshop and comments is available here.

Developments in Intercarrier Compensation

  • On June 17, 2013, the Iowa Utilities Board (IUB) issued an order granting YMax Communications Corp.’s withdrawal of its application for designation as an eligible telecommunications carrier (ETC) under the Universal Service regime. YMax filed its application on December 21, 2012, and sought only low-income support, but not high-cost support. On January 10, 2013, the Consumer Advocate Division of the Iowa Department of Justice filed an objection to YMax’s application and asked the IUB to initiate a proceeding to determine whether YMax offers service in Iowa that is consistent with the public interest, as required by Iowa Code Section 476.29 and YMax’s certificate of public convenience and necessity. On May 23, 2013, YMax filed a request to withdraw its application without prejudice to refiling. The IUB, in granting YMax’s request, noted that no objections to the withdrawal had been filed and that the request was reasonable. Docket No. ETA-2012-0006.

Compliance Notes

  • The FCC requests comment on its proposed methodologies for allocating and collecting its annual regulatory fees from its licensees. Reply Comments are due June 26, 2013. The FCC proposes to maintain its current rate of $0.00375 per assessable dollar for Fiscal Year 2013 for interstate telecommunications service providers (ITSPs), and $0.17 per subscriber for each Commercial Mobile Radio Service Provider (CMRS). As part of this proceeding, the FCC is proposing to change how it calculates the revenues needed to regulate all of its licensees in Fiscal Year 2014. The FCC also proposes to combine the wireless and ITSP categories, and having this combined category of providers pay their annual regulatory fees based upon their revenues, as the ITSPs do currently.

The FCC will no longer accept checks and hardcopy forms (such as FCC Form 159-W) beginning October 1, 2013, for payment of regulatory fees. This change is made in accordance with the Office of Management and Budget’s Open Government Directive, which requires the US Treasury to move towards paperless payment processes. A copy of this Notice of Proposed Rulemaking (FCC 13-74) can be found here. (MD Docket No. 12-201, MD Docket No. 13-58, MD Docket No. 08-65).

  • The Universal Service contribution factor for the second quarter of 2013 is 15.5%. A copy of the Public Notice announcing the rate can be found here. (DA 13-422)
  • The FCC has proposed a Universal Service Fund contribution factor of 15.1% for the third Quarter of 2013. It will be deemed approved on June 27, 2013, unless the FCC amends it prior to that date. A copy of the Public  Notice announcing the proposed contribution factor can be found here. (DA 13-1361)

In the Courts

  • On June 18, 2013, the U.S. District Court for the Northern District of Texas ended U.S. Bank’s $9 billion fraud suit against Verizon Communications. The case arise out of Verizon’s 2007 spinoff of its phone directory unit into a separate entity, Idearc Inc., which then sought bankruptcy protection in 2009. In January 2013 the court had concluded that Idearc was not insolvent on the day it was spun off, as U.S. Bank claimed. In this June decision, the court remained unpersuaded by U.S. Bank’s “titillating allegations” of fraud. To the contrary, the court found that U.S. Bank had “not demonstrated to this court that it has a coherent notion of how these unsavory actions are, in light of the solvency finding, logically or reasonably related to the $9 billion damage award it seeks.” The court further held that, “The constructive fraudulent transfer claims obviously fail on the merits[.]” The court will enter judgment for Verizon and related defendants. U.S. Bank N.A. v. Verizon Commc'ns Inc., No. 3:10-cv-01842 (N.D. Tex. June 18, 2013).

Legislative Outlook

  • The House Communications Subcommittee will hold a hearing titled “Equipping Carriers and Agencies in the Wireless Era” on June 27, 2013, at 10:30 am Eastern in 2322 Rayburn. Witnesses have not yet been announced. To view the Hearing Notice, click here.