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 Final Agenda for the next FCC Open Meeting to be held March 20, 2013, contains the same two items previously noticed: a Notice of Proposed Rulemaking on how to improve the reliability of 911 service; and a report on the FCC’s work with Native American Tribes to expand their access to broadband, voice, and broadcast services. The meeting start time has changed to 10:00 am Eastern. The Final Agenda is available here.
  • On March 15, 2013, the FCC issued two Citations and Orders to two political call service firms, Richard Gilmore d/b/a Democratic Dialing and Dialing Services, LLC, citing them for violations of the Telephone Consumer Protection Act (TCPA). The FCC states that the firms have sent millions of autodialed, prerecorded political messages to wireless phones without prior authorization from the call recipients. In addition, the FCC asserts that many of these prerecorded calls did not contain identification information required under the FCC’s TCPA regulations. The Telecommunications Consumers Division (TCD) reviewed three months’ worth of data and interviewed several call recipients, and concluded that no call recipient provided consent to receive the robocalls. The citations are the required first step in a process that could lead to fines of up to $4.8 million. The firms have 30 days to respond to the citations, copies of which can be found here and here.

The Mobile Market

  • Reply Comments on the remaining issues in the FCC’s Further Notice of Proposed Rulemaking are due April 9, 2013. The Federal Register notice is available here.

Federal Trade Commission (FTC) and Privacy Regulation

  • Google has agreed to pay $7 million as part of a multistate settlement resolving an investigation brought by a group of state attorneys general challenging Google’s alleged unauthorized collection of data through its Street View vehicles. The states, led by Connecticut Attorney General George Jepsen, had conducted a two-year investigation into the practice. The settlement will be divided among 37 states and the District of Columbia. It requires Google to “aggressively police its own employees on privacy issues” by establishing a privacy program within six months and by making privacy certification available to certain employees and training relevant employees. The settlement is notable because it was the result of state-level attorney general action as opposed to action at the federal level. In fact, three federal agencies, including the FTC, investigated Google on the same issue, but only one (the FCC) took any action, levying a small $25,000 penalty – and even there the penalty was not for any privacy-related violations, but rather because Google was found to have obstructed the investigation. To read the press release by the Connecticut Attorney General, click here.
  • The FTC recently released an online video with guidance for developing apps “with consumers’ privacy in mind” and for complying with truth-in-advertising principles. The video addresses “the importance of truthful advertising about what an app is and what it does, as well as the role of transparency in telling users what information the app collects and how it will be used,” the FTC said. It is available here.
  • The FTC will host a “Cramming Roundtable” on May 8, 2013, to examine unauthorized third-party charges, also known as “cramming,” on mobile phone bills. The roundtable will bring together consumer advocates, industry representatives, and government regulators to explore various issues, including how mobile cramming occurs and how to protect consumers from this practice. The roundtable is free and open to the public and will be held at the FTC’s satellite building conference center, located at 601 New Jersey Avenue, NW, Washington, DC. More information is available here.
  • The FTC has announced that it will host a one-day public forum on June 4, 2013, addressing malware, viruses and similar threats facing users of smartphones, tablets and other mobile technologies. According to the press release, the one-day forum “will focus on the security of existing and developing mobile technologies and the roles various members of the mobile ecosystem can play in protecting consumers from these types of security threats.” Technology researchers and other interested parties are invited to recommend topics for discussion and to submit requests to serve as panelists at the forum, which topics and requests should be submitted electronically to mobilethreats@ftc.gov by March 28, 2013. More information regarding the one-day forum is available here.

New Markets: Smart Grid and E-Health

  • New FTC Chair Edith Ramirez recently noted that the continued development of the “internet of things” and its implications for privacy will be an issue of focus at the agency under her watch. Because the smart grid will play an increasingly significant role in data communication, it is possible that the FTC may turn its attention to consumer protection efforts in this area. Ramirez stated that “no matter what we do at the FTC, the reality is that technology is just developing at a pace that we can barely keep up with. We need to be conscious of this, and it absolutely needs further study, and I certainly want to make sure the agency is looking at all these developments.” Ramirez suggested that the agency may even hold a workshop to examine these issues. To read more, click here.

Developments in Intercarrier Compensation

  • On March 12, 2013, the FCC announced a settlement agreement with Level 3 Communications involving rural call completion practices. The FCC stated that the failure to complete calls in rural areas is driven “primarily by long-distance carriers or intermediate providers attempting to reduce the intercarrier compensation paid to local telephone companies for completing long-distance calls to a rural home or business.” As part of the settlement, Level 3 agreed to make a $975,000 contribution to the US Treasury. In addition, for two years Level 3 is required to complete long-distance calls to carriers in rural areas at a rate within 5% of that in non-rural areas. Beginning in January 2014, Level 3 must report compliance with this 5% benchmark on a quarterly basis, and it will be required to pay an additional $1 million if it misses the 5% benchmark in any quarter. Level 3 also agreed to provide additional information to the FCC regarding least cost routing providers, and to cease handing off traffic to carriers that do not complete calls within the 5% benchmark. To read the FCC’s announcement of the settlement, click here.

Compliance Notes

  • UPDATED: Companies that provide telecommunications and Voice over Internet Protocol (VoIP) service are reminded that completed FCC Forms 499-A are due April 1, 2013. These forms report annual revenue to the Universal Service Administrative Company (USAC) and the Federal Communications Commission (FCC), as well as other fund administrators. This form must be filed by all interstate telecommunications carriers, interconnected VoIP providers, providers of interstate telecommunications that offer service for a fee on a non-common carrier basis (including stand-alone audio bridging companies), and payphone providers that are aggregators. In addition, non-interconnected VoIP providers are now required to file this form for the assessment of fees to support the Telecommunications Relay System (TRS).

A copy of the form may be found here. The instructions for completing Form 499-A may be found here.

The revenues reported on Form 499-A provide the basis for true-up of a company’s Universal Service contributions and serve as the basis for assessing annual fees for the TRS, Local Number Portability (LNP) fund, the North American Numbering Plan Administration fund, and the FCC’s annual fee.

Companies may submit FCC Form 499-A electronically, if they have registered with USAC. If a company submits its FCC Form 499-A to USAC in hard copy, it must contain an officer’s original signature.

  • Certificates regarding disabled persons’ access to services are due April 1, 2013. Telecommunications carriers, equipment manufacturers, Voice over Internet Protocol (VoIP) providers, including non-interconnected VoIP providers, wireless carriers, and advanced communications service providers are required to file a certificate with the FCC stating that they maintain records of any and all efforts undertaken to ensure their products and services are accessible to those with disabilities. Specifically, companies must maintain records of:
    • Their efforts to consult with individuals with disabilities;
    • Descriptions of the accessibility features of its products and services; and
    • Information about the compatibility of these products and services with peripheral devices or other equipment typically used to gain access to the company’s services, such as hearing aids.

The certificate has a look-back period to January 30, 2013, and also will be required to be filed annually on a going-forward basis.

The certificate must identify both a contact within the company who is authorized to resolve complaints, as well as an agent to receive any informal complaints that may be received by the FCC regarding the company alleging violations of the Commission’s accessibility rules, or Sections 255, 716, and 718 of the Communications Act of 1934, as amended (the Act). These sections of the Act requires providers to ensure that their services and equipment are accessible by the disabled, including that any Internet browsers included on mobile telephones are accessible by those who are visually disabled (unless doing so is not achievable), and to maintain the records described above. In addition, the certificate must be supported by a declaration or affidavit signed under the penalty of perjury by an officer of the company who has personal knowledge of the company’s recordkeeping policies and procedures.

The FCC has established a filing portal for this certificate, which can be found here. More information can be found in the Public Notice found here. (DA 13-114)

  • 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)

In the Courts

  • On March 12, 2013, the US District Court for the Western District of Washington granted AT&T Mobility’s motion to compel arbitration in two putative class action suits challenging its pass-through of the Washington State business and occupations tax as a surcharge. AT&T first moved to compel arbitration after the cases were filed in 2006. The court denied the motion, finding AT&T’s arbitration clause unconscionable under Washington law. But four years later, plaintiffs lost on the merits on summary judgment. Plaintiffs appealed to the Ninth Circuit, which certified the question to the Washington Supreme Court. The Supreme Court disagreed with the district court’s summary judgment ruling, finding that AT&T had violated the tax statute by passing its tax liability onto consumers’ bills. During the pendency of the Ninth Circuit appeal, the US Supreme Court issued its Concepcion decision, holding that the Federal Arbitration Act preempts state laws like Washington’s that invalidate arbitration clauses simply because they prevent consumers from pursuing relief on a class basis. After the Ninth Circuit returned the case to the district court, AT&T moved to compel arbitration again. The Plaintiffs argued that AT&T had waived its right to arbitrate by waiting so long after Concepcion to demand arbitration. The court disagreed. It concluded that AT&T “had no reason to move to compel arbitration until the Ninth Circuit reversed this Court’s summary judgment orders in its favor,” and that AT&T “filed its motions to compel arbitration promptly after the Ninth Circuit issued its mandate and jurisdiction was returned to this Court.” The court also rejected Plaintiffs’ prejudice argument, noting that the “lion’s share” of the appellate process had already been completed before Concepcion. The cases will now head to arbitration. Riensche v. Cingular Wireless LLC, Nos. C06-1325, et al. (W.D. Wash. Mar. 12, 2013).

Legislative Outlook

  • Various House Commerce Committee subcommittees will hold hearings this week regarding E-Health issues:
    • The Communications Subcommittee will hold a hearing titled “Health Information Technologies: Harnessing Wireless Innovation” on March 19, 2013, at 10:30 am Eastern in 2123 Rayburn.
    • The Health Subcommittee will hold a hearing titled “Health Information Technologies: How Innovation Benefits Patients” on March 20, 2013, at 10:00 am Eastern in 2123 Rayburn.
    • The Oversight Subcommittee will hold a hearing titled “Health Information Technologies: Administration Perspectives on Innovation and Regulation” on March 21, 2013, at 9:00 am Eastern in 2322 Rayburn.

For more information about these hearings, go to the Commerce Committee’s hearing webpage here.

  • Several additional bills have been introduced regarding cellphone unlocking. On March 11, 2013, Sen. Patrick Leahy, D-Vt., Chair of the Senate Judiciary Committee, introduced S. 517, the “Unlocking Consumer Choice and Wireless Competition Act”. It would repeal the Librarian of Congress decision to render unlocking illegal and require it to conduct a rulemaking within one year as to whether other mobile devices should be eligible for unlocking. That bill is available here. Sen. Amy Klobuchar, D-Minn., introduced S. 481, the text of which was not available when we went to print. In addition, on the House side, Rep. Bob Goodlatte, R-Va., Chair of the House Judiciary Committee, introduced H.R. 1123, which also was unavailable. These bills join S. 467, the Wireless Device Independence Act of 2013, that was introduced by Sen. Wyden, D-Ore., on March 5. See March 11, 2013 edition of This Week in Telecom.