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’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. To register for one of these sessions, send a company profile via email by June 21, 2013, to Karen.Beverly@fcc.gov. For more information, click here.
  • The next FCC Open Meeting is June 27, 2013. We will provide the Tentative Agenda when it is released. The following Open Meetings presently are scheduled for August 9 and September 26.

The Mobile Market

  • On June 6, 2013, the House Subcommittee on Courts, Intellectual Property, and the Internet held a hearing regarding the October 2012 decision by Librarian of Congress to end an exemption to copyright laws that allowed consumers to unlock their mobile phones. Specifically, the committee was considering HR 1123, The Unlocking Consumer Choice and Wireless Competition Act, which was introduced by a bipartisan group of Judiciary Committee members in March. The bill would reverse the Librarian’s decision regarding mobile phones and also direct the US Copyright Office to consider granting exemptions to enable consumers to unlock other types of wireless devices. A companion bill with the same title has been introduced in the Senate as S. 517. According to prepared testimony, available here, several groups, including CTIA, the Competitive Carriers Association, Consumers Union, and an industry copyright coalition all endorsed the legislation at the hearing. The text of HR 1123 is available here.
  • The next FirstNet Workshops will be in St. Louis (June 12-13), Boston (June 19-20), and Memphis (June 26-27). 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.
  • On May 1, 2013, the FCC released a Notice of Proposed Rulemaking on measures it may adopt to prevent the use of cellphones by incarcerated persons. 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.” Comments on the NPRM are due 30 days after Federal Register publication, and Reply Comments are due 45 days after publication. 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.

New Markets: Smart Grid and E-Health

  • On May 29, 2013, the FCC released an Order on Reconsideration that clarifies some of the rules it adopted earlier this year in the Experimental Licenses docket. The modifications were made on the Commission’s own motion after it concluded that the rules regarding the transfer of certain experimental licenses were vague. The Order on Reconsideration concludes that it is “in the public interest” to impose a complete prohibition on “the transfer of program, medical testing, and compliance testing experimental radio licenses.” The Commission will, however, continue to “permit conventional experimental authorizations to be transferred with the written approval of the Commission.” It reasoned that this prohibition on transfer is appropriate due to the specialized nature of medical testing and compliance testing licenses, each of which are available only to specialized organizations such as universities or hospitals. In addition, many of these new experimental licenses allow the experimentation to occur only at a designated location, making transfer of the license to another entity largely impractical. The full Order on Reconsideration (FCC 13-79) is available here.

Developments in Intercarrier Compensation

  • On June 5, 2013, the Iowa Utilities Board (IUB) issued an order approving Aventure Communication Technology’s notice to discontinue its provision of all regulated telecommunications services in the state of Iowa. Aventure filed the notice on May 9, 2013, stating that it is unable to continue to offer telecommunications services in Iowa due to the failure of certain long-distance carriers to pay intercarrier compensation “billed by and owed to Aventure for access services provided by Aventure to those carriers over the past eight years.” Aventure stated that it will continue to provide Internet access and other services that are not subject to IUB regulation. On May 23, 2013, the Iowa Consumer Advocate Division of the Department of Justice filed a response to Aventure’s notice, asserting that Aventure should not be permitted to discontinue service and relinquish its certificate of public convenience and necessity unless it complies with the IUB’s refund order in Docket No. FCU-07-2, in which the IUB ruled that Aventure, among other local exchange carriers, was required to issue refunds for any intrastate terminating access charges paid by Qwest, Sprint and AT&T for traffic terminating to conference calling companies served by Aventure. The IUB ruled that although Aventure may not be subject to the IUB’s requirement to establish an escrow account, it remains subject to the refund obligations established in the IUB’s access charge decisions. The IUB will nevertheless permit Aventure to discontinue regulated services in Iowa effective August 10, 2013. Docket No. SPU-2013-0012.

Compliance Notes

  • The FCC requests comment on its proposed methodologies for allocating and collecting its annual regulatory fees from its licensees. Initial Comments are due June 19, 2013, and 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 FCC Wireline Competition Bureau has announced its proposed funding requirements for the North American Numbering Plan (NANP) Administration for Fiscal Year 2013. Every telecommunications carrier and interconnected Voice over Internet Protocol (VoIP) provider is required to contribute to numbering administration on a competitively neutral basis, as follows: either a minimum of $25; or the product of the carrier’s end user telecommunications revenue, as reported on the filer’s FCC Form 499-A, multiplied by the contribution factor proposed to be 0.0000302. This contribution factor will become effective June 12, 2013, if the FCC takes no action regarding the proposed fund size before then. A copy of the Public Notice (DA 13-1215) can be found here. (CC Docket No. 92-237).
  • 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)

Broadband News

  • On June 6, 2013, in remarks at Mooresville Middle School in Mooresville, NC, President Obama stressed the need to “bring our schools and libraries into the 21st century.” To that end, the President is “directing the Federal Communications Commission, which is the FCC, to begin a process that will connect 99 percent of America’s students to high-speed broadband Internet within five years.” To read the full speech, click here.

In the Courts

  • On June 3, 2013, the US District Court for the District of Columbia held that Sky Angel, which operates FAVE-TV, failed to allege viable antitrust claims against C-SPAN following the latter’s termination of the parties’ IPTV contract that allowed Sky Angel to distribute C-SPAN’s networks real-time via an internet protocol-based stream. Sky Angel alleged that C-SPAN terminated the contract because, despite being a non-profit, C-SPAN is in fact “controlled by cable industry MVPDs [multichannel video programming distributors], the top ten largest of which hold seats on C-SPAN’s board.” The court first rejected C-SPAN’s argument that the court lacked subject matter jurisdiction to hear Sky Angel’s antitrust suit. C-SPAN argued that Section 628 of the Communications Act gives the FCC exclusive jurisdiction over the case. The court found that a “curious assertion,” noting that the “Sherman Act plainly falls within the Court’s federal question jurisdiction.” The court concluded that C-SPAN “cannot dodge this Court’s jurisdiction over the Sherman Act claims in this case by arguing that the facts overlap in part with a potential Section 628 claim.” But the court agreed with C-SPAN that Sky Angel’s factual allegations didn’t add up to a plausible Sherman Act claim. Claims under Sherman 1 require concerted activity in restraint of trade. The court agreed that C-SPAN, despite being a single entity, could be capable of violating section 1 via those various board members who may have “act[ed] on interests separate from the firm itself.” But a conceivable claim is not a plausible, sustainable one – “Because Sky Angel does not provide any factual context for the cable MVPD board members’ alleged agreement,” the court dismissed the Section 1 Sherman Act claim without prejudice. With respect to the Sherman 2 claim, the court agreed that Sky Angel could not plead that all of the C-SPAN board members’ individual MVPD interests could create a “shared monopoly” that they were allegedly trying to protect. The court held that Sky Angel did adequately plead injury in fact and antitrust injury, and thus granted it leave to amend to sufficiently plead the factual bases for its Sherman Act claims. Sky Angel US, LLC v. National Cable Satellite Corp., No. 12-1834 (RC) (DDC June 3, 2013).

Legislative Outlook

  • The House Communications Subcommittee will hold a hearing titled “The Satellite Television Law: Repeal, Reauthorize, or Revise?” on June 12, 2013, at 10:30 am Eastern in 2123 Rayburn. To read the Hearing Notice, click here.
  • Sen. John “Jay” Rockefeller IV, D-W.Va., Chair of the Senate Commerce Committee, has echoed Pres. Obama’s call to bring more Internet access to America’s schools, stating that “as impressive and important as the E-Rate program has been, basic internet connectivity is no longer sufficient to meet our 21st Century educational needs. It is time to create E-Rate 2.0.” The full statement is available here.