Federal Communications Commission (FCC) Announcements

  • The next meeting of the Consumer Advisory Committee will be August 2, 2013, 9:00 am to 4:00 pm Eastern at FCC Headquarters. Expected topics include access for persons with disabilities and the impact of emerging technologies on consumers. More information is available here.

The Mobile Market

  • AT&T, Inc. recently announced plans to buy wireless service provider Leap Wireless. Leap owns the Cricket brand, a pre-paid wireless company that is the sixth largest wireless carrier in the country. Leap’s network footprint is estimated to cover at least 96 million people nationwide and it reports having approximately five million customers. Late last year, Leap reported that as much as 60% of the its spectrum was not being utilized, making it a likely target for AT&T which previously failed in its bid to acquire T-Mobile as a means of gaining additional spectrum rights. Under the terms of the deal announced on July 12, 2013, AT&T will pay shareholders $15 per share, totaling about $1.18 billion for the company. AT&T will gain rights to the proceeds from the anticipated sale of Leap spectrum covering Chicago, but would also assume Leap’s outstanding debt of $2.8 billion. AT&T stated that holders of about 29% of Leap’s common stock have already agreed to vote for the merger. The merger is subject to approval by the FCC and the Department of Justice, which will likely take six to nine months to obtain.
  • EXTENSION GRANTED: In response to a request from Minority Media and Telecommunications Council (MMTC), the Wireless Telecommunications Bureau has extended the deadline to file reply comments in response to the Bureau’s Public Notice seeking comment on the state of the competition in the mobile marketplace. The Bureau is particularly interested in receiving comments on the role minority and women-owned enterprises play in shaping competition in the mobile wireless marketplace. The new deadline is July 25, 2013. The notice of the extended deadline is available here. The related notices are available here and here.
  • Reply Comments on the FCC Notice of Proposed Rulemaking regarding contraband cellphones 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 FTC has announced that an “Internet marketer” has agreed to settle charges against it alleging that it had illegally sent over 20 million unwanted and deceptive text messages to consumers. According to the FTC, the text messages “offer[ed] supposedly free iPhones and iPads to those who clicked on links in the messages. Those who clicked were instead taken to sites that requested substantial personal information and required an elaborate process — often involving other purchases or paid subscriptions — to be eligible for the ‘free’ devices.” The settlement prohibits the Internet marketer from involvement in future unwanted text messages and misleading marketing campaigns, and also imposes a monetary fine of $60,950. More information is available here.
  • EXTENSION GRANTED: Comments on proposed changes to the FTC’s Telemarketing Sales Rule (TSR) are now due August 8, 2013. 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.” The news release about the extension is available here.
  • DATE CHANGE: The FTC has changed the date of its consumer privacy workshop to November 19, 2013. The Workshop will 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 July 11, 2013, Rep. Jerry McNerney, D-Cal., and Rep. Matt Cartwright, D-Penn., have introduced the Smart Grid Advancement Act of 2013 to the U.S. House of Representatives. The Smart Grid Advancement Act intends to move forward the development of a more efficient electrical grid. The bill tasks states and public service commissions with establishing goals for reducing electrical use during peak times through the use of smart grid technologies. It also seeks to make improvements to the Energy Star program so that it will be better integrated with smart grid features. More information is available here.

Developments in Intercarrier Compensation

  • On July 15, 2013, Texas Public Utility Commission (TPUC) Staff filed a recommendation for how to proceed with the agency’s ongoing rate proceeding after CenturyLink successfully obtained a temporary injunction in Texas state court to prevent the TPUC from regulating its retail rates. TPUC Staff initiated this proceeding on January 7, 2013, to determine a reasonable rate for basic local telecommunications service provided by each incumbent local exchange carrier (ILEC) that receives support from the Small and Rural Incumbent Local Exchange Company Universal Service Plan in Texas. By statute, reductions in the level of support provided to ILECs are required to be implemented by January 1, 2014. On July 9, 2013, however, CenturyLink obtained a temporary injunction against further TPUC action as to its rates, convincing a court that it elected to be regulated under Chapter 59 of Texas Code which prevents CenturyLink from raising its retail rates in most circumstances, but deprives the TPUC of jurisdiction over CenturyLink’s retail rates “under any circumstances.” TPUC Staff therefore recommended that a separate proceeding be created as to CenturyLink and then stayed during the pendency of the state court’s consideration of a permanent injunction. Staff urged that the remainder of the “proceeding proceed as expeditiously as possible.” Docket No. 41097.

Compliance Notes

  • The FCC is seeking comment on revisions to Forms 470 and 471. Both forms are used by applicants seeking support for funding of projects under the Schools and Libraries Universal Service Funding Mechanism, more commonly known as the E-Rate Program. Form 470 is used to open the competitive bidding process, and Form 471 is filed by the E-Rate applicant to identify the services for which it is seeking reimbursement. The proposed changes to the forms include inquiries about broadband connectivity, and the number, type and speed of current broadband connections. Comments are due August 16, 2013, with Reply Comments due August 30, 2013. (CC Docket No. 02-6, DA 13-1590)

A copy of the Public Notice can be found here.

A copy of the proposed Form 470 can be found here, while the proposed Form 470 instructions can be found here.

A copy of the proposed Form 471 can be found here, and the proposed Form 471 instructions can be found here.

  • Form 499-Q is due August 1, 2013, for all filers that are not considered de minimis for Universal Service filing purposes. This filing encompasses historical revenues from the second quarter of 2013 and projected revenues for the fourth quarter of 2013. A copy of the current FCC Form 499-Q can be found here.

Voice over Internet Protocol (VoIP) providers and Commercial Mobile Radio Service (CMRS) providers who rely on traffic studies to report interstate revenues on FCC Form 499-Q must submit these studies by August 1, 2013, to the Universal Service Administrative Company (USAC) and the Chief, Industry Analysis and Technology Division of the FCC.

  • Providers of international common carrier services are required to file their International Traffic Data report for 2012 by July 31, 2013, as required by Section 43.61 of the Commission’s Rules. There is a change in filing protocols for resellers of telecommunications services, providers of miscellaneous telecommunications services, and providers with less than $5 million in international revenue. These providers may report their information via transmittal letter, as outlined in Public Notice issued by the FCC, found here.

All other carriers are required to file complete reports pursuant to the current filing manual which can be found here. A copy of the billing codes for switched services settlement arrangements can be found here. (DA-13-1436).

  • 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. A copy of the Public Notice announcing the rate can be found here. (DA 13-1361)

Broadband News

  • The FCC will auction the H Block, 1915-1920 MHz and 1995-2000 MHz, “by or as early as January 14, 2014.” The Spectrum Act requires that the auction occur by February 23, 2015. Comments on the competitive bidding procedures are due August 5, 2013, and Reply Comments are due August 16, 2013. The request for comment is available here.

In the Courts

  • On July 16, 2013, the U.S. District Court for the Northern District of Illinois allowed a Telephone Consumer Protection Act (TCPA) claim to proceed against Caribbean Cruise Line. The complaint alleges that plaintiff received a text message from Caribbean that read “Valentine’s day draw, your (cell number) has been drawn to win a FREE Bahama’s trip for two just call: 1-800-631-5049 winning code: LOVE.” Plaintiff further alleged that Caribbean “has a practice of autodialing cell phones of ‘clients who filled out a form to win a free cruise.’” Caribbean moved to dismiss the TCPA claim on the ground that plaintiff consented to receiving messages by giving his mobile number, but the court ruled that the case must proceed to discovery. “These allegations strongly suggest that plaintiff consented to having defendant contact him on his cell phone. But because the complaint does not conclusively establish that plaintiff consented, and this is an issue on which defendant bears the burden of proof, it is not a basis for a Rule 12(b)(6) dismissal of the TCPA claim,” the court ruled. The court also rejected Caribbean’s motion to dismiss claims under the Illinois Prizes and Gifts Act and the Illinois Consumer Fraud and Deceptive Practices Act. Volpe v. Caribbean Cruise Line, Inc., No. 13 C 1646 (N.D. Ill. July 16, 2013).

Legislative Outlook

  • The House Communications Subcommittee will hold a hearing titled “Oversight of Incentive Auction Implementation” tomorrow, July 23, 2013, at 10:30 am Eastern in 2322 Rayburn. Invited witnesses include Joan Marsh, AT&T Vice President — Federal Regulatory, and Gary Epstein, Chair of the FCC Incentive Auction Task Force. For more information, click here.
  • The Senate Communications Subcommittee will hold a hearing titled “State of Wireline Communications” on July 25, 2013, at 10:00 am Eastern in 253 Russell. For more information, click here.