Earlier this week, the Federal Communications Commission released an order affirming the International Bureau’s 2009 order directing all U.S. facilities-based carriers within the FCC’s jurisdiction to stop payments to Tonga Communications Corporation (“TCC”) for termination of switched voice service (“Stop Payment Order“) on the U.S.-Tonga route. The April 7 Memorandum Opinion and Order affirmed the Bureau’s conclusion that TCC’s significant increase in its rates for terminating traffic on the U.S.-Tonga route – even if ordered by the Tongan government – and its disruption of AT&T’s and Verizon’s circuits to Tonga each constituted anticompetitive conduct that harmed U.S. consumers and were contrary to the public interest. The FCC also rejected TCC’s contention that the Stop Payment Order constituted unauthorized extraterritorial regulation of TCC on the grounds that only U.S. international carriers were subject to the order. Continue Reading
The Department of Justice (DOJ) announced today that three Associated Telecommunications Management Services LLC (ATMS) executives were indicted yesterday charging one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering for their alleged role in a scheme to submit false claims to the Universal Service Administrative Company (USAC) for Lifeline reimbursements. The court also issued a seizure warrant for the defendants’ ill-gotten gains ($32 million), a yacht and several luxury cars. Federal Communications Commission Chairman Wheeler also released a statement today applauding the action.
With class action cases proliferating, the Federal Communications Commission (“FCC”) continues to receive petitions seeking guidance on the applicability of its rules to various calling or texting scenarios. In the latest example, the FCC issued a Public Notice seeking comment on a Petition for Declaratory Ruling filed by TextMe, Inc. (“TextMe”). TextMe provides a free mobile telephone app that allows users to send and receive text messages to or from personal contacts in the US, and to receive free texts and voice calls from other TextMe users. The TextMe app also allows users to make voice calls, although users do not need to purchase an outbound calling functionality to do so. In addition, a currently disabled function allows TextMe users to invite friends to use the app by sharing a message about TextMe through third-party social networks, by email, and by text message.
In its petition, TextMe requests that the Commission: (1) clarify the meaning of the term “capacity” as used in the TCPA’s definition of “automatic telephone dialing system” (“ATDS”) and (2) clarify that users of TextMe’s service, instead of TextMe itself, make or send calls or text messages for purposes of the TCPA. Alternatively, TextMe requests that the Commission clarify that third-party consent obtained through an intermediary satisfies the TCPA’s “prior express consent” requirement for calls and texts to wireless numbers.
This petition marks the latest effort from entities seeking clarification on the definition of an ATDS. And while the Commission has begun to address some of the nearly two dozen TCPA petitions remaining on its docket, it has yet to resolve many critical questions that could provide much needed clarity for telemarketers and class action plaintiffs alike. One such question is the applicability of the TCPA to text messaging. FCC Commissioner Michael O’Rielly recently expressed hesitation in applying the TCPA to text messaging, since Congress enacted the TCPA before the first text message was ever sent. The TextMe case provides the Commission with an opportunity to consider the issue anew, so interested parties may consider addressing it in their comments.
Comments are due May 7, 2014, while replies are due May 22, 2014.
A recently adopted Consent Decree entered into between the Enforcement Bureau (“Bureau”) and Wal-Mart.com USA leaves no doubt that retailers are advised to be aware of their regulatory responsibilities for the electronics they offer for sale, whether on their physical shelves or on their website. Those responsibilities essentially require retailers to be the pro-active policemen of their suppliers’ compliance with the Commission’s equipment authorization rules. In return for selling wireless microphones without equipment authorization manufactured by ne vendor and for failing to provide a consumer alert regarding conditions of operation at the point of sale for these devices as required in the Federal Communications Commission’s (FCC’s) rules, the on-line retailer agreed to pay $120,000 and submitted to a three-year compliance plan regarding the offering for sale of all radio frequency devices within the United States.
The Federal Communications Commission (the “Commission” or “FCC”) seems to be opening the spigot a bit on its extensive backlog of Telephone Consumer Protect Act (“TCPA”) petitions. On March 27, 2014, the Commission granted, in part, two petitions for declaratory ruling from the Cargo Airline Association (the “CAA Order”) and GroupMe, Inc./Skype Communications S.A.R.L. (the “GroupMe Order”) seeking clarification with respect to the Commission’s TCPA rules.
In the CAA Order, the Commission granted an exemption that allows package delivery companies to alert wireless consumers about their packages, so long as the delivery company meets a set of conditions designed to protect the consumers’ privacy. These conditions include, for example, requirements that the delivery company may only send a message to the package recipient, and must disclose the identity and contact information of the delivery company within the message. Moreover, messages may not include a telemarketing solicitation or advertising content, and must offer recipients the ability to opt-out of receiving future delivery notification calls and messages.
In the GroupMe Order, the Commission clarified that text-based social networks may send administrative text messages confirming consumers’ interest in joining text message groups, without violating the TCPA, when consumers give express consent to participate in the group, even when that consent is conveyed to the social network by an intermediary (e.g., a group leader). In addition, the Commission found that the TCPA’s prior express consent requirement is satisfied with respect to both the social network and the group members where each group member has: (1) agreed to participate in a group; (2) agreed to receive associated calls and texts; and (3) provided his or her wireless phone number to the group organizer for that purpose.
These Orders, together with the Commission’s recent SoundBite Communications Order (discussed in detail here), provide much needed guidance to companies sending informational text messages to consumers’ wireless numbers. Nevertheless, the Commission’s docket remains full of petitions from companies seeking further clarification in the wake of the Commission’s 2012 TCPA Order and an explosion in TCPA class action litigation. While we don’t expect a quick resolution of all outstanding issues, the Commission’s rulings last week provide some hope that the Commission has begun to focus on its backlog of TCPA petitions.
A recent Enforcement Bureau (“EB”) Order and Consent Decree highlights the perils that attend failure to get FCC approvals to transfer or assign wireless licenses. The March 13, 2014, release, involving Skybeam Acquisition Corporation and Digis, LLC, commonly-owned affiliates providing fixed wireless broadband service and VoIP, also confirmed, once again, that voluntary disclosure does not necessarily count for much once violations are referred to the EB for investigation. The two companies discovered their failure in the context of a subsequent transaction, retained counsel, and self-reported. While the situation was put back on track from a licensing perspective, through requests and grants of special temporary authority followed by curative assignment applications granted by the Wireless Telecommunications Bureau (“WTB”), the EB’s subsequent investigation led to a $50,000 voluntary contribution and a burdensome three-year compliance plan.
In mid-2012, the two companies, subsidiaries of JAB Wireless, Inc., which claims to be the largest fixed wireless broadband provider, acquired microwave licenses from third parties. Skybeam acquired ten licenses from KeyOn Communications, and Digis acquired forty licenses from HJ LLC. The parties proceeded without communications’ counsel and failed to seek approval from the FCC for the assignments. Once they realized in early 2013 that they had failed to obtain approval for the acquisitions, they proceeded to remedy the situation after the fact and voluntarily disclosed the earlier failure, attributing it to inadvertence, lack of experience in such matters, and not having counsel. While the Consent Decree states the two companies will pay a combined voluntary contribution of $50,000, there is no indication whether this number reflects the unlawful assignment of 50 licenses or the failure to obtain authority for two transactions, each involving multiple licenses. The entities selling the licenses are not the subject of the enforcement action. Continue Reading
Last week, the FCC granted a petition filed by AT&T requesting enforcement of the benchmark rate of $0.19 per minute for international traffic on the U.S.-Fiji route. Among other requirements, the Memorandum Opinion and Order (“Order”), specified that “all U.S. international facilities-based carriers providing international message telephone service with Fintel on the U.S.-Fiji route SHALL CONDUCT settlements for services provided on or after May 6, 2014 at a rate that does not exceed the Commission’s benchmark settlement rate of $0.19 per minute.”
In 1997, the FCC adopted the Benchmarks Order to address the fact that accounting rates on most international routes exceeded the foreign carriers’ costs to terminate international message telephone service from the United States. The FCC found that, through lower calling prices and increased demand, both customers and carriers would benefit from international rates closer to cost. The Benchmarks Order adopted benchmark settlement rates for international termination services on a route-specific basis.
Prior to November 7, 2011 Fintel’s termination rates were consistent with the FCC’s benchmark policy, but after that time, Fintel, responding to local developments, raised its termination rates above the benchmarks rates and AT&T was therefore unable to directly send traffic to Fiji.
As required, AT&T attempted to negotiate rates with Fintel that were consistent with the FCC’s benchmark policy, but was unsuccessful. The impact of the Order does not land squarely on Fintel, given the FCC has no jurisdiction over pure foreign carriers, but rather on U.S. international facilities-based carriers who terminate international traffic to Fiji. The FCC ordered that all U.S. international carriers must: (i) comply with the Benchmarks Order, i.e., not pay to Fintel a settlement rate in excess of $0.19 per minute ; (ii) in any negotiations with Fintel regarding any settlement rates must achieve rates that comply with the rules and requirements of the FCC’s Benchmarks Order; and (iii) immediately inform the FCC when it negotiates a benchmark settlement rate with Fintel for direct termination of U.S. traffic on the U.S.-Fiji route. The Order is also a clear signal to foreign carriers and governments that the FCC intends to enforce its benchmark policy.
 The incumbent international carrier in Fiji is Fiji International Telecommunications Limited (“Fintel”).
 International Settlement Rates, B3 Docket No. 96-261, Report and Order, FCC 97-280, 12 FCC Rcd 19806, 19807 08, TT 1-2 (1997) (Benchmarks Order), aff’d sub nom. Cable & Wireless P.L.C. v. FCC, 166 F.3d 1224 (D.C. Cir. 1999) (Cable & Wireless); Report and Order on Reconsideration and Order Lifting Stay, FCC 99-124, 14 FCC Rcd 9256 (1999).
The release of three notices of liability in the past two weeks regarding alleged violations of the Federal Communications Commission’s (FCC’s) antenna structure violations by the FCC’s Enforcement Bureau (Bureau) reveals the extent to which size may trump uncooperative and extended non-compliant behavior when it comes to proposed forfeitures. For violations falling under same category – failure to comply with lighting and/or marking of antenna structures – the smaller entity that cooperated with the Bureau received a proposed penalty of $10,000, whereas the one which ignored Bureau notices received a proposed forfeiture of $14,000. But the third, AT&T, because of its size (and the inclusion of an alleged second, but lesser, violation) received a notice proposing a $25,000 forfeiture.
Ohana Media Group, LLC (Ohana): In June 2013, a Bureau agent observed that an Ohana antenna structure did not have the correct daylight hours lighting in operation on two successive days and advised Ohana of the outage. Upon being contacted by the Bureau, Ohana initiated a Notice to Airmen (NOTAM) with the Federal Aviation Administration (FAA), required when there is a known tower lighting outage of more than 30 minutes duration. When the Bureau’s Anchorage Office issued a Notice of Violation (NOV) a month later, Ohana had already repaired the lighting and installed two redundant monitoring systems. The NAL issued to Ohana proposed the base forfeiture amount with no adjustment for lighting violations ($10,000) after alleging violations of the rule requiring proper tower marking and lighting and the rule requiring notification of the nearest FAA office or Flight Service Station whenever a top steady burning light is out or any flashing obstruction light is observed or known to be not working for more than 30 minutes. Ohana’s cooperation apparently avoided the application of any aggravating factors.
Kemp Broadcasting, Inc. (Kemp): In April 2013, Bureau agents observed that Kemp’s 401-meter antenna did not have the proper daytime lighting at either the top or at three lower levels. An employee was notified in person by the agents, who returned after dark to find one of the red flashing lights required on this tower at night was out. To make a long story short, some of the lights continued to be out for several months following the agents’ initial observations. Even after receiving a mid-May NOV and further contacts from the Bureau, Kemp apparently did not initiate a NOTAM with the FAA after several months. Finally, the Bureau itself notified the FAA in mid-September. Despite all of that, and the allegations in the NAL issued to Kemp that three FCC rules were violated – failure to exhibit required lighting, failure to notify the FAA of outages, and failure to maintain a properly functioning monitoring system – the Bureau started with a base forfeiture amount of $10,000 and made a modest upward adjustment of $4000 for Kemp’s repeated failure to notify the FAA of the outages.
AT&T Services, Inc. (AT&T): Following an April 2103 complaint from the Los Angeles Police Department regarding an unlit antenna structure, an agent of the Bureau confirmed the structure, owned by AT&T, was of a sufficient height absent a special aeronautical study (i.e., over 200 feet) to require lighting and marking, as well as antenna registration. Although AT&T six days later removed a whip antenna to bring the height below 200 feet, the Bureau issued an NOV in early May. AT&T acknowledged the whip antenna had been installed five months prior to the Bureau inspection, and that the FAA had not been properly notified of the structure. The Bureau noted that the base forfeiture of $10,000 would be proposed as in the two previous cases, as well as a separate base forfeiture amount of $3000 for failing to register the antenna structure with the FCC. The Commission noted only one aggravating factor that it was applying: ability to pay. Because AT&T is a multi-billion enterprise, and to ensure the forfeiture amount is an adequate deterrent, the Bureau increased the forfeiture proposed to $25,000. Notably, the Bureau observed in a footnote that Verizon Wireless in a 2010 order received a forfeiture of only the base amount, $13,000, for the same offenses. This differential between the two cases, AT&T and Verizon Wireless, signals the increased attention that the FCC is currently willing to put on the size of companies when assessing a penalty for violation of the rules. Further, the comparison of the AT&T case with the Ohana and Kemp cases leaves the unmistakable impression, absent possible additional detail not set forth in the NALs, that given the same or similar violation simply being a large company may expose one to greater liability that being an uncooperative, non-compliant smaller one, which is not what one would necessarily expect in a rational enforcement regime.
Although the Federal Communications Commission’s Rural Call Completion rules have not yet become effective, the Enforcement Bureau recently concluded an investigation into the performance of Windstream in completing long-distance calls. The carrier reached a settlement with the Commission obligating it to make a voluntary contribution to the Treasury of $2,500,000. The Enforcement Bureau’s investigation, which commenced in November 2012, “ultimately focused” on the performance of the voice network owned and operated by PAETEC Holding Corporation prior to and after its 2011 acquisition by Windstream and potential violations of Sections 201(b) and 202(a) of the Communications Act, which proscribe practices of common carriers that are unjust or unreasonable or unjustly or unreasonably discriminatory. In addition to the significant monetary component, the consent decree, adopted on Thursday, February 20, 2014, contains a three-year compliance plan commitment. Continue Reading
At its open meeting on February 20, the FCC adopted a Notice of Proposed Rulemaking (“NPRM”) to improve the accuracy of caller location information provided to public safety officials for all wireless calls to 911, including indoor calls. The Commission noted that over 70 percent of 911 calls are placed from wireless phones, with those calls increasingly coming from indoor locations. Last month, Commissioner Rosenworcel characterized the lack of reliable location information as “an unacceptable gap.” Today’s action moves forward on the issue, despite carriers’ concerns (and those of some Commissioners) that the technologies are not sufficiently ready. Continue Reading