Telecom Law Monitor

Telecom Law Monitor

Litigation, Enforcement & Compliance Issues Update

Attention Wireless Operators: FCC Issues $5.25 Million Civil Penalty for Unauthorized Transfer of Control and Operations

Posted in Enforcement, FCC, Infrastructure, Spectrum, Wireless

The FCC’s Enforcement Bureau announced today that the Canadian National Railway, a large diversified rail, trucking, warehousing and distribution services company, has entered into Consent Decree and agreed to pay $5.25 million in civil penalties to resolve an FCC investigation into the company’s wireless radio operations in the United States.

According to the Consent Decree, the Canadian National Railway discovered that on several occasions it had acquired control of a number of wireless radio licenses without securing the FCC’s prior consent to the transactions.  Following this discovery, the company initiated a comprehensive internal audit of its FCC authorizations, uncovering multiple unauthorized transactions and system modifications going back to 1995.  Additionally, the company found it had deployed several hundred wireless radio stations without first obtaining licenses, with some violations dating back as early as 1990.  The Consent Decree indicates that most of the affected radio stations remained in operation in 2013.

In February 2013, the company voluntarily disclosed its findings to the Commission in connection with multiple requests for Special Temporary Authority and remedial filings.  What followed was a Bureau investigation into the full extent of the company’s noncompliance.  The investigation confirmed that Canadian National Railway completed more than a dozen substantial and pro forma transactions and deployed, modified and/or operated hundreds of wireless facilities without FCC approval.

While the investigation did not uncover any evidence of interference complaints resulting from the unauthorized operations, the company nevertheless acknowledged its extensive noncompliance.  The FCC described the  “scope and duration of these unauthorized operations” as “unprecedented in the history of the Commission.”  And the Commission’s response was equally as ground-breaking: Canadian’s civil penalty “represents the largest in FCC history” for a wireless operator’s unauthorized radio operations and unauthorized transfers of control.  In addition to the payment of civil penalties, and an express admission of rule violations, the company also agreed to implement a three-year compliance plan and to maintain the internal compliance plan that was implemented as a result of the internal audit.

While the noncompliance and civil penalty may have been unprecedented, many things included in the consent decree are becoming part of the new normal.  As with several other consent decrees we blogged about in recent weeks, the settlement included an admission of liability by Canadian National Railway and referred to monetary payments as “civil penalties” rather than “voluntary contributions.”  This is further evidence of the substantial shift in the Enforcement Bureau’s policy for settlement like negotiating consent decrees.  Wireless licensees should pay close attention to these actions and take them into consideration when choosing a course of action in the face of discoveries about possible nonconformance.  The Canadian National Railway Consent Decree also serves as a strong reminder that any company or enterprise making an acquisition should always conduct sufficient  due diligence to ascertain whether radio operations requiring FCC licenses are involved and, if so, to ensure that the proper authorizations have obtained and maintained and that any FCC procedural requirements connected to the proposed acquisition are identified and followed.

 

In the Latest TCPA Twist, State AGs Seek FCC Guidance on Legality of Call-Blocking Technology

Posted in FCC, Telemarketing

On September 9, 2014, the National Association of Attorneys General sent a letter signed by 39 state attorneys general to FCC Chairman Tom Wheeler seeking a formal opinion as to whether there are any “legal and/or regulatory prohibitions [that] prohibit telephone carriers from implementing call-blocking technology,” and, if such prohibitions exist, whether a carrier may nevertheless implement such technology if customers “affirmatively ‘opt into’ [the technology] (either for a fee or as a free service).” The letter asserts that call-blocking tools such as NoMoRobo, Call Control and Telemarketing Guard represent “the first major advancement towards a solution” in the ongoing battle to eliminate unwanted telemarketing calls. The signatories hope to see a favorable statement from the FCC regarding call-blocking technology so that they can encourage the private industry to implement it.

The letter seemingly seeks a response from the Commission to statements by representatives of the US Telecom Association which suggest that common carriers are resistant to using call-blocking technology because of legal and regulatory risks that would arise from implementing it. Specifically, during a hearing before the U.S. Senate Subcommittee on Consumer Protection, Product Safety, and Insurance in July 2013, a US Telecom representative said “[t]he current legal framework simply does not allow [phone companies] to decide for the consumer which calls should be allowed to go through and which calls should be blocked.” Additionally, in response to a subsequent inquiry from Sen. Claire McCaskill on the issue, US Telecom claimed that one challenge to implementing call-blocking technology is the FCC’s position that “call blocking is an unjust and unreasonable practice under section 201(b) of the Communications Act of 1934.”

The letter poses the following additional questions to the Commission in response to the US Telecom statements:

  • “At a customer’s request, can telephone carriers legally block certain types of calls (e.g., telemarketing calls) if technology is able to identify incoming calls as originating or probably originating from a telemarketer?”
  • “Is US Telecom’s characterization of the FCC’s position [as one of ‘strict oversight in ensuring the unimpeded delivery of telecommunications traffic’] accurate? If so, upon what basis does the FCC claim that telephone carriers may not ‘block, choke, reduce or restrict telecommunications traffic in any way’?”

The FCC has not yet issued a response to the letter. We expect it to seek public comment on the request in the near future.

 

Do Recent Consent Decrees Indicate a Shift in FCC Enforcement Policy?

Posted in Enforcement, FCC

In August, the FCC adopted consent decrees with three companies (Border Media Business TrustTime Warner Cable, and ASUSTeK Computer Inc.) to resolve investigations into potential violations by each company of the Commission’s rules.  What makes these consent decrees noteworthy is the inclusion of new language and provisions not seen in settlements from prior years.  All three consent decrees include an admission of liability by the company and refer to the monetary payments the company will make as “civil fines” or “civil penalties” rather than “voluntary contributions.”  These changes may indicate a potentially significant shift in the Enforcement Bureau’s policy in resolving allegations of FCC rule violations.  If this indeed becomes Enforcement Bureau policy, it could make it significantly harder to resolve investigations through consent decrees, where often the primary benefit obtained by the regulated entity is a resolution without any findings of liability.

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Verizon Agrees to Pay $7.4 Million to Resolve CPNI Investigation

Posted in CPNI, Enforcement, FCC, Privacy

On September 3, 2014, Verizon agreed to pay $7.4 million to resolve an investigation into possible misuse of customers’ personal information in a number of tailored marketing campaigns.  Prompted by a self-disclosure from the company, the FCC investigated Verizon’s use of customers’ subscription and call information to market new services.  Such use is restricted by Section 222 of the Communications Act and the Federal Communications Commission’s CPNI rules.  Verizon’s consent decree is notable for more than its size.  Continue Reading

NIST Requests Industry Feedback on Cyber Framework 1.0

Posted in Cybersecurity, Infrastructure, Privacy

The National Institute of Standards and Technology (NIST) released a Request for Information (RFI), “Experience with the Framework For Improving Critical Infrastructure Cybersecurity”, this week requesting industry feedback on the Cybersecurity Framework published in February 2014. Framework 1.0 was developed by NIST in response to the Obama Administration’s February 2013 Cybersecurity Executive Order aimed at improving cyber defenses for critical industries impacting U.S. national security. The Framework is a series of standards, methodologies, procedures, and processes developed to help organizations address cyber risks.

Since releasing the Framework, NIST has focused its efforts on raising awareness and educating public and private organizations on the importance of managing cyber risks. Now that the Framework has been publicly available for over 6 months, NIST is reaching out to the critical infrastructure community to find out whether organizations are choosing to voluntarily implement the Framework and track progress across the various industries.

Critical infrastructure industries, including communications, transportation, energy, and healthcare companies, are encouraged to weigh in on initial experiences in implementing the Framework, how it is being used, and the successes and challenges of using the Framework to develop cyber programs. While the RFI focuses heavily on responses from critical infrastructure owners and operators, Federal agencies, state, local and tribal governments, and other industry and consumer stakeholders are also invited to comment on any topic that may impact the awareness or voluntary use of the Framework.

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Regulatory Fees Order for FY 2014 Released; September 23 Payment Deadline Set

Posted in Compliance Filing, FCC, International, Satellite, Wireless

As a result of the Federal Communications Commission ‘s Regulatory Fees Order released last Friday, submarine cable licensees will see a welcome decline in fees for fiscal year 2014 due to a reallocation among International Bureau regulatees, and Responsible Organizations (“RespOrgs”) will begin paying regulatory fees on toll free numbers in fiscal year 2015.  However, among other decisions, the FCC declined to adopt its proposal to pool the revenues to be collected from payers of the Interstate Telecommunications Service Provider (“ITSP”) fee and Commercial Mobile Radio Service (“CMRS”) providers.

Because the Regulatory Fee Order for FY 2014 came out later than in years past, the FCC indicated the decision would become effective upon publication in the Federal Register, rather than thirty days thereafter.  The FY 2014 regulatory fees are due September 23 (by 11:59 PM, Eastern Daylight Time), and Fee Filer, the Commission’s automated filing and payment system for FY 2014 regulatory fees, is now open. Continue Reading

FCC Releases E-Rate Connectivity Map

Posted in Broadband, E-rate, FCC

The Commission recently released its first update to the E-Rate Map of Fiber Connectivity which shows fiber deployment to America’s public schools and libraries.  The update comes just one week after the FCC issued a Public Notice encouraging E-rate stakeholders including states, districts, schools and libraries to submit connectivity data to the Commission.   Parties wishing to submit additional information can file comments to the E-Rate Modernization Further Notice of Proposed Rulemaking proceeding or can email the Commission directly at schoolfibermap@fcc.gov or libraryfibermap@fcc.gov.

The E-rate Map of Fiber Connectivity is broken down into two sections, “School Districts” and “Libraries.”  The “School District” map allows users to mouse-over a geographic area and see the total number of students in a particular school district as well as the percentage of schools with or without fiber access.   The “Libraries” map allows users to mouse-over a geographic area and see the total number of annual visits to a particular library system.

We encourage service providers to take a look at the available data and to review the FCC’s recently released Staff Report which was jointly authored by the Wireline Competition Bureau and the Office of Strategic Planning & Policy Analysis.  For additional information about the E-rate Modernization Order, please visit our previous blog post.

 

Second Circuit Cuts the Cord on Aereo’s Cable Company Argument

Posted in New Media

Earlier this summer, the Supreme Court overturned a favorable district court ruling, finding that Aereo’s television streaming service violated U.S. Copyright law.  After the 6-3 decision, the case was remanded to the Second Circuit Court of Appeals.  There, Aereo argued that the court should treat the company like a cable system, which would allow the streaming service to obtain a statutory license for transmitting programming to its subscribers.

On August 21st, the Second Circuit refused to hear Aereo’s cable system argument and remanded the case to the district court.  It will now be up to the district court to decide whether Aereo’s “cable system” argument has any credibility.

While Aereo is entitled to continue its legal battle, the decision marks another major win for broadcasters.  After its Supreme Court loss, Aereo shuttered its streaming service and has posted a “goodbye” letter on its website.  It also promised to refund customers for their last paid month.  It’s possible that Aereo could redesign its service to look more like a DVR system, bringing it within the bounds of copyright law, but it seems unlikely that Aereo will choose that route.

While the service may be discontinued, Aereo’s advocacy website remains up and running.

FCC Clarifies New Medical Telemetry Rules, Finalizes MBAN Coordinator Selection Process

Posted in Equipment Authorization, FCC, Spectrum, Wireless

Late last week, on August 21, 2014, the Federal Communications Commission (“FCC”) released an Order on Reconsideration and Second Report and Order regarding the authorization of Medical Body Area Networks (“MBANs”) on a secondary basis in the 2360-2400 MHz band to enhance patient safety, care and comfort, as well as protect against interference to primary aeronautical mobile telemetry (“AMT”) flight testing operations in the 2360-2390 MHz band.  When deployed, MBANs are expected to  permit a network of multiple body-worn sensors to measure and record patient information, as well as provide a diagnostic and therapeutic function, which is currently primarily done with physically connected, i.e., wired, sensors.  

The Order on Reconsideration addressed two petitions for reconsideration of the First Report and Order in the proceeding, and provided MBAN users with additional flexibility to enable the implementation of technical standards being developed for MBAN devices, and clarified and modified portions of the rules to facilitate the coordination, deployment, and use of MBAN systems on a secondary basis with primary operations.  More specifically, among other things, the FCC revised the definition of “health care facilities,” the group of eligibles that can utilize the 2360-2390 MHz band for MBANs, to limit the term to facilities that provide medical treatment for patient stays of at least 24 hours.  Other, non-qualifying medical facilities will be limited to use of the 2390-2400 MHz band.  The FCC also agreed to permit MBANs to operate with a programmer/control transmitter and as little as one body worn device, allowed body-worn devices to communicate with each other for the purpose of ensuring effective communications, and will permit programmer/control transmitters to communicate with each other for purposes of interference avoidance.  Either type of device will now be permitted to act as a coordinator node in an MBAN system.  The FCC also revised its rules to confirm that all MBAN devices must cease operation in the 2360-2390 MHz band in the absence of a control message.  The Order on Reconsideration clarified that only program/control transmitters need be registered, not each MBAN device, reducing the administrative burdens for health care facilities.  

In the Second Report and Order, the FCC finalized the process for selecting a MBAN Coordinator.  The FCC determined that the Wireless Telecommunications Bureau (“WTB”) will designate a single coordinator for a ten-year term based on the qualification criteria established in the order.  The WTB will release a Public Notice and invite applications for consideration.  The MBAN Coordinator will be permitted to set the user fees necessary to meet its costs as well as those for any third party technical consultants and the AMT Coordinator but not to make a profit.  The MBAN Coordinator is expected to reach  a coordination agreement with the AMT coordinator in the band, AFTRCC, within six months after selection of the Coordinator, but the Commission declined to make certification of the MBAN Coordinator contingent on finalization of that agreement.  Finally, the WTB has the authority to remove the MBAN coordinator and to require protections in the Memorandum of Understanding with the eventual coordinator that will be signed. 

Interstate Telecommunications Service Provider and Commercial Mobile Radio Service Provider FY2014 Regulatory Fee Data Available

Posted in Compliance Filing, International, Wireless

The Federal Communications Commission (FCC) has announced that Interstate Telecommunication Service Provider (ITSP) and Commercial Mobile Radio Service (CMRS)  data, on which FY2014 regulatory fees will be based, is now available on Fee Filer – the FCC’s electronic filing and payment system. The FCC has not yet released its FY2014 Regulatory Fees Report and Order but we anticipate regulatory fees will be due in the latter half of September.

Providers that must pay the ITSP regulatory fee (which includes providers with both interstate and international qualifying telecommunications revenues) can log into the Fee Filer system to view a worksheet identifying their FCC Form 499-A revenues and the regulatory fee revenue base will be identified on Line 14.  Affected providers will not be able to revise any revenue errors using the Fee Filer system. If the provider believes the revenue figure is incorrect, the provider must submit a revised Form 499-A to USAC. Once the Commission releases its FY2014 Regulatory Fee Order, the revenue amount in the Fee Filer system will be used to determine the provider’s ITSP regulatory fee obligation. Consequently, we strongly recommend providers that must pay the ITSP regulatory fee access the Fee Filer system as soon as possible to ensure the provider has time to revise its Form 499-A if necessary.

CMRS providers can view and revise their subscriber count information in the Fee Filer system.  The Commission will review and either approve or deny any revisions to subscriber counts and revisions must be made by September 10, 2014 to ensure the FCC can timely enter final subscriber counts before regulatory fees are due.  After September 10, 2014, revision requests will be handled on a case-by-case basis. Note: the FCC will no longer send CMRS Assessment letter to CMRS providers. Accordingly, CMRS providers should be sure to review and, if necessary, correct their data in the Fee Filer system.

The FCC actively enforces the regulatory fee payment requirement and failure to meet the payment deadline will result in late payment penalties of 25% being applied. The FCC does not waive these late payment penalties.

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