Telecom Law Monitor : Washington D.C. Telecom Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

In August, we warned that the FCC was preparing a series of major enforcement orders for the transmission of unsolicited faxes.  Today, the FCC released 9 forfeiture orders totaling $3.1 million in fines against senders of unsolicited faxes (aka "junk faxes").  With the two proposed fines released in early September and a $77,500 forfeiture ordered two weeks ago, the Commission looks to have completed this round of "junk fax" enforcement.

In a few days, the Commission will list the Forfeiture Orders here.  Notably, all but one of the alleged senders failed to respond to the FCC's Notices of Apparent Liability, and the FCC imposed the full forfeiture it had proposed. 

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One of the hottest areas in enforcement and litigation is the Federal Universal Service Fund.  In fact, with USAC embarking on an expanded set of audits and investigations since August, USF disputes are about to multiply.  Therefore, news that the FCC is seeking nominations for Board members of USAC is important to this blog.

In a Public Notice yesterday, the FCC announced it is seeking nominations for seven positions on USAC's 19-member board of directors.  Two of the positions are vacant, the other five are for members whose terms are expiring.  The FCC is seeking nominations for these positions:

• Representative for cable operators (vacant)
• Representative for interexchange carriers (vacant)
• Representative for mobile providers
• Representative for supported schools
• Representative for supported libraries
• Representative for consumer advocates
• Representative for non-rural incumbent LECs

Nominations must be submitted by October 27. 

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At Kelley Drye, we handle a lot of FCC investigations, so we know first hand how the Commission develops proposed forfeitures for telecom violations.  In previous posts, I've commented that the FCC should reconsider the proportionality of the base forfeiture amounts it uses in telecom enforcement cases.  A case released today underscores the inherent weaknesses of the FCC's current ad hoc approach to setting these base forfeiture amounts. 

In the case described below, the FCC proposed a $100,000 fine for a telecom carrier's non-compliance with its privacy rules -- namely, the rule requiring carrier to execute annual compliance certifications.  Three years later (and after a shift in administrations), the FCC settled the proposed fine for a mere $250.  There is no mention of mitigating circumstances, of an inability to pay or of any of the statutory factors the FCC is obligated to consider.  The outcome leaves you wondering:  Just what is the base fine for failing to comply with the FCC's privacy rules?

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This entry was drafted by Telecom Partner John Heitmann

Yesterday, the FTC testified before a Senate Subcommittee and recommended that proposed data security legislation introduced by Senators Pryor (D., AR) and Rockefeller (D., WV) (The Data Security and Breach Notification Act of 2010, S.3742) be modified so that its requirements and the FTC’s enforcement authority thereunder be extended to telecommunications common carriers.  

The FTC’s testimony – available here – is the latest in a series of FTC actions signaling the agency’s concern regarding the amount of personal information telecom common carriers handle and the FTC's ability – or inability – to take enforcement action against such carriers.

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As consumers increasingly rely on mobile phones, marketers naturally are following.  Text messaging, in particular, has proven to be a popular marketing method.  It is not surprising, therefore, that we are seeing in increase in litigation over the obligations of senders and mobile carriers with respect to text messaging campaigns. 

The latest example of this trend is a complaint brought in US District Court by text broadcaster EZ Texting, Inc. against T-Mobile USA.  In the complaint, EZ Texting alleges that T-Mobile unlawfully blocked EZ Texting's "short code" (a six digit number to which consumers may direct text messages) on T-Mobile's network.  The reason, as alleged by EZ Texting, was that T-Mobile "did not approve" of an EZ Texting customer that provided information concerning the location of legal medical marijuana dispensaries in California. 

EZ Texting alleges that text messages are "calls" and that Title II's common carrier obligations apply, most notably, Section 201's prohibition on unjust and unreasonable practices and Section 202(a)'s non-discrimination requirement.  EZ Texting also seeks a temporary restraining order and a preliminary injunction.  The court set a hearing on the request for September 30.

The complaint already has garnered a fair amount of attention from others.  Public Knowledge posted on its blog about the case, arguing that the case illustrates the need for the FCC to act on Public Knowledge's 2007 Petition for Declaratory ruling seeking classification of text messaging as a Title II service.  About 75 parties filed comments or replies in response to that petition.

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AT&T has joined the ranks of petitioners seeking to overturn the Wireline Competition Bureau's tough stance on contributors' late-filed USF forms.  On September 13, AT&T joined Airband Communications in seeking Commission-level review of the Bureau's Denial Order. 

Note:  A third carrier, Airnex Communications, filed a petition for reconsideration of the Denial Order. 

AT&T asserts that the Denial Order is inconsistent with other orders granting waivers of Form 499 filing deadlines.  For good measure, AT&T also asks the FCC to act on its 5-1/2 year old petition to reverse the 1-year amendment deadline that it missed in this instance. 

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We are pleased to welcome Bill Hunt to our Telecom Practice Group.  Bill, who most recently worked as Vice President at Level 3, joins us in our Chicago office.  You may read our press release here.

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Online privacy concerns have been a hot topic in Washington recently.  The FCC, which is charged with spurring broadband deployment, adoption and innovation, recently concluded that privacy concerns are creating an impediment to these goals.  Our Telecom Practice Group partner, John Heitmann, published an article in The Metropolitan Corporate Counsel discussing the FCC's broadband privacy agenda and related jurisdictional issues, including shared jurisdiction with the FTC.  The article also highlights initiatives by the Department of Commerce's Internet Task Force and the FTC regarding online privacy.


The article is available here.

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Universal service violations, slamming, "junk faxes" and privacy violations typically draw large FCC fines.  It may seem surprising, then, to learn that unauthorized transfers of control of FCC licenses draw a comparatively small forfeiture amount. 

In this Notice of Apparent Liability released on Friday, the FCC proposed to fine Turner Broadcasting System, Inc. $16,000 for failing to obtain prior FCC approval before closing on a transaction that changed the control of Turner's FCC licensees.  Yes, the transfer was a pro forma transfer of control, and resulted from a single transaction.  But, the Bureau concluded that 49 licenses were transferred without authorization and Turner's violation remained uncorrected for two and one half years.  Nevertheless, the total fine proposed is less than one-third the amount that the FCC has been assessing for a single failure to file a Form 499-Q.  Personally, I think it is time to re-assess the comparative significance of the Commission's forfeitures.   

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While the FCC has taken an interest in mobile marketing by carriers -- most notably with investigations of carrier early termination fees and proceedings examining wireless consumer "bill shock" -- it also is helpful to remember that the mobile content providers are subject to enforcement for deceptive marketing practices.  Our colleagues at the Ad Law Access blog covered a recent settlement of a class action lawsuit by several mobile marketers.  They remind marketers to clearly and conspicuously disclose costs so that consumers know what they are obligated to pay.  Mobile service providers should ensure that their billing and collection agreements impose such an obligation on the content provider and that the carrier properly polices compliance.

Read the Ad Law Access story here. 

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Last week, we posted an entry about the tough stance the FCC's Wireline Competition Bureau is taking on late-filed Universal Service Forms submitted by contributors.  One of the parties whose USF appeal was denied, Airband Communications, has filed an application for review of the Bureau decision.  The Commission yesterday asked for comment on the request.   Comments are due September 30 and October 15. 

The FCC's quick action is unusual in one sense:  the deadline for petitions for reconsideration or applications for review of the Denial Order is not until September 14.  Other parties to the same order may file additional petitions on the same issue.

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