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

Yesterday, the FCC released an Order adopting a consent decree resolving several investigations into failures of AT&T’s CPNI opt-out practices. In the settlement, AT&T agreed to make a $200,000 voluntary contribution to the U.S. Treasury and to adopt a two-year Compliance Plan including monthly testing of its opt-out mechanisms, training and reporting requirements. The Order, which closes out three separate investigations into AT&T’s self-reported lapses in its opt-out mechanisms for small business, can be found here. The Order and others like it (see TLM, June 28, 2010 post) demonstrates that the FCC continues to prioritize taking enforcement action with respect to easily detected failures to comply with its CPNI rules (see TLM, August 4, 2010 post).
 

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Long time readers of the blog will know that we've been following AT&T's attempts to collect access charges for local calls delivered via intermediaries to prepaid card providers.  The background is available here: previous Telecom Law Monitor entry.  The AT&T litigation is proceeding, albeit slowly.

In June, the U.S. District Court overseeing the first of AT&T's lawsuits allowed the IDT case to proceed forward.  IDT counterclaimed against AT&T, and AT&T answered the counterclaims.  The pre-trial discovery period is ongoing, but trial is not scheduled to begin until March of 2012. 

In addition, AT&T has sued two other small prepaid card providers in the same U.S. District Court in Texas.  The defendants are Next-G Communications  and Touch-Tel Communications.  Next-G has answered the complaint, and it appears it will follow the IDT case's timing. 

Meanwhile, the FCC still has not acted on the Arizona Dialtone petition for reconsideration of the Prepaid Card Order that underlies AT&T's case.  Arizona Dialtone's 2006 request to reconsider an "ambiguous aspect of the Order [that] sends mixed messages to carriers" remains pending.

Stay tuned.

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News reports last week that the FCC is investigating possible violations by Google underscore the expansive view that this FCC is taking of its enforcement powers.  According to reports such as this Wash Post article, the FCC has confirmed that it is investigating Google's alleged capture of user data from open WiFi connections when it gathered information for its Street View product.  The FCC investigation comes on the heels of an FTC no action letter released in late October concerning the same actions by Google.

So what is the FCC investigating?

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As has been expected, the FCC late Friday released an order finding that states can require nomadic interconnected VoIP providers such as Vonage to pay state universal service fund contributions on a prospective basis provided that (1) the relevant state’s contribution rules are consistent with the FCC’s universal service contribution rules (i.e., states must allow a provider to treat as intrastate for state USF purposes the same revenues treated by the provider as intrastate under the FCC’s USF contribution rules), and (2) the state does not apply its contribution rules to intrastate VoIP revenues attributable to another state (i.e., no two states can impose USF assessments on the same intrastate revenues).

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Our post about the unique enforcement posture of interconnected VoIP quickly became the most popular post on the Telecom Law Monitor.  One person asked if we could elaborate on the differences in regulatory treatment between traditional telecom services, interconnected VoIP and non-interconnected VoIP (like Skype).   In response, we prepared a chart comparing applicability of the major telecom obligations to both types of VoIP.

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Please Note: The host of the Telecom Law Monitor has made some technical improvements to how email notifications are sent. If you have signed up to receive email alerts, you will need to reconfirm to receive future alerts when we post new entries.

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Don’t miss out – the Telecom Law Monitor is your guide to enforcement-related news, events and trends within the telecommunications field. From the FCC to the FTC, to State PUCs and AGs, to private litigation, we cover USF enforcement, truth-in-billing rules, Do-Not-Call developments, CPNI actions, access charge litigation, prepaid card enforcement actions and other related developments. Visit our Resource Center that provides two-click access to enforcement websites and relevant statutes and rules.

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As we have covered in this blog (see here and here), the Universal Service Fund contribution factor has bounced between 12 and 15 percent for the past year or so.  Yesterday, telecommunications consultant Billy Jack Gregg predicted that the USF factor is in for another significant increase -- to a near-record level of 14.7% for 1Q 2011.  This would be the fourth quarter out of the last five where the USF factor changed (plus or minus) by at least 1.2 percentage points from the previous factor.   This hardly seems to satisfy the "predictability" standard for the Fund. 

Mr. Gregg, of Universal Consulting, has kindly allowed us to post his calculations here.  He notes:

Assuming that the contribution base is the same as for the fourth quarter of 2010, the USF assessment factor for the first quarter 2011 will rise from 12.9% to 14.7%, the second highest assessment factor in history. USF revenue projections are due out in a month.

Mr. Gregg attributes the increase primarily to projected USF demand of $2.212 billion -- the highest amount in history -- based on increases in the High Cost Fund and the Schools and Libraries Fund.

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The Government Accountability Office (GAO) recently released a study of the FCC's e-rate program controls.  The GAO study recommended that the FCC conduct a "robust risk assessment" of its e-rate program and revise the internal control structure of the program.  What caught our eye, however, was the commentary on USAC's e-rate beneficiary audits.

The GAO criticized USAC's beneficiary audits as lacking documented and approved policies and procedures.  As a result, "[USAC] management may not have the assurance that control activities are appropriate and properly applied."  It specifically criticized USAC for not using information gathered from the audits to assess and modify the e-rate program's internal controls.  As an example, the GAO noted that of 64 beneficiaries that were audited multiple times over a three year period, 56 percent of the beneficiaries (36 of 64) had the same audit finding in multiple years.

The full GAO report is available here.

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What:   FCC Form 499Q: Telecommunications Reporting Worksheet - Quarterly Filing for Universal Service Contributors.  Contributors must project 1Q telecommunications revenues for 2011 and report actual telecommunications revenues for 2Q 2010.

When:  Due on November 1, 2010

Who must file:  All carriers that are required to contribute to the maintenance of universal support mechanisms.  De minimis contributors (those with an annual contribution to the FCC's Universal Service Fund below $10,000) need not file a 499Q but must keep records demonstrating their de minimis status. 

See the KDW Client Advisory for more information.

REMINDER:  Revisions to the 499Q must be filed within 45 days of this deadline. 

REMINDER:  CMRS and interconnected VoIP providers that rely on traffic studies instead of the jurisdictional safe harbor must submit their studies quarterly.

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