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

Late yesterday, the FCC released the text of its Open Internet Report and Order (aka the Net Neutrality decision).  We're on vacation already, so we don't have time for any analysis right now.  Nevertheless, for those interested, the Report and Order is available here. 

Readers should review paragraphs 151-160 for the discussion of enforcement of the new rules.  Also, paragraph 161 states that all of the rules will be effective 60 days after the Federal Register notice of OMB's approval of the new information collection requirements associated with the rules.

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The Telecom Law Monitor wishes you warm greetings for the holidays and a Happy New Year. We will return in January.

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Today, a divided FCC adopted enforceable "net neutrality" rules for the first time.  By a 3-2 vote, with all three Democrats voting in favor and both Republicans voting against, the Commission adopted a Report and Order in its Open Internet inquiry.  As Chairman Genachowski announced last month, the new rules rely upon the FCC's "Title I" authority to adopt "basic rules of the road" to preserve the open Internet "as a platform for innovation, investment, competition and free expression."

To win the support of the other Democratic Commissioners, the Chairman agreed to several changes from his proposal last month.  Most notably, the Order applies the transparency rule and a limited blocking prohibition to wireless carriers, and -- although the exact extent is unclear -- appears to bar wireline broadband service providers from engaging in paid prioritization of Internet content.  The Order also adopts a definition of the "broadband Internet access services" to which the rules apply.

Commissioners Copps and Clyburn pronounced this action imperfect but sufficient to enable them to permit adoption of the Chairman's proposal.  On the other hand, both Commissioners McDowell and Baker dissented from the Order.  Both strongly objected to the Commission's claim of exisiting authority over Internet network management.  Commissioner McDowell also asserted that the Order would create "irreparable harm" -- a factor considered by courts in granting a stay of agency orders.

The FCC action is described in more detail below.  UPDATED:  A PUBLIC NOTICE WITH THE RULES WAS RELEASED.  SEE BELOW

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It did not take long for the FCC to respond to the flurry of questions being posted regarding the new E-rate rules adopted in the FCC's Sixth Report and Order in the Universal Service proceeding.  Yesterday, the FCC's Wireline Competition Bureau released both a Public Notice and an Order addressing many of the questions that had been posted.  E-rate applicants and service providers should review these documents carefully.  Most rules are applicable to Funding Year 2011 applications.

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On September 28, 2010, the FCC released a Sixth Report and Order revising its rules for disbursements from the Schools and Libraries Program of the Universal Service Fund (commonly referred to as the "e-rate" program).  The Universal Service Fund administrator, USAC, recently posted questions it has received in training sessions discussing the new rules.  In all, it forwarded 38 questions raised in the sessions, which are available here.  The questions primarily address how to apply the new dark fiber reimbursement rules and the rules prohibiting e-rate recipients from receiving gifts from service providers.

There is no word yet whether the FCC plans to put the questions out for comment.

12/15 UPDATE:  Several parties have submitted similar requests for clarification, primarily of the gift rules.  These letters make it more likely that the FCC will seek comment on the issue soon.

E-rate Management Professionals Association letter

Patton Boggs letter

State E-rate Coordinators Alliance letter

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Complaints of unsolicited faxes (aka "junk faxes") persistently are the most common type of complaint that the FCC receives.  As a result, the FCC issues a steady stream of investigations, citations and proposed fines for junk faxes.  This week, the FCC released an order that we believe marks the first adjudication determining that a "fax broadcaster" is not liable for unsolicited faxes sent on behalf of others.  See below for the details. 

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Late last week, the Federal Trade Commission (“FTC”) issued a highly-anticipated staff report on privacy entitled “Protecting Consumer Privacy in an Era of Rapid Change.” The report – which is preliminary in nature and does not reflect the views of the FTC (though it was approved and issued by the FTC) – proposes a new privacy framework for businesses and policymakers which is intended to be adopted next year by the FTC after public comment (due January 31, 2011) and further modification (which may or may not be significant). In other words, the proposals in the report provide insight as to what business can expect with respect to privacy compliance requirements and enforcement in the future and are not directly enforceable regulations right now. Readers should keep in mind, however, that there is much that is mentioned in the report that is enforceable right now and distinguishing the enforceable from the aspirational isn’t always easy.

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One month ago, we reported on Universal Service demand levels that suggested a significant increase in the USF Contribution Factor.  Yesterday, the revenue figures came in low.  As a result, the 1Q 2011 contribution factor is predicted to be a record 15.5 percent.  This is even higher than the increase we expected last month.

As usual, our projections come courtesy of telecommunications consultant Billy Jack Gregg, of Universal Consulting.  The summary of Mr. Gregg's calculations is available here.  This will 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, raising the question whether the Fund meets the statute's "predictability" standard.

REMINDER:  You can track the official USF contribution factor through the links in our Resource Center.  Go to "Universal Service Links" on the right hand side of the page.

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Since April, the FCC has been struggling with how to react to the Court's reversal of the Comcast P2P blocking order.  Today, Chairman Genachowski announced that he plans to move forward to adopt net neutrality rules at the FCC's December 21 open meeting.  That announcement was met with prompt condemnation from the Republican commissioners and measured support from his fellow Democratic commissioners.

Genachowski's speech abandons his prior proposal for a "third way" to resolve this issue.  His current approach relies upon the same Title I authority that the court of appeals found lacking, although presumably the Chairman intends to provide a better rationale connecting the rules to the Commission's authority.  One issue that should not get lost in the shuffle, however, is that Chairman Genachowski is proposing to adopt enforceable rules that bind broadband providers for the first time.  This would replace the 2005 Policy Statement, which, as we've pointed out, creates enforcement problems of its own.

Follow the jump below to read the statements released today.

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