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

In a speech yesterday, President Obama proposed to reform the federal Universal Service Fund's Schools and Libraries program (commonly referred to as the "E-rate" program.  He directed the FCC to implement a program under the E-rate fund to bring high speed connectivity to 99 percent of the nation's students within five years.  The President targeted a minimum of 100 Mbps, with a goal of 1 Gbps, available to each school and library.

The bulk of the money for this reform likely would come from other savings in the USF program.  If implemented, this proposal means that the USF program will not shrink -- and USF contribution rates likely will stay around their current 15-17% range -- but the share of the pie devoted to E-rate will increase.

This reform is needed in part because the E-rate program is pressing against its current cap.  For the second year in a row, the FCC authorized USAC to use undisbursed funds from previous years to supplement current funding (a so-called "carry forward").  With this approval, the FY 13 E-rate program will have enough funding to meet expected Priority 1 demand (telecom and internet access services).  It is not clear whether there will be enough money left over to fund Priority 2 services (internal connections and maintenance).

Obama's announcement was met with immediate pledges of support from Acting FCC Chair Mignon Clyburn and from FCC Commissioner Jessica Rosenworcel.  Obama's proposal is similar to the "E-rate 2.0" proposal that Commissioner Jessica Rosenworcel proposed a few months ago.  Commissioner Rosenworcel will be a key player in moving the proposal forward. 

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David Darwin co-authored this post.

In the final days of the Genachowski era, the FCC’s Wireline Competition Bureau continued to press forward to implement and refine the Connect America Fund (“CAF”).  Late yesterday, the Bureau released a number of order and notices on various parts of the CAF that will affect both Tier 2 and Tier 3 local exchange carriers (“LECs”) and their support.

First, to implement the CAF Phase II program in price cap LEC service areas, the Commission ordered the establishment of a process for determining eligible areas for Phase II support. After examining the National Broadband Map to determine whether census blocks are unserved and determining whether unsubsidized competitive providers in served blocks are offering both voice and broadband services, the Commission will put together a list of those census blocks it concludes lack unsubsidized providers and that are, therefore, potentially eligible for support. Such designations would then be open to challenges by both price cap LECs and unsubsidized competitors.

Additionally, the Commission issued a notice seeking comment on two potential frameworks to provide rate-of-return (Tier 3) carriers with additional incentives to more efficiently deploy broadband services. The first approach comes in response to rate-of-return carriers petitioning the Commission to make universal service fund support available to support broadband lines, including where consumers choose not to purchase voice service. To that end, the Commission seeks comment on a proposal by the rural carrier associations regarding changes to the existing framework to make those funds available for standalone broadband-service network infrastructure.

The second possible framework on which the Commission seeks comment would facilitate rate-of-return carriers’ voluntary participation in CAF Phase II, which sets defined support amounts for a defined period of time with specific service deployment requirements and which may prove advantageous for some rate-of-return carriers. Recognizing that rate-of-return carriers already have the option of voluntary conversion to price cap regulation, the Commission seeks comment on what steps it could take to further these conversions and on others issues that may arise in the provision of Phase II support to those carriers.

And, finally, following its questioning in the original CAF Order whether the authorized rate of return for CAF participants should be lower than the current 11.25 percent, the Commission issued a staff report on the proper rate-of-return for LECs participating in CAF programs, concluding that the rate should fall between 8.06 and 8.72 percent. The Commission also issued an accompanying notice seeking comment on that report’s analysis and recommendations.

You can expect the Bureau to continue to press forward on implementing the CAF, even with the Chairman exiting. In fact, we believe a new Phase I order for price cap LECs will be released very soon – possibly today.

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Barbara Miller co-authored this post.

A few years back, the use of deep packet inspection software – software that examines individual data packets in a broadband transmission – to deliver targeted advertising was a hot topic in regulatory and privacy circles.  Those activities spawned a series of cases against the DPI companies and their Internet Service Provider (“ISP”) partners.  In one such case, the ISP just won an important victory closing a potentially troublesome area of liability.  On December 28, 2012, in Kirch v. Embarq Management Co,  the Tenth Circuit held that an ISP was not liable under the Electronic Communications Privacy Act of 1986 (“ECPA”) for authorizing an online advertising company to collect and use certain customer electronic information for the purpose of targeted direct online advertising.  This ruling effectively ends this particular case against Embarq and likely will close a chapter in the deep-packet inspection saga.  However, because the Tenth Circuit’s finding is closely tied to the facts of this case, ISPs should carefully consider potential liability under the ECPA for any actions involving the collection of customer information for purposes other than provision of ISP services.

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Jameson Dempsey co-authored this post. 

With the new year upon us, the FCC will soon be receiving comment on one of the “big picture” issues facing telecom regulation: addressing the evolution of the Public Switched Telephone Network (“PSTN”) from “legacy” time-division multiplexing (“TDM”) systems toward an Internet protocol (“IP”) based network.  The transition from the traditional PSTN to IP has been a hot topic at the Commission and within the industry, as consumers increasingly “cut the cord” on landline copper networks and rely on mobile wireless or IP-enabled communications technologies running on broadband networks.  However, consumer groups and small carriers have warned that in recognizing the inevitable transition toward IP, the FCC should not abdicate—and in some cases must increase—regulatory authority over communications networks. Later this month, the FCC will receive comment on two divergent petitions proposing responses to the transition. These petitions provide the first opportunity for the FCC to frame the debate over IP-enabled communications in Obama’s second administration.

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In several earlier posts, we informed you the FCC had adopted mandatory outage reporting regulations for both facilities-based and non-facilities-based interconnected Voice over Internet Protocol (VoIP) service providers.  The FCC has now established those rules will take effect before the end of the year.  For more details on the VoIP outage reporting regulations, see our full Advisory.

As we explained, the effective date of the new VoIP outage reporting rules would be delayed until 90 days after the Office of Management and Budget (OMB) approves the information collection required by the Report and Order. Well, that process is complete, and the FCC published in the Federal Register today a notice announcing the effective date of the new rules as December 16, 2012.

If they haven't already, VoIP providers should make sure they understand the new requirements and have processes in place to ensure that the FCC's tight reporting requirements can be met in a timely fashion --- some reports must be filed within four hours of an outage commencing. Significant enforcement penalties may apply in cases of non-compliance.  In the past, the FCC has set significant fines for carriers subject to similar outage reporting obligations in a timely fashion. It has used base forfeitures of $40,000 for failing to file an initial outage Electronic Notification, $20,000 for failing to file the subsequent outage reports and $25,000 for filing incomplete or inaccurate reports. Presumably, similar base fines will likely apply to a VoIP provider that fails to comply with the new rules, although perhaps limited to $16,000 per violation per day, since VoIP providers have not to date been classified as telecom carriers.  The prospective fines will vary depending on the circumstances.  But as we note elsewhere, at least for now, VoIP providers may be subject to monetary forfeitures only after they first receive a citation. 
 

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I don't expect this to go anywhere, but this request is too interesting to ignore any longer.  On May 25, 2012, a library in Caroline County, Virginia petitioned the FCC to declare that Vonage is a "common carrier" under Title II of the Communications Act and to compel Vonage to register as a provider under the federal e-rate program.  The library seeks this in order to collect e-rate discounts of $1,000, "not an insubstantial amount for a small library." At its core, however, this is another example of the uncertainty created by the FCC's long-standing refusal to classify interconnected VoIP services.

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As we've discussed, today the FCC adopted rules to require interconnected VoIP providers to report network outages to the FCC.  The text of the FCC's order has not been released, but the order adopts a much narrower outage reporting requirement than originally proposed.  Under the new rules, interconnected VoIP providers will be required to report "hard" outages -- inabilities to complete calls -- that meet thresholds also applicable to traditional telecom services.  This decision continues the trend to treat interconnected VoIP the same as traditional TDM voice services, at least with respect to its obligations.

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Yesterday, the FCC released its proposed budget for fiscal year 2013 (beginning in October 2012).  The budget offers a few interesting insights into the balance of the FCC's functions.  It also offers a preview of what to expect with the FCC's regulatory fees, which are due in September of each year.  See below for more.

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This post was drafted by Chip Yorkgitis and Josh Guyan.

On Friday, February 3, 2012, the FCC's Wireline Competition Bureau and Wireless Telecommunications Bureau jointly released an order revising and clarifying certain aspects of the sweeping universal service and intercarrier compensation reform order adopted last November. The clarifications address the rates applicable to VoIP-PSTN traffic, access stimulation and the CETC phase-down of high-cost support, among other things. 

The clarification order will be effective thirty days after it is published in the Federal Register, which is likely to occur quickly. However, as a practical matter, the clarifications are effective immediately in light of the rules being clarified already having taken effect.

For more information, see Kelley Drye's Advisory on the clarification order.

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Here's another VoIP item from our backlog.  On December 16, the FCC's Enforcement Bureau issued an "Enforcement Advisory" reminding providers of their obligation to submit an FCC Form 477 every six months.  The Form 477 collects information about broadband deployment on a Census Tract level.  All facilities-based broadband providers and all interconnected VoIP providers are required to submit the form.

The Advisory lists several "problems" the Enforcement Bureau has noticed with the filings, including:

1. failing to file the form in a timely fashion, if at all;
2. failing to properly certify the form (and provide contact information); and
3. filing incomplete or inaccurate data (including failing to update data from previous submissions

The FCC has not issued any forfeitures for failure to submit a Form 477, nor, to our knowledge, are any investigations into Form 477 compliance pending.  Nevertheless, as a reminder, below is a summary of the Form 477 filing obligations for broadband providers and VoIP service providers.

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This morning, the FCC's November 18, 2011 High-Cost USF and Intercarrier Reform Compensation Order was published in the Federal Register triggering an effective date of December 29, 2011 for all parts of the Order and rule changes adopted therein, except for the information collection requirements contained in some of the rules adopted.   Those information collection requirements will not become effective until approved by the Office of Management and Budget.  A subsequent Federal Publication will be made announcing the effective dates of those sections.  A copy of today's Federal Register publication is available here.

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Late yesterday, the FCC released the text of its USF Reform and Intercarrier Compensation Reform Order, which it adopted on October 27.  The FCC's rules, among other things, transition terminating access charges to zero, apply access to VoIP-PSTN traffic, adopt rules addressing access stimulation (prevalent in free conferencing, for example), and tackling the problem of phantom traffic.  

The order is 759 pages long, with over 2,500 footnotes and 84 pages of rules.  As we warned, the impact of these rules on individual business plans is highly fact-specific.  We encourage you to contact your advisor to learn more. 

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The same circuit that decided the Comcast case will decide the net neutrality appeals after all. Yesterday, the Judicial Panel on Multidistrict Litigation announced that the D.C. Circuit had been selected by random selection (i.e., lottery) for the net neutrality appeals.  The other cases will be consolidated with the D.C. Circuit case.

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With the September 23rd publication of the Net Neutrality Order in the Federal Register, appeals of the order could finally be filed.  As expected, multiple parties filed appeals in multiple districts, and the choice of circuit will now be decided by lottery under the Judicial Panel on Multijurisdiction Litigation rules.  Verizon has again asserted that the case must be heard in the DC Circuit, but the FCC moved to dismiss that appeal, on substantially similar grounds as in January.

The next step is for the panel to announce which circuit is selected in the lottery.  That decision is expected by the end of the week.  If the pick is not the DC Circuit, Verizon is expected to move to transfer venue to the DC Circuit. 

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One long march is finally over, another one begins.  After OMB approval of the rules was announced earlier this week, today, the FCC published the Net Neutrality Order in the Federal Register.  The 44 page summary is available here.  With this notice today, the next stage in the net neutrality saga finally begins. 

First, and most likely, with the publication today, appeals of the rules may finally begin.  Multiple appeals will be filed, most likely in multiple circuit courts of appeals.  The question will be where the appeals will be heard.  On one side, Verizon Wireless has argued that the appeal must be heard in the DC Circuit because it is a "licensing" decision.  Others have argued that the general appeal provision applies, so venue is proper in any of the circuits.  If this latter view is correct, a lottery will be held among the circuits with appeals filed in the first 10 days to determine which circuit will hear the case. 

Second, the publication triggers the effective date of the new rules.  With publication today, the new rules will take effect on November 20th unless stayed by the court.  It is important to recall that Commissioner McDowell wrote a dissent that essentially argued that the rules will create irreparable harm, which is the primary factor examined in determining whether a stay is proper.

Watch this blog for more updates.  We expect today to mark the beginning of a busy litigation period over the new rules. 

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Yesterday, the FCC held its "Workshop/Webinar" on the pending proposal to extend the outage reporting requirements to interconnected VoIP and to broadband service providers.  We've noted several times that the FCC staff appears to be in favor of extending these rules.  At yesterday's workshop, two FCC Commissioners made statements that also signal their support.

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Interconnected VoIP provider Ooma suffered a three-hour outage late last week.  Ooma identified the cause of the outage as "an extremely rare power failure at a portion of our data center," but the effect of the outage may have a much broader impact.  The outage comes only two weeks after VoIP providers opposed extension of the FCC's outage reporting rules to them.  Timing, as they say, is everything.  In this case, the timing of the outage appears to be unfortunate.

The Ooma outage may assure FCC staff that they are on the right track in requiring reporting of such outages in the future.  Just last week, the Public Safety Bureau announced it was holding a "Workshop/Webinar" on the extension of the reporting requirements to VoIP and broadband providers.  The portion of the workshop devoted to outage reporting is described as examining how public safety agencies and critical infrastructure industries rely on communications "and how outages of interconnected VoIP and broadband Internet service providers could affect their vital work."  It looks like the FCC needs no convincing of the wisdom of requiring new outage reporting by VoIP providers. 

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The Office of Management and Budget does not post the comments it receives on Paperwork Reduction Act notices, like the FCC's recent notices regarding the net neutrality rules.  But we have them here.

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Continuing the slow march to Federal Register publication -- and certain court challenge -- of the Net Neutrality rules, the FCC today published notices of the two information collection provisions subject to review by the Office of Management and Budget (OMB).  The notices address the formal complaint rules for violations of the new requirements and the public disclosure rules for network management practices.  Regarding the latter, see also the clarification released by the FCC last week.

Comments on the two information collection notices are due by August 8.  Publication of the rules in the Federal Register is not likely before the comment date.

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After months of waiting for the FCC to publish its Net Neutrality Order in the Federal Register, the FCC has finally . . .  released a clarification of the disclosure rules that will eventually apply.   The action does not indicate when Federal Register publication will occur, but, buried in the clarification is an announcement that the FCC will release results of its own broadband performance measurements before the new rules become effective.  So, we may have at least one more Public Notice before Federal Register publication (or perhaps simply a notice between publication and effectiveness). 

For more on the clarification, see below

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Last month, we noted that the FCC is proposing to expand outage reporting obligations to interconnected VoIP providers, broadband Internet access providers and to Internet backbone providers.  The new rules propose reporting based on latency and jitter, and effectively would establish a minimum service quality for broadband networks.

Yesterday, the FCC published notice of the new rules in the Federal Register.  Comments on the proposed rules will be due on August 8, with reply comments due on October 7.  In addition, parties wishing to comment on the paperwork reduction requirements associated with the rules, may do so by August 8.  Those comments are due to the Office of Management and Budget (OMB), not the FCC.

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As we discussed previously, the FCC is proposing to extend outage reporting obligations to interconnected VoIP providers, broadband Internet access providers and to Internet "backbone" providers.  With the release of the text of the Notice of Proposed Rulemaking, we now know the specific triggers the FCC is proposing to use for these providers.

In a first, the FCC is proposing to set the triggers based on packet loss, average round-trip latency and average jitter measurements.  This proposal essentially would set minimum service quality standards for IP-enabled services -- another first for the FCC.

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As we noted earlier this week, the FCC is moving ahead to expand its reporting obligations for telecommunications outages.  Touting the outage reporting rules as a 911 service protection, the FCC proposed to expand its outage reporting rules to require interconnected VoIP and broadband Internet service providers to submit reports to the FCC, as wireline, wireless, cable and satellite providers must today.  Indeed "resilience" and "reliability" were the buzzwords of the presentation before the Commission. 

5/16 UPDATE:  The FCC released the text of its proposal, which would set a service quality standard for IP-enabled services for the first time. 

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It has taken nearly a year since the FCC's Public Safety Bureau first started laying the groundwork, but the FCC is poised to consider expanding its outage reporting rules to cover interconnected VoIP communications and broadband Internet access providers.  The Commission will consider a Notice of Proposed Rulemaking to extend the outage reporting rules at its May 12 Commission Meeting. 

This item has been moving forward under the radar of most VoIP and broadband providers.  As we told you back in July, the Public Safety Bureau sought comment on how to apply its outage reporting obligations to interconnected VoIP services and broadband Internet access services.  The Public Notice produced only a handful of comments and replies.  Even in the few days before the FCC announced its meeting agenda -- typically a very busy time for those with an interest in an order -- only three ex parte notices were filed on the proposal.  The minimal level of interest won't last long, however.  Once the NPRM is released this week, a much larger universe of interested parties is likely to appear. 

Note:   Also on the May 12th agenda are proposed revisions to two international service compliance obligations -- the FCC's settlements policy and its Part 43 reporting requirements for international traffic.  International carriers should pay close attention to both items. 

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In a move that has more symbolic than practical effect, on Friday, the U.S. House of Representatives approved a resolution of disapproval of the FCC's December 21, 2010 Net Neutrality Order.  The Resolution was approved largely along party lines, with only two Republicans voting against the measure and only six Democrats voting for the measure.

To become effective, the resolution of disapproval would have to be approved by the Senate and signed by the President.  The Senate is not expected to approve the resolution, and the President stated that he would veto any disapproval measure.

The next major step for the Net Neutrality Order will be Court of Appeals review.  That will commence once the FCC publishes notice of the order in the Federal Register.

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Back in January, we posted on Verizon's attempt to appeal the FCC's Net Neutrality order.  Verizon presented a controversial claim that the order was a "licensing" decision which limited review to the U.S. Court of Appeals for the D.C. Circuit.  The FCC opposed that interpretation.

If successful, Verizon's preemptive move would have prevented a lottery from deciding which court of appeals considered the Net Neutrality order.  Yesterday, however, the D.C. Circuit dismissed Verizon's appeal as premature.

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A broad coalition of telecommunications carriers is asking the FCC to initiate a rulemaking proceeding to determine the proper treatment of MPLS-based services for regulatory and Universal Service purposes.  The coalition, which includes Verizon, XO, Level 3, Qwest and four other carriers, are providers of services based on the Multi-Protocol Label Switching (MPLS) technology.  The carriers recently met with advisors to the FCC's Wireline Competition Bureau and urged the FCC to clarify prospectively the proper treatment of services based on this technology.

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The FCC's February 9, 2011 Universal Service Fund (USF) and Intercarrier Compensation (ICC) Reform NPRM was published in this morning's Federal Register (FR).  This is the triggering event for establishing the actual comment due dates set forth in the item.  Here are  the deadlines:

Comments on Section XV (ICC "Immediate Reform", including VoIP classification, phantom traffic and traffic stimulation): 30 days from FR publication / April 1

Reply Comments on Section XV (ICC "Immediate Reform", including VoIP classification, phantom traffic and traffic stimulation): 45 days from FR publication / April 18

Comments on all Sections other than XV: 45 days from FR publication / April 18

Comments of State Members of the Federal-State Joint Board on Universal Service: 59 days from FR publication / May 2

Reply Comments on all Sections other than XV: 80 days from FR publication / May 23

And the "ex parte" round is likely to rage all summer long....

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On January 20th, Verizon took the controversial move of appealing the FCC's Net Neutrality Order before notice was published in the Federal Register.  Shortly after Verizon appealed, MetroPCS Communications filed a similar appeal, also in the D.C. Circuit and also relying on section 402(b) to assert that venue lies exclusively within the D.C. Circuit.

The FCC has moved to dismiss both petitions as premature.  Verizon opposed the motion and the FCC filed its reply yesterday.  At this time, the court has not ruled on the motion.  However, the D.C. Circuit issued a brief order denying Verizon's motion to refer the case to the Comcast panel of judges. 

Meanwhile, the FCC's order still has not been published in the Federal Register.  Once it is published, we expect multiple appeals to be filed, most likely in several circuit courts of appeal.  Such appeals would trigger the lottery process to determine where to consolidate the cases.

Links to the pleadings relating to the FCC's motion to dismiss are available below.

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In a controversial move, yesterday Verizon filed an appeal of the FCC's Net Neutrality Order adopted December 21.  Verizon sought review in the U.S. Court of Appeals for the D.C. Circuit -- and asked the same panel that decided the Comcast case to hear the appeal.

Verizon's appeal is controversial because it was filed before the FCC has published notice of the Net Neutrality Order in the Federal Register.  Appeals taken under the more common review provision -- section 402(a) of the Communications Act -- may not be filed prior to Federal Register publication, and the courts will conduct a lottery among all courts where appeals were filed within the first 10 days to determine which circuit will hear the case.  Verizon's move is an attempt to force review in the D.C. Circuit, where the Comcast decision also was considered.

Verizon's petition for review is available here.  Verizon's appeal relies upon section 402(b) of the Communications Act, asserting that the Net Neutrality Order modified Verizon's wireless licenses and thus that 402(b) applies.  Verizon's motion for consideration of the appeal by the Comcast panel is available here.

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As expected, late yesterday, the FCC announced that it would again attempt to tackle its "holy grail" of regulatory action:  reforming carrier-to-carrier compensation mechanisms and the high-cost program of the Universal Service Fund.  The FCC has placed a Notice of Proposed Rulemaking addressing both intercarrier compensation and USF reform on its agenda for February 8.  The combined NPRM furthers the National Broadband Plan's promise to refocus FCC policy to supporting broadband networks.

These two topics are at the core of what we cover in this blog.  The complicated mix of carrier-to-carrier compensation mechanisms, which make how a call is classified critical to determining its cost, has engendered significant litigation involving such issues as VoIP, prepaid calling cards, access charges, reciprocal compensation and many others.  Meanwhile, the funding and administration of the $7 billion per year Universal Service Fund is a constant source of audit issues, enforcement actions and rulemaking proposals.

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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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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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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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Earlier this month, Verizon and Google announced an agreement on the vexing issue of net neutrality.  The agreement has been criticized by net neutrality advocates for allegedly permitting a "private Internet," and for excluding wireless services, among other things.  Until recently, the provisions in the Verizon-Google "Legislative Framework" that radically alter FCC enforcement have been overlooked.

Four elements of the Legislative Framework are described in detail in this post.  These elements would restrict the tools available to the FCC and would raise the standard for FCC fines.  In addition, one provision strips the Federal Trade Commission of any potential jurisdiction over broadband Internet access service. 

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Despite issues over the FCC's jurisdiction in light of the Comcast decision, the FCC's Public Safety Bureau took a step toward possible extension of the FCC's outage reporting requirements to broadband service providers and providers of interconnected VoIP services.  In a July 2 Public Notice, the Bureau seeks comment "in advance of" a possible Commission rulemaking proceeding.  The comment request in many ways presumes that the outage reporting rules should apply, and asks a number of questions about how they could apply and what changes might be necessary in light of the different technologies involved.  Clearly, the Bureau is seeking to do its homework before the Commission initiates a rulemaking proceeding.

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The FCC today adopted and released its highly anticipated Notice of Inquiry (“NOI”) regarding the potential regulatory reclassification of facilities-based broadband Internet access services.  This proceeding will explore the "third way" toward regulation that Chairman Genachowski suggested in response to the recent decision issued by the U.S. Court of Appeals for the D.C. Circuit in the Comcast case.  In Comcast, the D.C. Circuit rejected the FCC's attempt to rely upon its "ancillary authority" to enjoin a cable operator from degrading its customers' lawful Internet services.  This sparked a concern that similar decisions could cause the Commission to lose regulatory authority over time in connection with most, if not all, Internet access services.  The heart of the problem is that the FCC made a series of decisions over the past decade that have classified wireline broadband Internet access services as "information services" that are exempt from Title II common carrier regulation, and this classification was upheld by the U.S. Supreme Court in its Brand X decision.   If the Commission cannot exert "ancillary authority" to regulate them, then the FCC could be left with virtually no control over services provided over a broadband platform. 

The NOI seeks comment in three areas.  First, the FCC seeks input on whether the current "information service" classification remains adequate for the Commission to perform its mission.  Second, it seeks comment on the legal and practical consequences of "reclassifying Internet services used to communicate with others that have Internet connections" as "telecommunications service" and then applying all of the regulatory requirements of Title II.   Finally, and most importantly, the Commission seeks comment on the "third way" position by which so-called "Internet connectivity service" that is offered as part of a wired broadband Internet service would be reclassified as a "telecommunications service", but that the Commission would forbear from applying all Title II regulatory authority over it except such as necessary to implement a set of discrete rules applicable to universal service, consumer protection, competition and small business opportunity. 

The Commission has fast-tracked the comment cycle in this case.  Comments will be due by July 15, with replies due August 12. 

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The FCC took a flurry of actions at yesterday's monthly open meeting.  Fulfilling this blog's role as your resource for news and helpful links, below is your guide to yesterday's actions.

Wireless Market Report:  The  Commission adopted its 14th Annual Report on the state of the wireless market.  Among other things, this report was controversial because it refused to make an "effective competition" judgment on the wireless market.  The report also expands coverage beyond CMRS to address the broader mobile marketplace. 

Number Porting:  The Commission released a Report and Order shortening the time interval for "simple" ports.  This action will particularly affect wireline-to-wireless ports, and might accelerate the trend of "cut the cord" conversions.

Pole Attachments:  The Commission made a number of changes to its rules governing the rights of cable and competitive telecommunications providers to hang facilities on utility poles.  The order also proposes a number of changes to the pole attachment complaint rules.

Universal Service:  The Commission issued a Notice of Proposed Rulemaking to modify its "e-rate" rules, which support discounts for schools and libraries for internet access and other services. 

Broadband Spectrum:  The Commission adopted rules to make available another 25 MHz of spectrum for mobile braodband use. 

REMINDER:  For more information on many of these topics, peruse our links on the right hand side of this page. 

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A month after the Court of Appeals reversed the FCC's Comcast decision, FCC Chairman Genachowski announced a "third way" to regulate broadband transmission lawfully.  The Chairman released a statement describing his "third way" along with a memo from the General Counsel asserting its legality.  Commissioner Copps, who publicly advocated reclassification of braodband internet access services to Title II, praised Genachowski's solution (though he still prefers reclassification).  Meanwhile, Commissioners McDowell and Baker, the two Republicans on the Commission, declared the proposal "disappointing" and "deeply concern[ing]." 

The battle has only begun.

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The Wireline Competition Bureau of the FCC has overruled a USAC finding that an internet services provider should pay universal service fund assessments on T-1s that the company uses to provide internet access and voice services.  The order is available here.  In U.S. TelePacific Corp. the Universal Service Adminstrative Company concluded that revenues received by TelePacific Corp from its sale of internet access services, sometimes coupled with voice service, should be subject to assessment for universal service fund contributions.  According to the Bureau, USAC had reached its finding "solely because the facilities (T-1 lines) ... are typically used for basic transmission service."  The Bureau reversed this conclusion, stating that even though TelePacific was utilizing T-1 lines it "is not required to make contribution based on revenues from sales of [internet access] service." 

Notably, the Bureau did not decide an ancillary question raised in the proceeding -- whether TelePacific should have contributed indirectly to the federal universal service fund on T1 wholesale inputs purchased from incumbent LECs.  Instead, the FCC instructed TelePacific to take two further actions within 60 days.  First, it requested a "detailed explanation of the methodology by which TelePacific apportions revenues derived from its sale to end users of voice telephony...and how it reports such revenues" on its USF forms.  TelePacific represented in the inquiry that it allocates its revenue among the services it sells and pays into the universal service fund on the amounts attributed to voice services.  Second, TelePacific was told to "provide USAC with the names and contact information of its wholesale providers of transmission services within 60 days .., so that USAC can assure that all contributions to universal service are promptly paid."   In a footnote, the Order explains that TelePacific may have erroneously certified itself as a resale carrier to its wholesale vendors which, in turn, "may have impacted the amount of revenues that TelePacific's wholesale provider reported."

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On April 21, 2010, the FCC issued a Notice regarding proposed universal service reforms. The document is 28 pages long plus some lengthy appendices.  The Notice itself is divided into a Notice of Inquiry section discussing steps to implement the Connect America Fund proposed in the National Broadband Plan, and a Notice of Proposed Rulemaking addressing specific ideas about reducing amounts currently committed to the High Cost Support portion of the USF program. The High Cost Support aspect of USF consumes about half the total of $8 billion now spent on universal service support each year.  The procedural difference between the NOI and the NPRM portions is this: a Notice of Inquiry generally cannot be followed by the adoption of rules without first issuing a follow-on Notice of Proposed Rulemaking. Thus, an NOI tends to be more ethereal and not focused on near term action. The NPRM portion, on the other hand, can result in rules to be adopted at any time after the expiration of the public comment period.  The FCC itself described the Notice as "the first in a series of proceedings to implement" the National Broadband Plan.   

Public comments on the Notices are due 60 days from publication in the Federal Register, and Reply comments are due 30 days later.

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Thursday, April 8, 2010, the FCC released its Broadband Action Agenda describing the purpose and timing of more than 60 rulemakings and other actions the agency plans to conduct in order to implement its recently issued National Broadband Plan.  The FCC News Release can be found here and the more detailed, 10 page Agenda is here.  In addition, the Commission issued a one page chart of its proposed action items showing the actions that it hopes to initiate, with each such action listed by the quarter of the year in which it is expected to occur.

Among topics primarily covered by this blog, a few items stand out.  In connection with the Universal Service Fund, reform of USF distribution is scheduled for 2Q 2010 (it is on the April 21 Meeting agenda, actually), but contribution reform is not scheduled to begin until the end of the year.  Access charges, VoIP and other intercarrier compensation issues are given a 4Q 2010 start date.  CLEC interconnection rights with rural ILECs are slated to be "clarified" in 3Q 2010.  Pole attachment reforms -- which presumably will include the formal complaint process improvements we described in a previous post -- are slated for 2Q 2010. 

Continue reading for more detail on the agenda.

REMINDER:  These and other broadband plan documents can be accessed using our Resource Center on the right hand column of this page.

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The Genachowski FCC is enamored with the bully pulpit as an enforcement tool.  In the year since the new Chairman has taken office, we've seen examples with FCC letters to Apple regarding its iPhone approval practices; letters to Google concerning the classification of Google Voice; and letters to wireless carriers concerning their early termination fees.  This time, the FCC's Public Safety and Homeland Security Bureau "reminds" telecommunications carriers of the need to provide diversity and redundancy in their 911 and E-911 services.  Although the Public Notice is not enforceable and does not cite to enforceable rules, it clearly is intended to influence carrier behavior.  Those who fail to heed this "reminder" could find themselves in an investigation questioning whether their practices are "just and reasonable."

The Public Notice stemmed from a review by the Bureau of network outage reports that carriers are required to file.  The Bureau stated that it has observed a "significant number" of 911/E911 outages caused by a lack of diversity.  Moreover, it notes that these outages "could have been avoided at little expense to the service provider"  (emphasis mine).   The clear implication is that FCC tolerance for these types of outages will diminish over time. 

Follow the link for a discussion of the diversity mistakes highlighted by the Bureau.

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Last year, the U.S. Congress directed the Federal Communications Commission (“FCC”) to develop a National Broadband Plan to ensure that every American has “access to broadband capability.” After 36 public workshops, 31 public notices that produced 75,000 pages of public comments, 131 blogposts that triggered 1,489 comments, 69,500 views on YouTube, and countless tweets, the National Broadband Plan is finally here. In the words of FCC Chairman Julius Genachowski, the National Broadband Plan is “a 21st century roadmap to spur economic growth and investment, create jobs, educate our children, protect our citizens, and engage in our democracy.” The National Broadband Plan will be a major influence on U.S. communications policy for the next decade, and it will be studied by broadband providers and national regulatory authorities in many other countries.

Join Robert Aamoth, Todd Daubert and Joan Griffin of the Telecommunications Practice Group of Kelley Drye & Warren LLP for an insightful discussion of the Plan, how implementation of the Plan might impact your business, and what you can do about it. The topics we will explore include:

• A succinct overview of the National Broadband Plan and its key elements;

• A discussion of the myriad new FCC proceedings that will be launched in the wake of the plan, with a focus on proposed reforms of the Universal Service Fund and intercarrier compensation;

• The Plan’s recommendations on changes in competition policy, such as new pricing and performance disclosure requirements for broadband service providers, and new rules to promote intermodal wholesale broadband competition;

• Proposals for more efficient recovery, allocation, and assignment of spectrum and for increased availability of infrastructure such as poles, conduits, rooftops, and rights-of-way; and

• Next steps for the Commission.

To register, call Alexandra Meaza at 202.945.6674 or email dcevents@kelleydrye.com.  Click here for additional details.

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On March 16, 2010, the Federal Communications Commission (“FCC”) announced the release of the National Broadband Plan (the “Plan”). The Plan outlines sweeping proposals intended to accelerate broadband access and adoption throughout the United States that will be implemented over the coming years. Over the coming months, the FCC will launch a series of rulemakings to seek public comment and adopt rules to implement these proposals. Broadband and telecommunications providers should expect these proceedings will be a key focus of the FCC for the next several years.

Among the Plan’s chief recommendations are proposals that would give the FCC and other policymakers an enhanced role in establishing and enforcing pro-consumer policies, including mandating heightened disclosure requirements for broadband service providers, publishing market-by-market analyses of broadband pricing and competition, and enhancing online privacy protections. The Plan also calls for the FCC to: increase the amount of spectrum available for allocation through the use of incentive auctions; expand the amount of spectrum available for unlicensed use; and increase the transparency of spectrum allocation in general. Further, the Plan includes recommendations to speed the development and adoption of technologies that touch on a wide range of policy objectives from health care to public safety to energy efficiency.

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Although advertised as a "policy framework" for the National Broadband Plan, Wednesday's presentation to the FCC looks more like a  "to do" list for Chairman Genachowski's 2010 agenda.  A number of suggestions will be very controversial, including ensuring "productive" use of spectrum (especially TV broadcast spectrum), spurring competition for TV set-top boxes, and measuring "advertised vs. actual" broadband speeds.  Most relevant to this blog's focus are the reforms of USF and the FCC Formal Complaint Process.  

USF Reform.  Staff emphasized that USF should be refocused to support broadband, and suggested a 5-10 year transition.  Increases in broadband support would come with "trade-offs", primarily in the form of cuts in high cost support, but with all funding programs being reformed.  The long-discussed Lifeline support for broadband services may be growing legs.  Finally, "sustainability" would be the driving force for reforming the USF contribution base (no doubt, spurred by concerns over the new 14% USF factor next quarter).

FCC Formal Complaints.  A number of enforcement reforms were discussed to promote infrastructure deployment.  In particular, the Staff urged "timely and predictable" dispute resolution by the FCC's Enforcement Bureau of pole attachment requests and development of a uniform rental rate to replace a rate that varies by the type of provider attaching to the pole.  FCC mandates to decrease the "make-ready" work a pole owner performs and to impose deadlines for current attachers to perform "make-ready" work may be on the horizon too. 

The FCC press release and Staff's presentation are available here and here.  The FCC will adopt the National Broadband Plan by February 17, 2010.

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As we do regularly in this blog, we preview significant items to be presented at the FCC's upcoming monthly meeting.  This month it is easy, because the FCC's agenda includes only one item: an update on the development of the National Broadband Plan. 

At the December 16th meeting, the FCC staff will present an update on the status of the National Broadband Plan, and particularly, on the "policy framework" for the Plan.  With the National Broadband Plan due to be adopted by February 17, 2010, this update likely will include the first disclosure of the major components of the plan.  Word is that the Plan will recommend ways to re-focus the federal Universal Service Fund to support broadband connections, and may include suggestions for phasing out some existing USF support in order to replace it with broadband support. 

In addition, the update may discuss proposals to examine TV broadcast spectrum as a possible source of mobile broadband service.  The possibility of authorizing broadcasters to use or lease spectrum for this purpose, or, even more radically, to reallocate broadcast spectrum to other licensees, has been floated by wireless interests in the past few months.  While certain FCC personnel have indicated a willingness to investigate this possibility, the views of the Commissioners -- the ones whose votes count -- are unclear.  We will be watching the FCC meeting with anticipation.

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The Notice of Funds Availability issued jointly by the Rural Utilities Service and the National Telecommunications and Information Administration was published in the Federal Register today. The NOFA is 121 pages long and lists the rules for applying to receive funding in the first round, which will make available up to $4 billion of the total commitment of $7.2 billion in broadband stimulus monies. This represents nearly all the RUS funds ($2.4 billion) and about 1/3 of the NTIA funds ($1.6 billion). The RUS funds are provided under the heading of the Broadband Initiatives Program (BIP) and the NTIA funds are in the Broadband Technology Opportunities Program (BTOP). Applications seeking more than $1 million must be submitted electronically and be filed no later than 5:00 p.m. EDT on August 14, 2009. Paper applications may be filed by applicants seeking less than $1 million (if electronic filing would be a hardship) and by any applicant whose representative is an individual with disabilities. Those applications also must be filed by 5 p.m. EDT on August 14, 2009.

BIP funds from RUS are limited by statute to projects to provide service to areas which are at least 75 percent rural and lack access to sufficient high speed broadband to facilitate economic development. Grants may be obtained to serve exclusively remote, unserved rural areas. Loans will be given for plans to serve non-remote but underserved rural areas. The funds are to be made available in categories: up to $1.2 billion for Last Mile projects (i.e., ones that serve end users); up to $800 million for Middle Mile projects (i.e., ones that do not serve end users directly but instead provide internet backbone and the like); and up to $325 million is available for a “national reserve.” Unused funds will be made available for subsequent rounds of applications.

NTIA has divided its BTOP funds into three categories: Broadband Infrastructure (both Last Mile and Middle Mile), Public Computer Centers, and Sustainable Broadband Adoption. The funds in this first round of applications are to be allocated as follows: up to $1.2 billion for Broadband Infrastructure; up to $50 million for Public Computer Center projects; and up to $150 million for Sustainable Broadband Adoption. 

The complete eligibility criteria and application requirements can be found in the NOFA. However, potential applicants should be aware that all Last Mile projects for either BIP or BTOP must be for service to areas that are either “unserved” or “underserved”. An “unserved” area is composed of census blocks where at least 90 percent of households lack access to facilities-based, terrestrial broadband service, either fixed or mobile, at speeds of 200 kbps upstream and 768 kbps downstream. Obviously, this restriction is extremely limiting to Last Mile projects. Similarly, “underserved” areas are made up of census blocks where (i) no more than 50% of households have access to terrestrial broadband at speeds of 200/768 kbps; or (ii) no provider advertises broadband at speeds of 3 MBps or higher; or (iii) the “take rate” for broadband subscription is 40% or less of total households. Again, the first two of these criteria are extremely limiting in geographical scope, while the third one suffers from a lack of data on which to base a proposal.

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After opening remarks from new Chairman Genachowski and Commissioner Copps, the FCC outlined its schedule and process for the creation of a National Broadband Plan by February 17, 2010, as mandated by Congress. The process will involve all Bureaus within the agency and will start with a series of workshops on 21 topics to be held starting August 12 and ending September 3. The FCC also launched a new website, www.broadband.gov, to make information about the process available to the public. That website will give the list of specific workshop topics and dates. For those interested in participating or monitoring the workshops, the FCC promised to post the names of the staff coordinators by July 16, the final list of topics by July 23, and the list of formal participants by August 5. After the workshops have been completed on September 3, the FCC will accept public comments about matters addressed in the workshops until September 11. Following that hectic schedule, the FCC expects to provide a formal response to the GAO by December 8, 2009, issue its “Section 706” Report by February 3, 2010, and then its final National Broadband Plan by February 17, 2010 (as the statute requires). The agency also indicated that it expects the Broadband Mapping project to be done by February 17, 2010 as well, since the mapping is important to the final Plan.

Click here for the full FCC Commission Meeting - The FCC and Broadband: The Next 230 Days.

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Changes at the FCC moved one step closer to fruition this week. On March 25, the Senate Commerce, Science and Transportation Committee confirmed that the White House has transmitted the nomination of Julius Genachowski to be Chairman of the FCC. No word yet on when the Senate will conduct confirmation hearings.

Meanwhile, Commissioner Jonathan Adelstein, whose term had expired in 2008, has been nominated to head the Rural Utilities Service (RUS) within the U.S. Department of Agriculture.

The RUS oversees grants and loans to support rural broadband service, and will have the responsibility to distribute $2.5 billion in stimulus money from the American Recovery and Reinvestment Act. Commissioner Adelstein has a history of supporting service in rural America.

We can think of no one better equipped to run the RUS in this important time for the entity.
 

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The “Obama FCC” took one giant step toward reality today when President Obama formally announced his “intention to nominate” Julius Genachowski as Chairman of the FCC. Genachowski’s nomination has been expected for some time, but apparently was delayed when President Obama revamped his process for vetting candidates after several high-profile withdrawals by key nominees.

Genachowski comes with stellar credentials including two Supreme Court clerkships, a prior stint as advisor to FCC Chairman Reed Hundt and several years at Barry Diller’s Internet company, IAC. Virtually every telecom organization took turns today praising the incoming chairman.

Genachowski is expected to further President Obama’s policies to promote broadband deployment and net neutrality. Genachowski’s nomination must be approved by the Senate, so he may not formally take office for a few months.
 

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