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

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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