The document provides a summary of recent regulatory developments in the telecommunications industry. Key updates include:
- The FCC launched its incentive auction proceeding to reallocate broadcast TV spectrum for wireless use.
- The FCC opened a proceeding to consider limits on how much mobile spectrum individual companies can hold.
- T-Mobile and MetroPCS announced plans to merge, and Softbank reached a deal to acquire Sprint, both pending regulatory approval.
- The FCC proposed reforms to rules for foreign carriers seeking to enter the US telecom market and took other actions.
U.S. Securities and Exchange Commission Proposes New Rule on Pay Disclosure
TechComm Industry Update ~ November 2, 2012
1. November 2, 2012 TechComm Industry Update
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In this update:
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• FCC Incentive Auction Proceeding Launched
TechComm Team
• Broadcasters File Brief in Aereo Appeal
If you have any questions
• FCC Opens Proceeding on Limits on Mobile Spectrum Holdings
about the foregoing or if you
require additional • T-Mobile and MetroPCS to Merge
information, please
contact: • Softbank to Acquire Sprint
• FCC Proposes Reform of Rules and Policies on Foreign Carrier
Jennifer L. Richter Entry
202-457-5666
jrichter@pattonboggs.com • U.S. Court of Appeals Upholds FCC Policy of Permitting Security
Interests in License Sale Proceeds
Paul C. Besozzi
202-457-5292 • FCC Seeks Comment on Seven TCPA Petitions
pbesozzi@pattonboggs.com • Additional Comments Sought on the Video Service Relay Program
Monica S. Desai • Wireline Competition Bureau Conducting a Virtual Workshop on
202-457-7535 Connect America Phase II Cost Model
mdesai@pattonboggs.com • Proposed Amendment to the Electronic Communications Privacy
Act
Michael E. Drobac
202-457-7557 • FCC Creates Public Safety Answering Point (PSAP) Do-Not-Call
mdrobac@pattonboggs.com Registry
• FCC Adopts Wireless Communications Service (WCS) Technical
Ryan W. King Rule Settlement Proposal
202-457-5312
rking@pattonboggs.com • All-Digital Cable Systems Allowed to Encrypt Basic TV Service
• FTC Holds Robocall Summit
Carly T. Didden
202-457-6323 • FCC Reminds ETCs That They Must Recertify Before Year End
cdidden@pattonboggs.com
• Comments Sought on Lifeline Annual Recertification Rule
Jennifer A. Cetta • Liberty Media Seeks Consent to Acquire Control of Sirius XM
202-457-6546 Radio
jcetta@pattonboggs.com
• CTIA Releases Whitepaper on Cybersecurity
Melanie C. Goggins • FCC Approves E-Rate Eligible Services List for FY 2013
202-457-5649
mgoggins@pattonboggs.com • Update on Mobility Fund Phase I Auction
• Court Denies Stay in Viewability Appeal
• Ban on Certain Exclusive Programming Contracts Expires; FCC
Seeks Further Comments
• FCC Seeks Comment on LightSquared Request for Relief
• FirstNet Seeks Comment on Public Safety Broadband Network
2. • FCC Initiates Comprehensive Satellite Licensing and Operational
Rule Review
• FCC Announces Planned mHealth Task Force Report
Implementation Steps
• Internet Radio Fairness Act Introduced in House and Senate
• Legislation Introduced to Prevent FCC Reforms to Rural Subsidy
Formula
FCC Incentive Auction Proceeding Launched
On Friday, October 26, the FCC hosted a workshop for broadcasters to
learn more about the FCC’s recently released incentive auction Notice of
Proposed Rulemaking (NPRM). The workshop provided information
about issues raised in the NPRM, including proposed auction designs,
the mechanics of participation, and station eligibility. It also focused on
issues of interest to broadcasters that may choose not to participate,
including proposed band plans and possible approaches to repacking.
According to the NPRM, the incentive auction will consist of three major
components: (1) a reverse auction in which broadcast television
licensees may submit bids to voluntarily relinquish spectrum usage
rights in exchange for payments; (2) a reorganization or “repacking” of
the broadcast television bands in order to free up a portion of the UHF
band for wireless use; and (3) a forward auction of initial licenses for
flexible use of the newly available spectrum. The FCC seeks public
comment on the NPRM. The Chairman seeks to issue a final order in
2013, and hold the auction in 2014. Comments are due December 21,
2012, and Reply Comments are due February 19, 2013. For a copy of
the NPRM click here.
Broadcasters File Brief in Aereo Appeal
A group of associations representing broadcasters filed an Amicus Brief
supporting an appeal before the U.S. Court of Appeals for the Second
Circuit. Appellants asked the Second Circuit to overturn a district court
decision not to issue a preliminary injunction that would have prevented
Aereo from retransmitting the Appellant’s broadcast program over the
Aereo network while the program is in progress. Aereo has developed a
technology that records broadcast television signals using a network of
small antennas and then sells a service to consumers that can receive
these recorded broadcast signals over the Internet. Aereo does not
have the broadcasters’ consent and does not pay any royalty fee to
compensate the broadcasters for retransmitting their signal over the
Internet.
Broadcasters argued that Aereo’s retransmission of broadcasters’ signal
“irreparably harms broadcasters by undermining their two most
important sources of revenue: advertising and retransmission consent
fees,” as well as “undermines contractual arrangements by which
broadcasters negotiate and pay to be the ‘first run’ outlet for many
popular programs and otherwise threatens the sustainability of
broadcasters’ investment in high-quality local and national
programming.” They urged the court to conclude that Aereo has violated
copyright laws by publically performing the broadcast content without
permission.
3. FCC Opens Proceeding on Limits on Mobile Spectrum Holdings
The FCC released an NRPM seeking comment on how much wireless
spectrum a single company can hold. The agency asks interested
parties whether it should apply a case-by-case analysis to transactions
and auctions or whether to adopt a different approach, such as creating
a bright line “spectrum cap.” The FCC further seeks comment on which
spectrum bands should be included in these evaluations and other
implementation issues. Comments are due by November 23, 2012 and
reply comments are due by December 24, 2012.
T-Mobile and MetroPCS to Merge
Deutsche Telekom and MetroPCS Communications have reached an
agreement to combine T-Mobile USA and MetroPCS. The resulting
company will retain the T-Mobile name, but will operate T-Mobile and
MetroPCS as separate customer units. According to the press release:
“This transaction will create the leading value carrier in the U.S. wireless
marketplace, which will deliver an enhanced customer experience
through a wider selection of affordable products and services, deeper
network coverage and a clear-cut technology path to one common LTE
network.” The transaction is expected to close in the first half of 2013,
subject to approval by MetroPCS shareholders, regulatory approvals,
and other customary closing conditions. Petitions to Deny the request for
FCC approval of the transaction are due by November 26, 2012.
Oppositions are due by December 6, 2012 and replies are due by
December 17, 2012.
Softbank to Acquire Sprint
SoftBank, a Japanese carrier, has reached a deal with Sprint to acquire
approximately 70 percent of the U.S. wireless carrier. As part of the
deal, $12.1 billion will be distributed to existing Sprint stockholders and
$8.0 billion will be invested in Sprint to strengthen its balance sheet.
The companies expect the deal to close in mid-2013, subject to approval
by Sprint stockholders, regulatory approvals, and the satisfaction or
waiver of other closing conditions.
FCC Proposes Reform of Rules and Policies on Foreign Carrier
Entry
The FCC adopted an NPRM to change the criteria under which it
considers applications by foreign telecommunications carriers or their
affiliates that seek entry into the U.S. market for international
telecommunications services. The proposal would eliminate, or in the
alternative, simplify the effective competitive opportunities (ECO) test
that applies to FCC review of Section 214 applications to serve the U.S.
market. Developments since 1995, including the decision to replace the
ECO test for applicants from World Trade Organization (WTO) Member
countries, justify considering whether there is a reason to apply all of the
4. ECO test requirements absent complaints or evidence of anti-
competitive conduct on routes between the U.S. and countries that are
not WTO members. The FCC will re-examine the current ECO test
requirements as it applies to Commission review of Section 214
applications, cable landing license applications and foreign carrier
affiliation notifications. Comments and reply comments are due 30 days
and 50 days, respectively, after publication of the NPRM in the Federal
Register.
U.S. Court of Appeals Upholds FCC Policy of Permitting Security
Interests in License Sale Proceeds
Since lenders cannot take a security interest in an FCC license because
it would be possible for the lender to acquire the license without FCC
consent, the common practice is to take a security interest in the
proceeds of the sale of an FCC license. In the Tracy Broadcasting
Corporation bankruptcy proceeding, a District Court based on its reading
of the Bankruptcy Code concluded that a security interest in the
proceeds of the sale of a broadcast station license that was not entered
into until after the licensee declared bankruptcy was not enforceable.
The U.S. Court of Appeals overturned the District Court and stated that
the lender’s security interest was in the economic value of the license,
including the proceeds of the sale of the license. It concluded that those
rights vested before the licensee filed for bankruptcy and could not be
discharged.
FCC Seeks Comment on Seven TCPA Petitions
The FCC seeks comment on several requests for clarification or
declaratory ruling regarding the application of the Telephone Consumer
Protection Act to autodialed and prerecorded message calls, text
messages, or faxes. For example, questions are raised about whether
predictive dialers that are not used for telemarketing purposes and do
not have the current ability to generate and dial random or sequential
numbers are “automatic telephone dialing systems,” and whether the
TCPA applies to users of Internet-to-phone text messaging technology
and similar technologies involving the storage and automatic dialing of
wireless telephone numbers. Comments on three of the petitions are
due by November 15, 2012 (with reply comments due by November 30),
and comments on the remainder of the petitions are due November 23,
2012 (with reply comments due by December 10, 2012).
Additional Comments Sought on the Video Service Relay Program
The FCC seeks further comment on proposals to reform the structure of
the video relay services (VRS) program and on proposed compensation
rates. CSDVRS, LLC (a VRS provider) proposed that VRS access
technologies be migrated to a standard, software based VRS access
technology that could be used on commonly available off-the-shelf
hardware. CSDVRS also proposed changes to industry structure that
would in effect “separate the video communication service component of
VRS from the ASL relay CA service component by providing the
functions of the former from an enhanced database.” The FCC further
seeks comment on the Fund Administrator’s proposed rate structure,
5. proposed rates and cost calculations. Comments are due by November
14, 2012, and reply comments are due by November 29, 2012.
Wireline Competition Bureau Conducting a Virtual Workshop on
Connect America Phase II Cost Model
The FCC’s Wireline Competition Bureau has commenced a virtual
workshop to inform the development and adoption of a forward-looking
cost model through which the agency will provide Connect America
Phase II universal support. Participants may share information and
ideas with Bureau staff in near real-time by posting comments through
various subject-matter-specific online discussion forums that are hosted
on the FCC’s website (which is available here). Posts also will be
placed in the relevant FCC dockets. Comments must be posted by
November 19, 2012.
Proposed Amendment to the Electronic Communications Privacy
Act
The Senate Judiciary Committee adopted an amendment from
Chairman Patrick Leahy (D-VT) to the Electronic Communications
Privacy Act (ECPA). The 1986 law sets forth standards governing law
enforcement access to electronic communications. Chairman Leahy’s
amendment would require that, except for emergencies, the federal
government must obtain a probable cause warrant in order to obtain e-
mail, texts, or other electronic communications, including documents
stored “in the cloud.” The amendment would help bring Fourth
Amendment safeguards into the digital age. Under current law, the
government can often access individuals’ e-mails and documents stored
“in the cloud” by issuing a subpoena to the Internet service provider.
Leahy’s measure also would amend the Video Privacy Protection Act
(VPPA) to allow companies to obtain one-time consent from a customer
to share user viewing histories on an ongoing basis and that consent
may be secured via the Internet. This disclosure provision would allow
companies to link users and products. Currently, users of social
networking services must take an affirmative action, such as liking or
sharing on Facebook, in order to associate themselves with a product.
The VPPA portion of the bill is a variation of what was previously passed
by the House of Representatives. Although the amendment was
adopted as a substitute, it was not reported out of committee. The
Judiciary Committee is expected to mark up the bill during the lame-duck
session in November.
FCC Creates Public Safety Answering Point (PSAP) Do-Not-Call
Registry
The FCC voted to create a do-not-call registry of PSAP telephone
numbers and prohibit an operator of automatic dialing or robocall
6. equipment from calling or texting a telephone number on this list, other
than for emergency purposes. The agency staff is working through the
operational details of the registry and will release a Public Notice when
that process is complete. The effective date of these changes has yet to
be determined, but it will be no sooner than six months after the release
of that Public Notice.
FCC Adopts Wireless Communications Service (WCS) Technical
Rule Settlement Proposal
In order to resolve challenges to the FCC’s WCS technical rules that
were adopted in 2010, a recent FCC order adopted the joint technical
proposal of AT&T and SiriusXM and made other rule changes. 20 MHz
of the available 30 MHz WCS spectrum is now available for mobile
broadband services. The remaining 10 MHz is available for fixed
broadband services and will act as an interference buffer between
mobile WCS operations and the adjacent spectrum used for SDARS.
The technical rule changes will facilitate the deployment and co-
existence of WCS and SDARS operations, provide a mechanism for
resolving harmful interference on roadways, clarify when notice and
coordination of WCS operations is required, and extend the WCS
construction deadlines.
All-Digital Cable Systems Allowed to Encrypt Basic TV Service
The FCC has lifted the restriction on encrypting the basic service tier on
all-digital cable television systems. According to the agency, this
change will allow operators to enable and disable service remotely,
reduce theft of cable service, and provide regulatory parity between
cable operators and satellite providers. Cable operators that choose to
encrypt basic service must comply with consumer protection measures,
including providing notice and offering free set-top boxes or
CableCARDs to certain subscribers for a limited time. In addition,
Comcast, Time Warner Cable, Cox, Charter, Cablevision, and Bright
House have committed to a process that will provide basic service tier
access to certain third party devices that would other otherwise be
useless once the basic service tier is encrypted.
FTC Holds Robocall Summit
On Thursday, October 18, 2012, the Federal Trade Commission (FTC)
hosted a summit on stopping illegal robocalls. Industry and government
leaders discussed at length the state of the industry, the current legal
landscape, and technical issues such as caller-ID spoofing, data mining,
and call-blocking technology.
The summit culminated with the announcement of the FTC Robocall
Challenge – a contest for the best new solution to block illegal robocalls
on landlines and mobile phones. Individuals, groups, and organizations
are encouraged to submit new proposed technical solutions or functional
solutions and proofs of concept to the agency by January 17, 2013.
Proposals will be judged on whether they work, are they easy to use,
and what it will take to roll them out. Individuals, teams or small
7. organizations with fewer than 10 people are eligible to win a $50,000
prize. Organizations with more than 10 employees are also encouraged
to participate, but are not eligible for the cash prize. The FTC plans to
announce the results in April 2013.
FCC Reminds ETCs That They Must Recertify Before Year End
The FCC recently reminded Eligible Telecommunications Carriers
(ETCs) and state agencies that they must re-certify the eligibility of the
base of their subscribers as of June 1, 2012 and must complete the re-
certification process by December 31, 2012. Each ETC must report the
results of its re-certification process to the FCC and the Universal
Service Administrative Company (USAC) by January 31, 2013. Where
state agencies perform re-certification, the agencies must provide notice
to each ETC so that the ETC can initiate all de-enrollments by
December 31, 2012 and file its annual recertification report by January
31, 2013. The FCC also provided guidance on compliance with the one-
per-household rule, and how states can opt-out of the National Lifeline
Accountability Database.
Comments Sought on Lifeline Annual Recertification Rule
The FCC seeks comment on whether carriers that receive Lifeline
universal support must recertify the eligibility of their Lifeline subscribers
once per calendar year or every twelve months. The issue was raised in
a Petition for Clarification filed by General Communication, Inc. (GCI), in
which the company argued that the “annual” recertification requirement
in FCC Rule 54.410(f) should be interpreted as requiring recertification
once per calendar year. GCI also claimed that interpreting the provision
as requiring recertification every 12 months imposes unnecessary and
unjustified costs without any corresponding public benefit. Comments
are due by November 23, 2012, and reply comments are due by
December 10, 2012.
Liberty Media Seeks Consent to Acquire Control of Sirius XM Radio
Liberty Media has filed applications with the FCC for regulatory approval
for the company to take control of Sirius XM Radio. Through various
stock purchases and the conversion of its preferred stock, and upon
approval of the transaction by the FCC, Liberty Media will own more
than 50 percent of Sirius’ common stock. Petitions to Deny were due by
November 1, 2012, oppositions are due November 13, 2012, and replies
are due by November 20, 2012.
CTIA Releases Whitepaper on Cybersecurity
CTIA-The Wireless Association® released a white paper on
cybersecurity in which the association stressed the need for sharing of
“cyberthreat information among industry players and between industry
and government.” More broadly, the paper provides: (1) a brief overview
of the cybersecurity landscape of the mobile communications industry;
(2) the extent of its interdependence in responding to an environment of
rapidly changing threats, (3) a summary of the many cybersecurity
8. features and solutions at work today, and (4) a sampling of the many
advanced protections available for device users. The white paper is
available here.
FCC Approves E-Rate Eligible Services List for FY 2013
The FCC released the approved E-Rate eligible services list (ESL) for
funding year (FY) 2013, which will start July 1, 2013, and indicated that
the window for filing FY 2013 applications for E-Rate support should
open no earlier than November 26, 2012. The FCC did not make major
modifications to the ESL, but it did consolidate all Priority One services
into a single list to reduce regulatory and administrative burdens on
applicants. Thus applicants are no longer expected to separate service
requests into telecommunications services, telecommunications or
Internet services. In approving the ESL, the FCC did not take action on
the issue of bundling of ineligible equipment with eligible services.
Update on Mobility Fund Phase I Auction
The FCC announced the results of the Mobility Fund Phase I auction in
which nearly $300 million in funding will be distributed to help close gaps
in mobile coverage in the U.S. The funding will cover deployment of 3G
and 4G service in 31 states. Winning bidders, which include T-Mobile
and U.S. Cellular, must complete their projects within three years and
allow other carriers to roam on their networks. Each winning bidder
must submit a completed long-form application by November 5, 2012.
Court Denies Stay in Viewability Appeal
The U.S. Court of Appeals for the D.C. Circuit denied a request to stay
the FCC’s Viewability Order pending judicial review, stating that the
petitioners did not meet the stringent requirements for issuing a stay.
The Order allows the FCC’s “viewability” rules to sunset – these rules
require cable systems that offer both analog and digital service to carry
digital must-carry signals in analog format. Must-carry broadcasters
argued that they will lose viewership and audience share if the Order
takes effect, and that declining viewership will cause them to lose
advertising revenue. Broadcasters further claimed that absent a stay
they will have to eliminate or reduce programming, which will
disproportionately harm low income and minority viewers.
Ban on Certain Exclusive Programming Contracts Expires; FCC
Seeks Further Comments
The FCC did not extend its general ban on cable operators entering into
exclusive contracts with cable-affiliated programming vendors that
deliver programming via satellite. Instead, the FCC will generally review
these agreements on a case-by-case basis, except that the agency
created a rebuttable presumption that an exclusive contract involving a
satellite-delivered, cable-affiliated Regional Sports Network (RSN) has
the “purpose and effect” of “significantly hindering or preventing” a
complainant from providing satellite-delivered programming. The FCC
also sought comment on related program access issues, including
9. whether to establish a number of additional rebuttable presumptions.
Comments are due by November 30, 2012 and reply comments are due
by December 17, 2012.
FCC Seeks Comment on LightSquared Request for Relief
The FCC seeks comment on a request from LightSquared that the
agency declare that build-out requirements adopted in a prior order do
not apply until the status of LightSquared’s authorizations have been
resolved. These conditions include that LightSquared provide terrestrial
mobile broadband coverage to at least 100 million people by the end of
this year. The FCC proposed in February 2012 to either suspend
indefinitely or revoke all of LightSquared’s Ancillary Terrestrial
Component (ATC) authorizations, but the proposal is still pending before
the Commission. Petitions to Deny and other comments on
LightSquared’s request are due by November 9, 2012. Oppositions are
due by November 19, 2012, and replies are due by November 28, 2012.
FirstNet Seeks Comment on Public Safety Broadband Network
The National Telecommunications & Information Administration (NTIA)
released a Notice of Inquiry on behalf of the First Responder Network
Authority (FirstNet) seeking public comment on a network architecture
presentation made at the September 25 FirstNet Board meeting.
Comment also is sought on network design, business plan
considerations and applications for public safety. The presentation
made by FirstNet Board member Craig Farrill outlined a possible
framework for designing the public safety network architecture in a
manner that leverages existing resources and infrastructure as
contemplated by the Middle Class Tax Relief and Job Creation Act. The
presentation explores three options, but appears to favor creating a
diverse nationwide network with multiple wireless networks and systems.
Comments were due November 1, 2012.
FCC Initiates Comprehensive Satellite Licensing and Operational
Rule Review
For the first time since 1996, the FCC is undertaking a comprehensive
review of its satellite licensing and operational rules. The rule review will
eliminate unnecessary rules, update the rules to reflect technological
advances, and streamline the licensing process.
The proposed rule changes include:
• A change in the regulatory approach for licensing from “tell us
how you built it” to “tell us how you avoid interference with your
neighbors”;
10. • Elimination of unnecessary filing requirements;
• Expansion of the number of earth station applications that are
eligible for routine and streamlined processing;
• Revising the information collected on space and earth station
applications to reflect evolving technology;
• Providing additional methodologies for use by earth station
applicants to verify antenna performance;
• Reinforcing emergency contact reporting requirements,
consolidating annual reporting requirements, and removing
unnecessary reporting rules; and
• Simplifying and clarifying space station milestone requirements.
Comments and reply comments are due 45 days and 75 days,
respectfully, after publication of the NPRM in the Federal Register.
FCC Announces Planned mHealth Task Force Report
Implementation Steps
The FCC announced plans to act on recommendations from a mHealth
Task Force Report. The independent Task Force released its
recommendations to the FCC, other federal agencies and to industry,
with the goal of making mHealth a routine medical best practice by 2017.
Among the specific actions that FCC Chairman Genachowski committed
to taking include renewing the search for a permanent FCC Health Care
Director. He also indicated that the FCC would consider an Order to
comprehensively reform and modernize the Rural Health Care Program
and an Order to streamline the FCC’s experimental licensing rules to
promote and encourage the creation of wireless health device “test
beds.” The Commission will also develop and execute a health care
stakeholder outreach plan to promote greater collaboration between the
FCC and the health care sector.
Internet Radio Fairness Act Introduced in House and Senate
Congressmen Jason Chaffetz (R-UT) and Jared Polis (D-OR) and
Senator Ron Wyden (D-OR) introduced the Internet Radio Fairness Act
(HR 6480; S. 3609) in the House and Senate. The bill seeks to apply
the same method for establishing royalty rates for Internet radio as is
currently applied to cable and satellite radio. According to Senator
Wyden, the current method used to set royalty rates for Internet Radio
has “led to webcasters paying five times the amount of royalty rates – as
a percentage of revenue – as other digital music broadcasters like
satellite and cable.”
Legislation Introduced to Prevent FCC Reforms to Rural Subsidy
Formula
Representative Jeffrey Landry (R-LA) introduced legislation, the Restore
Effective Statistics to the Calculation of USF Expenditures Act of 2012
(RESCUE Act), to prevent the FCC from decreasing payments to rural
11. telecommunications companies. Specifically, the bill seeks to end the
FCC’s use of statistical caps in determining universal service support as
part of the FCC’s 750-page order reforming the Universal Service Fund
(USF). The RESCUE Act would also mandate that an alternative
methodology for funding be created within 120 days. Though the bill has
support from the National Telecommunications Cooperative Association,
it currently has no cosponsors. It is unlikely Rep. Landry’s bill will
receive consideration this year. However, the FCC’s order to reform the
USF is being challenged in court by 29 petitioners and is expected to be
heard in the coming months.
*************
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