Patton Boggs TechComm Industry Update - September 27, 2012

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FCC to Seek Comment on Three NPRMs at September 28th Meeting

The FCC plans to issue the following Notices of Proposed Rulemaking (NPRM) at its Friday, September 28th meeting:

  • Voluntary Incentive Auctions. An NPRM regarding implementation of a voluntary incentive auction of broadcast spectrum. According to reports, the NPRM will propose to conduct the “reverse” and “forward” auctions concurrently. The NPRM reportedly will seek comment on how to design a band plan for the spectrum, how to conduct the transition during which remaining broadcast operations will be repacked, and the eligibility requirements for auction participants. The target date for the auctions is 2014.
  • Mobile Spectrum Holdings. An NPRM initiating a review of the agency’s policies governing mobile spectrum holdings and how much spectrum each wireless company can hold in a market. The NPRM is expected to ask whether the FCC should continue to apply its “spectrum screen” analysis on a case-by-case basis when evaluating companies’ spectrum transactions or adopt a more standardized framework. Because this rulemaking could affect which wireless companies participate in the upcoming spectrum incentive auctions, reports indicate that the FCC may act on the mobile spectrum holdings NPRM before finalizing its incentive auction rules.
  • Satellite and Earth Station Rules. An NPRM to “update, streamline, or eliminate earth and space station licensing requirements, reducing regulatory burdens on licensees and accelerating delivery of new satellite services to consumers.” According to trade press, the NPRM will consider updating certain technical definitions, easing administrative burdens, reinforcing an emergency reporting contact requirement, providing greater flexibility to earth station applicants, and codifying the practice of granting a single earth station authorization to cover multiple antennas located in close proximity.

FTC Business Guide for Mobile Application Developers

The Federal Trade Commission (FTC) released a new Business Guide for mobile application developers, “Marketing Your Mobile App: Get It Right from the Start.” While the stated intention is to help mobile app developers observe truth-in-advertising and basic privacy principles, this guide is a helpful primer of fundamental advertising, marketing and privacy principles applicable to all formats and media. The new FTC Business Guide also reflects the FTC’s continuing focus on privacy protections in online and mobile environments. For our Client Alert about the new FTC guide, click here.

FCC Adopts Forbearance Approach for Certain Foreign Ownership of Common Carrier Licenses


The FCC will forbear from applying Section 310(b)(3) of the Communications Act to a certain class of common carrier licenses. The forbearance will apply to licensees in which foreign governments, individuals, and/or entities would hold more than 20 percent ownership through intervening U.S. organized entities that do not control the licensee. The FCC will forbear so long as it determines that such foreign ownership is consistent with the public interest under the policies and procedures used for assessing foreign ownership under Section 310(b)(4). An eligible licensee will seek such determination by filing a request with the FCC before the foreign ownership exceeds the 20-percent threshold. The FCC’s decision will permit all “indirect” foreign ownership of common carrier licenses to be treated under the same FCC policies and procedures and be subject to the FCC’s public interest review.


Appeals Court Upholds Injunction Against ivi

The U.S. Court of Appeals for the Second Circuit upheld an injunction issued by the district court against ivi, Inc. – a company that streams television programming over the Internet without a broadcaster’s consent. The court concluded that Congress did not intend for the compulsory copyright license statute to apply to the retransmission of television signals over the Internet and gave deference to similar conclusions made by the U.S. Copyright Office that Internet transmission services are not cable systems.

NAB Granted Delay in Appeal of Political File Ruless

The U.S. Court of Appeals for the D.C. Circuit granted a request by the National Association of Broadcasters (NAB) to delay its appeal of the FCC’s new online political file rules until after the elections. The association left open the possibility of eventually asking the court to dismiss the appeal. The FCC did not oppose NAB’s motion, in which the association argued that: “Deferring the briefing schedule in this case will allow NAB to gain experience with the new regulatory requirements at issue and explore possible alternative means of resolving the issues.”


Court Stays Tennis Channel Decision

The U.S. Court of Appeals for the D.C. Circuit stayed the FCC’s decision regarding the Tennis Channel. The FCC had upheld an FCC ALJ decision finding that Comcast had discriminated against Tennis Channel, with respect to terms and conditions of carriage, by placing Tennis Channel in a more expensive viewing tier than Comcast’s wholly owned sports networks. The FCC ruling favoring Tennis Channel was the first time that the FCC had ruled in favor of any independent cable network under the Commission’s program carriage rules. As a result of the stay, during the pendency of the appeal, Comcast will not be required to move Tennis Channel onto more widely distributed tiers.

FCC Releases Broadband Progress Report and Notice of Inquiry

According to the FCC’s recently released Eighth Broadband Progress Report (Report), 19 million Americans, most of whom live in rural areas, do not have access to high-speed Internet. In areas where access is available, only 40 percent of Americans actually subscribe to high-speed fixed broadband service either due to cost, education or perception issues. As a result, for the third consecutive year, the FCC has “concluded that broadband is not yet being deployed ‘to all Americans’ in a reasonable and timely fashion.” Still, the Report demonstrates steady progress from last year both in reducing the number of Americans lacking high-speed access by 7 million and in increasing the deployment of high-speed 4G cellular networks.

Along with the Report, the FCC adopted a Notice of Inquiry (NOI) initiating the assessment for the next annual broadband report and seeking comment on how to best measure future progress in meeting broadband goals. Among other things, the NOI asks how “advanced telecommunications capability” should be defined, whether separate benchmarks for fixed and mobile services should be established, and how to evaluate mobile broadband availability. Reply comments are due by October 22, 2012.

52 Bidders Qualified to Participate in Mobility Fund Phase I Auction

Fifty-two applicants have qualified to bid in the Mobility Fund Phase I Auction (Auction 901). The auction is scheduled for Thursday, September 27. The auction will be used to award up to $300 million in one-time support for the provision of mobile services.

The FCC also announced the availability of updated census blocks eligible for Mobility Fund Phase I support. The revisions do not change the set of eligible census blocks or biddable items, rather they change the road miles listed for certain eligible census blocks and their associated biddable items. The changes are designed to correct eligible road miles that the FCC has found in some instances to be overstated under its initial calculations. In addition, in an effort to increase data consistency, the FCC has decided to round all road mile numbers to hundredths of miles (two decimal places). More than 80 percent of the biddable items have either no change in road miles or a change of less than one mile.

Federal Reserve Banks Release Report on Regulation of Mobile Payments

The Federal Reserve Banks of Atlanta and Boston have released a joint report on the “U.S. Regulatory Landscape for Mobile Payments.” The report, an outgrowth of discussions of the Mobile Payments Industry Workgroup (MPIWG) and Federal and State regulators, notes that the use of a mobile phone for payments is an “emerging channel” and that “currently no one law or government authority oversees mobile payments.” Regulators have “an interest in ensuring safety and soundness and consumer protection” in this emerging environment. However, neither the “regulatory agencies nor industry stakeholders see any immediate need for additional regulations.” The MPIWG plans to develop tools to educate regulators on areas where they should focus their efforts to ensure that any new guidelines or regulations reflect the multiple modes and methods of mobile payments.


Enforcement Bureau Issues Advisory on Autodialed and Prerecorded Political Calls

The FCC’s Enforcement Bureau (Bureau) issued an advisory to ensure that political campaigns and promoters understand the restrictions imposed by the Telephone Consumer Protection Act and associated FCC rules. As the Bureau explained, prerecorded voice messages and autodialed political calls to cell phones (including certain text messages) are prohibited except when the calls are made for emergency purposes or the called party provides prior express consent. The caller has the burden of proving that it has received consent. Conversely, most prerecorded or autodialed political calls are permitted, subject to certain general disclosure and technical requirements. Entities that violate these rules may be subject to enforcement action, including monetary forfeitures.

New Trade Associations to Play Active Role in 113th Congress

In the past few weeks, three new trade associations have formally been announced to weigh in on key issues in the 113th Congress:

  • The Internet Association (IA) led by a former senior staffer for Representative Fred Upton, Michael Becker, will be representing the largest pure-play Internet sites such as Google, Facebook, Expedia, Yahoo! and many others. The focus of the group will be to educate lawmakers and policymakers about the importance of the Internet industry to the economy and innovation, and address such issues as copyright law, tax and Internet architecture issues.
  • The i2Coalition was announced shortly after the IA, and its mission will be to represent the backend Internet architecture and cloud computing companies on issues such as copyright law, interconnection access and the importance of the Internet to the future growth of the U.S. economy. The group was formed and will be run initially by the four founding members from the companies: cPanel, Rackspace, Softlayer and Endurance International Group. The group boasts 42 members and highlighted its concern with the legislative efforts in the 112th Congress related to the “Stop Online Piracy Act” and “PROTECT-IP Act.”
  • Finally, the Web Enabled Retailers Helping Expand Retail Employment (We R HERE Coalition) was formed with more than 1,000 small businesses to work against burdensome legislation and regulations that impede the growth of small businesses in the U.S., at a time of critical need for job creation and market growth. The coalition will be led by executive director Phil Bond, formerly the Under Secretary for Technology at the Commerce Department and former President of TechAmerica. While the group will highlight the importance of small business to the U.S. economy, its primary focus will be on state sales tax and the streamline sales tax project (SSTP), and legislation currently pending before Congress.


Congress Introduces Legislation to Increase Green Cards for Highly Skilled Workers

Senator Chuck Schumer (D-NY) and Congressman Lamar Smith (R-TX) introduced legislation to issue more green cards to graduates of U.S. universities with Science, Technology, Engineering and Mathematics (STEM) degrees in order to keep these skilled workers in the country. Though the bills differ, they would create two-year pilot programs to increase the number of available green cards issued. Senator Schumer’s bill, the “BRAINS ACT,” contains other immigration provisions. Representative Smith’s legislation failed to pass the House last week due to opposition to its reallocation of visas from the diversity lottery program. Both bills are unlikely to receive additional consideration in the 112th Congress, however, the bipartisan commitment to expanding green cards by 55,000 a year for STEM graduates was lauded by the technology industry, and similar legislation will likely be introduced in the 113th Congress.

FTC Praises New “Do Not Track” Browsers Settings for Consumers

FTC Chairman Jon Leibowitz praised Google and Mozilla for adding “Do Not Track” settings to their Chrome and Firefox browsers following Microsoft’s lead earlier this summer. The Digital Advertising Alliance (DAA), the self-regulatory body comprised of a number of leading technology companies, voiced concern about the precedent this sets in an ad-supported Internet economy. The FTC is working with industry to develop an Internet privacy program following its report in March. Congress introduced a number of bills in the 112th Congress to address Internet privacy and consumer tracking online specifically, but there has been no significant movement on those initiatives. The World Wide Web Consortium (W3C) met in Seattle this summer to discuss how a “Do Not Track” program could be defined and administered, and the group plans to meet again next month in Amsterdam to continue those discussions. The FTC has been participating in the discussions despite criticism from some lawmakers about its role in discussions of the W3C.
 

FCC Takes Steps to Implement the Public Safety Spectrum Act

The FCC has implemented several changes impacting the existing public safety broadband spectrum. The FCC reallocated the D Block for public safety services, as well as eliminated all of the rules that are inconsistent with the spectrum use and allocation mandated by the Public Safety Spectrum Act. In their place, the FCC adopted rules to license both the D Block and existing public safety broadband spectrum to the First Responder Network Authority (FirstNet), the single public safety wireless network licensee established by the statute. The FCC is ready to grant a new license to FirstNet under a new call sign as soon as possible after FirstNet submits its request.

House Energy and Commerce Holds a Hearing on Spectrum Efficiency

The House Energy and Commerce Subcommittee on Communications and Technology held a hearing on the role the government should play in providing wireless broadband spectrum for the private sector and, specifically, the tension between sharing spectrum and clearing it. Committee Chairman Greg Walden (R-OR) and his fellow Republicans agreed with witnesses from T-Mobile and Ericsson that the government should focus its efforts on clearing spectrum instead of sharing spectrum with private entities. Likewise, the witness from the Government Accountability Office (GAO) said that spectrum sharing was an unworkable business model “because of the uncertainty involved.” Conversely, Democratic congresspersons in the hearing were more inclined to support a sharing approach. Representative Henry Waxman (D-CA) asserted that, because of the impending spectrum crunch, the government “cannot afford to take any options off the table.” 

Mobile Device Tracking Bill Introduced - H.R. 6377

Representative Ed Markey (D-MA) introduced the Mobile Device Privacy Act (H.R. 6377) that would require mobile device sellers, manufacturers, service providers and app providers to disclose that the device uses or has monitoring software. Covered entities would be required to disclose the kind of information that is monitored, who would collect or transmit that information, and how the information would be used. In addition, under the bill, express consumer consent would need to be obtained before any information may be collected by the monitoring software. Entities collecting such information would be required to develop information security policies to protect the security of the information.

Public Interest Groups to File Net Neutrality Complaint Against AT&T

Public interest groups Free Press, Public Knowledge and the New American Foundation’s Open Technology Institute notified AT&T of their intent to file a net neutrality complaint against the carrier if it does not change its policy. The public interest groups allege that AT&T plans to block certain users from accessing Apple’s FaceTime application over the AT&T network, and that such a decision violates the FCC’s Net Neutrality Rules. AT&T denies that its plans violate either the transparency or blocking restrictions found in the Net Neutrality Rules. FCC rules require the public interest groups to provide AT&T with 10 days notice before filing a complaint.

FCC Announces Comment Dates for TIA Petition

The FCC requests comments on a Petition for Rulemaking filed by the Telecommunications Industry Association (TIA). The Petition urges the FCC to give manufacturers the option of electronically labeling wireless devices rather than physically placing labels on the outside of each device. TIA claims that such rules would ease technical and logistical burdens on manufacturers while increasing end user access to useful information. Comments supporting or opposing the Petition are due by October 5, 2012.

FCC Issues New Rules Regarding Medical Devices

The FCC issued final rules to permit development of new Medical Body Area Network (MBAN) devices in the 2360-2400 MHz frequency band. The final rules expand the FCC’s Medical Device Radiocommunication Service rules and aim to provide a flexible platform for wireless networking of multiple body transmitters used in the measurement and recordation of patient information that is critical for diagnostic and therapeutic purposes in a hospital environment. The final rules adopt, in part, recommendations from a joint proposal submitted by representatives of Aeronautical Mobile Telemetry (AMT) licensees. The AMT licensees previously expressed doubts that AMT and MBAN operations could successfully coexist in the same frequency band. The FCC ultimately concluded that the two technologies could coexist without significant interference issues and found that expansion of MBAN technology is in the public interest.

FAA Proceeding on Passenger Use of Portable Electronic Devices

The Federal Aviation Administration (FAA) seeks comments on current policy, guidance and procedures that aircraft operators use when determining if passenger use of portable electronic devices may be allowed during any phase of flight on their aircraft. With the growth of smart phones and other personal electronic devices, the FAA recognizes that passengers may wish to use their devices during critical phases of flight (e.g., takeoff and landing), which is currently largely proscribed. The FAA intends to establish an Aviation Rulemaking Committee to review the comments and make recommendations. The FCC will be a key partner in this activity working collaboratively with the FAA, airlines and the manufacturers to explore broader use of personal electronic devices in flight. Comments are due by October 30, 2012.

Markey Circulates Draft Wireless Surveillance Legislation

Congressman Ed Markey (D-MA) has circulated draft legislation that would call on courts and law enforcement to report on wireless surveillance practices that so far have gone unreported. Representative Markey released the discussion draft as part of his ongoing investigation that indicated that more than 1.3 million requests were made last year by law enforcement for consumer mobile phone information. In July, Representative Markey released responses from nine wireless carriers to his inquires about requests made by law enforcement for consumers’ mobile phone data, including text messages, call records, geolocation and cell phone tower “dumps.” Representative Markey also sent the Department of Justice a letter asking the agency about its current mobile phone surveillance activities. Among other issues, Representative Markey’s discussion draft of The Wireless Surveillance Act of 2012 would require regular disclosures from law enforcement on the nature and volume of requests they make; discourage information requests such as cell tower “dumps”; and direct the FCC to limit how long carriers can keep consumers’ personal information.

FCC Relaxes Restrictions to Allow Cable Operators to Buy CLECs

The FCC unanimously approved an Order allowing cable operators to buy competitive local exchange carriers (CLECs). Under Section 652(b) of the Telecommunications Act, a cable operator is precluded from acquiring more than a 10 percent interest in any local exchange carrier that provides service within its franchised area unless the FCC grants a waiver or an exception is met. However, the FCC decided to forbear from applying this statute to acquisitions of CLECs by cable operators because relaxing the requirement will increase competition. The Order states that forbearance of Section 652(b) “will likely speed the entry of cable operators into the market for telecommunications services provided to business customers and will foster increased facilities-based competition for these services.” The FCC also noted that application of the rule to CLECs is unnecessary to protect consumers, particularly because a transaction would still be subject to a public interest determination under Section 214, which would allow the local franchising authorities to comment on the potential impact of the acquisition on consumers. 

FCC Issues Third Report on International Broadband Comparisons

The FCC’s International Bureau released its third annual International Broadband Data Report (Report) that compares rates of broadband adoption, speeds and prices in the United States to those in the international community. The agency believes that this international data “can serve as useful benchmarks for progress in fixed and mobile broadband accessibility.” For example, the Report calls the U.S. the “global test bed for wireless technology and services,” and cites data that lists the U.S. seventh in the world for mobile broadband penetration on a per capital basis and fifteenth for wired broadband penetration on a per capita basis.

FCC Suspends Special Access Rules on an Interim Basis

The FCC suspended rules regarding pricing flexibility for special access services on an interim basis while the FCC considers a new approach. The FCC plans to release a comprehensive data collection order soon that will guide its efforts to promulgate permanent rules. In the meantime, entities may seek interim relief through the agency’s forbearance process. According to the Report and Order, the change was made “in light of significant evidence that these rules, adopted in 1999, are not working as predicted, and widespread agreement across industry sectors that these rules fail to accurately reflect competition in today’s special access markets.”

Comments Sought on 800 MHz Reconfiguration Plan Along U.S.- Mexico Border

The FCC’s Public Safety and Homeland Security Bureau (Bureau) seeks comment on a reconfigured 800 MHz channel plan along the U.S.-Mexico border (Southern California, NPSPAC Region 5; Arizona, NPSPAC Region 3; New Mexico, NPSPAC Region 29; Texas – El Paso, NPSPAC Region 50; and Texas – San Antonio, NPSPAC Region 53). In the plan, for example, the Bureau proposes to “eliminate channel center offsets in the Sharing Zone and use standard channel centers for all post-band reconfiguration channel assignments in the Sharing Zone.” The Bureau further proposes a 30-month transition period for the rebanding process in the broader region. Comments are due by October 1, and reply comments are due by October 15.

Enforcement Bureau Issues Reminder of January 1, 2013 Deadline for Transitioning to Narrowband Technology

The FCC’s Enforcement Bureau issued an advisory reminding private land mobile radio (PLMR) licensees operating in the 150-174 MHz and 421-470 MHz frequency bands that they must migrate to narrowband technology by January 1, 2013. Subject to exceptions, equipment manufacturers must stop manufacturing and importing equipment that is “capable of operating with only one voice path per 25 MHz of spectrum in the 150-174 MHz and 421-470 MHz bands.” Parties unable to meet the deadline may file for a waiver, but the Bureau has stated that any waiver request will be held to “high level of scrutiny” and that penalties for non-compliance with the narrowbanding rules can result in “license revocation, and/or monetary forfeitures of up to $16,000 for each such violation or each day of a continuing violation, and up to $112,500 for any single act or failure to act.”

Fifth Circuit Rules “Legal” Challenges to FCC Forfeiture Orders Must be Brought in Federal Appellate Courts

The U.S. Court of Appeals for the Fifth Circuit held that a legal challenge to an FCC forfeiture order (e.g., FCC had no legal jurisdiction over an allegedly illegal “intrastate” radio station) must be brought under Section 402(a) of the Communications Act in the federal appellate courts. The court ruled that Section 504(a) of the Communications Act, which specifically deals with enforcement of forfeitures by the government through the federal district courts, only permits defending parties to challenge the forfeiture in those courts based on factual arguments (e.g., the factual basis for imposition of the forfeiture is not correct). This ruling is contrary to a 2003 decision by the D.C. Circuit which ruled that the party subject to the forfeiture has a choice to pay the fine and bring a challenge in the appellate courts under Section 402(a), or wait to be sued for recovery of the forfeiture amount under Section 504(a) and raise any and all defenses in that forum.

FTC Updates Telemarketer Fees for Access to the Do-Not-Call Registry

The FTC has announced that beginning on October 1, 2012, access fees for the National Do-Not-Call Registry will be increased. This means that from October 1 to September 30, 2013, telemarketers will pay $58 (an increase of $2) for access to Registry phone numbers in a single area code, up to a maximum charge of $15,962 for all area codes nationwide (an increase from the $15,503 maximum charge). In addition, telemarketers will pay $1 more per area code for numbers they subscribe to receive during the second half of the 12-month subscription period, for a total of $29 per area code. The first five area codes will remain free, and organizations that are exempt from the Do-Not-Call rules may still obtain the entire list for free.

Published In: Antitrust & Trade Regulation Updates, Communications & Media Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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