Patton Boggs TechComm Industry Update - Week of August 25, 2008

    25 August 2008

    FCC Finds Comcast’s Network Management Practices Anticompetitive and Discriminatory; Requires Comcast to Replace Current Practices

    The FCC has released an Order concluding that Comcast unduly interfered with its Internet customers’ rights to access lawful Internet content and use applications of their choice. The FCC found that Comcast’s “management of its broadband Internet networks contravenes federal policies that protect the vibrant and open nature of the Internet”. The FCC launched an investigation of Comcast’s network management procedures as a result of Comcast subscribers complaining about problems using Comcast’s peer-to-peer applications, like BitTorrent, over their Comcast broadband connections. The investigation revealed that Comcast’s network management practices discriminate among applications rather than treating all equally and are inconsistent with the concept of an open and accessible Internet.

    The Commission rejected Comcast’s argument that its practices constitute reasonable network management. The Commission found that the Comcast’s practices are anticompetitive and in violation of the FCC’s 2005 Internet Policy Statement because: (1) they affect customers who are using little bandwidth because they use a disfavored application; (2) they are not employed only during times when congestion is prevalent; (3) the company’s equipment does not target only those neighborhoods suffering from congestion; and (4) a customer may use an extraordinary amount of bandwidth during periods of network congestion and will be totally unaffected so long as he does not utilize an application disfavored by Comcast. The Commission makes clear that this decision is based solely on Comcast’s network management practices, and it will review network management complaints on a case-by-case basis. But it also is clear that intentional blocking of internet traffic based on competitive, disfavored applications and nondisclosure of network management practices violate the FCC’s Internet policies.

    Comcast is required, within 30 days, to disclose the details of its discriminatory network management practices, submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year, and disclose to customers and the Commission the network management practices that will replace current practices.

     

    FCC Seeks Comment on RCA Petition to Reconsider the FCC’s CETC Interim Cap

    The Rural Cellular Association (RCA) filed a petition for reconsideration of the FCC’s Order placing an interim, emergency cap on the amount of high-cost universal service support competitive eligible telecommunications carriers (CETCs) may receive. Starting on August 1, 2008, the FCC’s Order capped the total annual CETC support for each state at the level of support CETCs in that state were eligible to receive during March 2008. RCA requested that the FCC reconsider the interim cap because there is no empirical evidence and no evidence in the record that supports the FCC’s conclusion that the universal service fund is in jeopardy. RCA also argues that the FCC’s decision to impose the interim cap was not based on statutory universal service principles and violates the FCC’s competitive neutrality principles and local competition requirements. Oppositions to RCA’s petition are due September 4, 2008 and replies to oppositions are due September 15, 2008.

     

    FCC Seeks Comment on USAC’s Eligible Services List

    The FCC released an NPRM seeking comment on its list of services and equipment eligible for support from the Schools and Libraries universal service fund. The FCC seeks comment on whether, beginning in Funding Year 2009, the Eligible Services List should include filtering software, a broader classification of basic telephone service, dark fiber, text messaging, firewall service, anti-virus/anti-spam software, scheduling services and telephone broadcast messaging. The FCC also seeks comment on whether to include certain wireless Internet access applications. Specifically, the FCC seeks comment on whether wireless Internet access services such as those used on school buses to transmit information about emergencies, track students entering or leaving buses, and locate buses with GPS technology serve an educational purposed under the FCC’s rules and therefore should be added to the Eligible Service List. The FCC also seeks comment on whether to keep interconnected VoIP on the list for future funding years. Comments on the list are due September 18, 2008 and reply comments are due October 3, 2008.

     

    Globalstar ATC Modification Application Circulating on the Eight Floor

    Last week, the FCC added Globalstar’s Ancillary Terrestrial Authority (ATC) modification application to the list of items circulating among the FCC’s Commissioners. Earlier this year, Globalstar filed a modification application and waiver request to expand its operations beyond cdma2000 and IS-95 air interface protocols. Globalstar seeks to amend its ATC authority to include four additional protocols: WiMAX using TDD, Wideband CDMA, TD-CDMA and LTE using FDD. According to its waiver, Globalstar will lease some of its spectrum to Open Range Communications under a spectrum manager lease to jointly offer its TDD WiMAX service and plans to use WCDMA, TD-CDMA and LTE with Open Range and other potential business partners. Globalstar also seeks a waiver of certain technical satellite requirements.

    Sprint Nextel and Iridium Satellite LLC filed petitions to deny Globalstar’s application and CTIA filed an ex parte objection.

     

    FCC Issues NOI on SDARS Equipment Issues

    Consistent with its Order approving the XM and Sirius merger, the FCC issued a Notice of Inquiry regarding whether to require HD Radio or any other audio technologies to be incorporated into all SDARS receivers and/or whether to require SDARS or any other audio technologies to be incorporated into all HD Radio receivers. The FCC seeks comment on whether to require: (1) all receivers and other devices capable of receiving SDARS signals to also contain chips and other technology necessary to support HD Radio or any other technologies capable of providing audio entertainment services; and (2) all receivers and other devices capable of receiving HD Radio signals to also contain chips and other technology necessary to support SDARS or any other technologies capable of providing audio entertainment services. Comments are due 60 days after the FCC’s NOI is published in the Federal Register, which has not yet occurred. Reply comments are due 30 days thereafter.

     

    Ericsson and STMicroelectronics Form Joint Venture to Make Chipsets

    LM Ericsson AB and STMicroelectronics NV are forming a 50-50 joint venture to make chipsets for mobile telephones. The new company will have 8,000 employees and be based in Geneva, Switzerland. It is expected that the new company will supply chipsets to the wireless industry’s top handset manufactures, including LG, Nokia, Samsung, and Ericsson. Ericsson and ST will both appoint 4 directors to the new company’s board and Ericsson’s Svanberg will be chairman and ST’s CEO, Carlo Bozotti, will be vice chairman. The CEO of the new company will be appointed by ST. Ericsson is contributing $1.1 billion to the new company, with $700 million to be paid to ST. Regulatory approvals must be obtained for the joint venture.

     

    Opera’s Mini Browser Soon to be Available for Google’s Android Mobile Operating System

    Opera Software has made its Opera Mini browser available to Google developers ahead of an upcoming beta release. Android’s access to the Opera Mini furthers Google’s goal of placing Android in front of as many users as possible. The Opera Mini is designed for smart phones and allows users to send data using less bandwidth. Both the Opera Mini and Google’s Android share the goal of creating a desktop-like environment on a mobile phone by offering services such as small screen rendering, zoom, synched bookmarks, and Google search.

    A battle is developing between mobile phone platforms and browsers with Mozilla, Opera, and Google on one side and Windows and Symbian on the other. The competition will continue because there are 500 million mobile phone users in the world and not all of them have a web-enabled smart phone. Mobile phones with Google’s Android mobile operating system are expected to be available before the end of this year.

    In other Google news, Verizon and Google are near a deal that would make Google the default search provider on Verizon devices. Negotiations began almost a year ago but the parties hope to reach an agreement in the next few weeks.

     

    Google’s Mobile Election Website

    Google’s mobile election website provides links to: election- related news, Barak Obama and John McCain’s YouTube channels, information about the Presidential candidates, and maps of Denver (Democratic National Convention location) and Minneapolis (Republican National Convention location).

     

    American Airlines Launches In-Flight Internet Access Service

    American Airlines passengers on coast-to-coast flights now have access to the Internet in-flight. American Airlines and Aircell have entered into an agreement for Aircell to provide in-flight internet access on flights between New York and San Francisco, New York and Los Angeles, and New York and Miami. Aircell’s internet service will be available on 28 American nonstop flights between the cities on Boeing 767-200 aircraft. The service will cost $13 per trip and will be available once the aircraft reaches 10,000 feet. Passengers will be able to access Gogo, Aircell’s mobile air-to-ground broadband service, with any Wi-Fi enable device.

    Before launching in-flight Internet access, American and Aircell completed rigorous testing in order to prove to the Federal Aviation Administration that the service would not interfere with flight crew radio transmissions.

     

    First Responders Test Communications Systems and Active Water Sprinklers

    The fire and police departments in Cedar Hill, DeSoto, and Duncanville, all outside of Dallas, Texas, have joined together to update their first responder communications system. Recent system tests are activating radio controlled water sprinklers up to 30 miles away in Plano, Texas. The first responders believe their public safety system takes a priority over the sprinkler system but Plano disagrees having spent $5 Million on its system. A complaint is pending before the FCC.

     

    Clearwire Expects to Close Sprint Deal and Launch WiMax Service By Year’s End

    Despite AT&T’s opposition to the Clearwire-Sprint joint venture to combine WiMax assets, Clearwire still expects to receive FCC approval and close the deal before the end of the year. The deal will provide the joint venture with a $3.2 billion investment. The first commercial launch for the new company is planned for the fourth quarter of this year in Portland, OR with service to follow in Atlanta, Grand Rapids, and Las Vegas. AT&T may also be considering using WiMax in rural areas as an alternative to DSL or cable. AT&T’s CTO recently stated that WiMAX is a possible, less expensive technology for use as an alternative to copper.

     

    Cox Confirms Wireless Ambitions

    Cox stated that it will be using 700 MHz spectrum to offer mobile content and services. It is planning to launch calling plans and an integrated device with a cross-platform interface so that its content and applications are mobile. Cox spent $300 million on 700 MHz spectrum in the recent auction and plans to invest another $200 million. Cox sees mobile as an extension of its existing broadband network. This announcement builds on Cox’s agreement with Sony and other cable companies to develop a platform that will allow users access to cable content on non-set top boxes. The platform, known as tru2Way, will allow the delivery of cable content to mobile devices. A wireless service will allow Cox to offer its customers on-stop-shopping for Internet, home phone, cable TV, and mobile phone services at a lower cost, bundled price. This will drive other telecommunications providers to offer similar “quadruple play” services. The most likely candidates are AT&T with its IP-based U-Verse service and Verizon with its FiOS service.

     

    Interference Concerns Prompt the FCC to Ban Some Wireless Microphones

    The FCC is proposing a ban on certain types of wireless microphones and is investigating how the industry markets its products. In a complaint filed last month, consumer groups allege that users of wireless microphones, such as Broadway actors, church pastors, and disc jockeys, are unknowingly violating the FCC’s rules because a license is required for wireless microphones that operate in the 700 MHz band. The FCC is concerned that manufactures may be using deceptive advertising practices and do not disclose to purchasers that an FCC license is required to use their products. Wireless microphones for use in the 700 MHz band are limited to TV, cable, and motion picture users, not church pastors or disc jockeys.

    The FCC’s Enforcement Bureau is investigating the use and marketing of wireless microphones and other low power broadcast auxiliaries. It also proposes to ban the sale and manufacture of such devices in order to prevent harmful interference to new public safety and commercial wireless services in the 700 MHz band. Up until now, the FCC has not strictly enforced its wireless microphone licensing requirements because there have been a few complaints and the microphones are programmed to avoid local television channels. The FCC is now taking action because the digital transition is near, February 17, 2009, and it needs to prevent harmful interference to the new public safety and commercial wireless users of the former 700 MHz television band.

     

    Consumer Wireless Provider Options Reduced Due to Consolidation

    The wireless business continues to grow as evidenced by increasing merger activity. The larger players continue to increase their presence by buying smaller carriers. Analysts have been predicting consolidation in the wireless market. This year alone, Verizon Wireless and T-Mobile have acquired smaller wireless operators. Leap Wireless and MetroPCS have been rumored to be merging for years but a deal has yet to be announced. Another possible merger candidate is U.S. Cellular but they have shown no interest in a merger and may purchase some of the spectrum Verizon is required to sell off as part of its acquisition of Alltel. Other reports indicate that Sprint Nextel might be ripe for a merger but that has not yet proven to be true. In the end, there are few wireless provider options available today for consumers when compared to the recent past and there may be even few providers in the years to come.

     

    USAC To Hold Training Sessions This Fall

    The Universal Service Administrative Company will host seven training sessions for applicants of its schools and libraries support program throughout the country in September and October. The training, which is entitled, “What We Do and Why We Do It,” is expected to focus on audits, and eligible services. For registration information, dates and locations, go to USAC's web site, click here


    INDUSTRY CALENDAR

    Aug. 25-28
    Democratic National Convention, Denver: Sen. Hillary Clinton will be the headline prime-time speaker and former Virginia Governor Mark Warner will deliver the keynote address on Tuesday night, Aug. 26th. Pay Equity pioneer Lilly Ledbetter will also address the Convention on Tuesday. The headline prime-time speaker on Wednesday will be Vice Presidential Nominee Senator Joe Biden.

     

    Aug. 27
    PUBLIC SAFETY AND GOVERNMENT BROADBAND: Advanced Wireless Technologies and the Road Ahead

    Telecom Policy Briefing Hosted by Patton Boggs LLP and Silicon Flatirons Center for Law, Technology and Entrepreneurship, Denver Colorado 

    This information is not intended to constitute, and is not a substitute for, legal or other advice. You should consult appropriate counsel or other advisers, taking into account your relevant circumstances and issues. While not intended, this update may in part be construed as an advertisement under developing laws and rules.