Patton Boggs TechComm Industry Update - Week of August 18, 2008

    18 August 2008

    CTIA Seeks FCC Preemption of Burdensome State, Local Tower Siting Rules

    The FCC is seeking comment on a petition field by CTIA requesting that the Commission issue a Declaratory Ruling clarifying provisions of the Communications Act regarding state and local review of wireless tower siting applications. Specifically, CTIA seeks clarification of the Act’s provisions regarding preservation of local zoning and tower siting rules that CTIA argues are ambiguous. Because of their ambiguity, CTIA claims that certain zoning authorities have interpreted the Act’s local zoning provisions incorrectly, imposing “unreasonable impediments to wireless facility siting and the provision of wireless services”. Pursuant to the Act’s prohibition on state and local authorities against creating barriers to entry, CTIA also requests that the Commission preempt local and state laws that automatically require a wireless service provider to obtain a variance before siting facilities or that subject wireless tower siting applicants to burdensome requirements. Comments on CTIA’s Petition are due September 15, 2008 and reply comments are due September 30, 2008.

    FCC to Consider Roaming, 911, DTV Transition at August Open Meeting

    At its August Open Meeting, the FCC will consider: (1) a Memorandum Opinion and Order on Reconsideration regarding roaming issues; (2) a Notice of Proposed Rulemaking implementing the New and Emerging Technologies 911 Improvement Act of 2008, which was signed into law on July 23, 2008; and (3) a Fourth Report and Order regarding mandatory carriage of digital broadcast television signals after the conclusion of the DTV transition. The Commission will not address USF reform issues, as FCC Chairman Martin had previously indicated.

    FCC Seeks Comment on Petitions for Reconsideration of its Intercall Order regarding Teleconferencing Services and USF Contributions

    The FCC is seeking comment on two petitions for reconsideration of the FCC’s Intercall Order filed by Global Conference Partners and A+ Conferencing, Ltd., Free Conferencing Corporation and the Conference Group. In its Intercall Order, the FCC classified teleconferencing services as a telecommunications service and therefore required teleconferencing providers to contribute to the universal service fund. The petitioners argue that the Intercall Order should be reconsidered because teleconferencing services are information services and the Commission did not provide sufficient notice to non-party teleconferencing service providers. Comments on the petitions are due September 8, 2008 and reply comments are due September 22, 2008.

    Proposed Sprint-Clearwire Merger Sparks Limited Opposition

    Although 50 parties filed comments in support of the Sprint – Clearwire proposed merger to create “New Clearwire”, two parties filed petitions to deny -- AT&T and the Rural Cellular Association (RCA). Vonage filed comments in support of the proposed merger, but requested that the FCC condition approval of the merger on Sprint and Clearwire’s open network commitments.

    In its petition to deny, AT&T argues that the FCC should apply a more stringent review process to the Sprint – Clearwire transaction by adding BRS/EBS spectrum to its current spectrum screen. AT&T claims that many changes in the BRS/EBS service, including Sprint and Clearwire’s proposal to hold a near monopoly in BRS/EBS spectrum and the substantial progress towards completion of the BRS/EBS spectrum transition, warrant revising the current spectrum screen analysis. If the FCC applies this revised spectrum screen, AT&T asserts that the Sprint – Clearwire transaction will not meet the FCC’s public interest standard because the restructured company would fail the FCC’s spectrum screen in at least 1,134 counties, containing 70% of the U.S. population.

    In its petition to deny, RCA requests that the FCC deny the Sprint – Clearwire proposed transaction due to the potential for competitive harm to its rural operator members. In the alternative, RCA argues that if the FCC grants the Sprint – Clearwire proposed transaction, then the FCC should condition its consent on several carrier-to-carrier network interoperability measures. RCA requests that the FCC require New Clearwire to enter into automatic roaming agreements with technically compatible networks and interoperability agreements with other wireless carriers when a reasonable request is made and their networks are technologically compatible. RCA also requests that the FCC condition the grant of Sprint and Clearwire’s proposed transaction on termination of existing handset exclusivity agreements and a prohibition on new handset exclusivity agreements.

    Vonage requests that the FCC condition grant of the proposed Sprint – Clearwire transaction to ensure their open networks proposals are enforceable as a merger commitment. According to Vonage, Sprint revealed after filing the merger application that New Clearwire will charge third-party service providers for priority access over others. Vonage requests that Sprint and Clearwire clarify how New Clearwire will implement priority access and whether such network policies will impact New Clearwire’s commitment to an open network. To ensure New Clearwire fulfills its promise to have an open and non-discriminatory New Clearwire WiMAX network, Vonage requests that the FCC require New Clearwire to: (1) comply with the FCC’s Internet Policy Statement which promotes consumer choice on an open Internet, and (2) offer its new WiMAX service on an unbundled basis, not tied to New Clearwire voice service.

    Although it does not implicate the Sprint-Clearwire proposed merger, rural interests also recently petitioned the FCC to establish a new spectrum cap. The Rural Telecommunications Group (RTG) petitioned the FCC to initiate a rulemaking proceeding that would limit CMRS operators from owning more than 110 MHz of spectrum in any given county. RTG was careful however to limit its request to spectrum below 2.3 GHz, focusing mostly on CMRS spectrum.

    FCC Seeks Comment on EBS White Spaces Auction Proposals
    Comments are due September 22, 2008 and Reply Comments are due October 22, 2008 regarding whether and how the FCC should license EBS spectrum in the Gulf of Mexico and how the FCC should assign vacant EBS spectrum - the so-called "EBS White Spaces." Specifically, the FCC seeks comment on the following issues, many of which were already considered in prior phases of the ongoing BRS/EBS rulemaking:

    • whether it would be in the public interest to develop a scheme for licensing unassigned EBS spectrum that avoids mutual exclusivity and auctions;

    • whether all EBS eligible entities can participate fully in a spectrum auction. The FCC specifically seeks comment on any organizational limitations that might prevent educational institutions from participating in a live auction. They also inquire about whether EBS licensees should have the authority to bid on spectrum outside of their jurisdiction, whether they should be permitted to form consortium or other forms of joint bidding, whether non-profit educational organizations should be prohibited from participating in an auction, and whether eligible bidders should be limited to publicly supported or privately controlled educational institutions accredited by the appropriate State department of education;

    • whether and how to use small business size standards and bidding credits for EBS if they adopt a licensing scheme that could result in mutually exclusive applications;

    • the proper market size and size of spectrum blocks for new EBS licenses; and

    • whether to issue one license to a State agency designated by the Governor to be the spectrum manager, using frequency coordinators to avoid mutually exclusive EBS applications, as well as other alternative licensing schemes.

    Questions About Devices to Utilize TV White Spaces Remain

    The FCC’s Office of Engineering and Technology continues to conduct laboratory and field tests of unlicensed devices to be operated in unoccupied parts of the television broadcast spectrum, white spaces. Companies such as Microsoft, Google and Motorola support the use of white spaces by unlicensed devices. White spaces devices may cause unacceptable levels of interference to television and wireless microphone operations and the use of such devices is opposed by broadcasters, Broadway-theater owners and sports leagues.

    Field tests focused on unlicensed white spaces devices developed by Philips and Singapore’s Institute for Infocomm Research (I2R) during a professional football game, a Broadway musical and other locations. The tests were designed to measure the spectrum sensing equipment in the devices. The devices scanned for television devices and then wireless microphones that are on or off. The FCC has yet to formally release the results of its white spaces device testing but both sides on the issue claim the tests as a victory. Unofficial reports from the tests state that the white spaces devices were not very successful in sensing the operation of wireless microphones in the field and are not ready for commercial release. Those observers supporting the use of white spaces devices state that the devices did not incorrectly identify any channels and that is a success.

    Congress is pressuring the FCC to quickly take action on the white spaces device issue. Eight members of the House of Representatives, including Energy and Commerce Committee members Jay Inslee (D-Washington) and Marsha Blackburn (R-Tennessee), recently sent a letter to FCC Chairman Kevin Martin supporting the use of white spaces for broadband access and urging the FCC to act quickly within the next 90 days.

    Electronic Health Records To Resurface in September

    Even as the legislative hours in the 110th Congress come to a close, a measure to create a nationwide system of electronic health records is expected to resurface in September. Before Congress adjourned for its summer recess, sponsors of S. 1693 attempted to bring the legislation to the floor by unanimous consent, but a vote was thwarted by at least two holds.

    Aides for Sens. Olympia Snowe, R-Maine, and Tom Coburn, R-Oklahoma, said they would block the bill if it came to the floor under the expedited process. Snowe is pushing for consumer privacy protections that go further than language agreed to by Health, Education, Labor and Pensions Chairman Edward Kennedy (D-Massachusetts), Ranking Member Michael Enzi (R-Wyoming) and Senate Judiciary Chairman Patrick Leahy (D-Vermont) in May.

    Coburn has several concerns, including the bill's authorization of more than $100 million a year in new money for grant and loan programs, which would fund, among other things, Internet connectivity necessary to transmit electronic health records.

    The bill passed the House Energy and Commerce Committee by voice vote on July 23, 2008, and will head to the House Ways & Means Committee where Chairman Pete Stark of the Health Subcommittee has announced his intention to introduce his own bill. The Subcommittee held a hearing on promoting health IT on July 24th. The Stark bill is expected to be introduced in September with more stringent data privacy and data breach provisions.

    Increased Copyright Fees May Force Pandora, Other Webcasters Out of Business

    Pandora is a very popular Internet-based radio service which allows users to create customized radio stations and may be used on Apple’s iPhone. Unfortunately, significant increases in copyright royalty payments for webcasters are forcing Pandora to decide if it is able to continue offering its services. Last year a Copyright Royalty Board doubled the per-song performance royalty rate that webcasters must pay to performers and record companies. Traditional radio is not required to pay a royalty fee and the satellite radio royalty fee, by some measures, is proportionally less than the webcaster royalty rate. Once the new royalty rates are fully implemented, satellite radio will pay about 1.6 cents per hour per listener but webcasters will pay about 2.91 cents per hour per listener.

    This year Pandora’s royalty fees will be about $17 million or 70 percent of its projected revenue of $25 million, a level that could force the company and other smaller, webcasters out of business. Rep. Howard L. Berman (D-Calif.) is trying to negotiate a reduced royalty rate for webcasters with SoundExchange, the organization that represents performers and record companies, but the parties are far apart.

    Pandora’s end may soon be near because its venture capital investors are getting impatient. If royalty rates cannot be resolved and advertising cannot increase revenues, then Pandora’s business model may be broken and it will be unable to keep its existing investors and attract new capital.

    Sirius XM Must Sign a Lease With A Qualified Entity Offering Minority Programming by November 28, 2008

    As part of the FCC’s consent to the merger of Sirius and XM Radio, the parties agreed to enter into leases with qualified entities who will offer minority programming. Sirius XM does not want to be involved in the qualified entity selection process and the FCC has yet to announce procedures or criteria for choosing qualified programmers. It is expected that the FCC will seek comment on its proposed selection procedures on an expedited schedule – two weeks for comments and reply comments due one week later. There are likely to be more applicants than available channels to program and the selected programmers will still need to negotiate a lease with Sirius XM by November 28, 2008. There is a lot to be accomplished in a relatively short timeframe considering the FCC does not have a mechanism in place to determine how to select qualified minority programmers.


    Industry Calendar

    August 21, 2008: Replies Due regarding the Annual Review of Services Eligible for Support in the E-Rate Program under Current Rules

    Region 47 (Puerto Rico) 700 MHz and 800 MHz Public Safety Planning Committee Meetings
    700 MHz and 800 MHz Regional Public Safety Planning Committee Meetings, Bayamon, PR

    August 22, 2008, 10am: Open FCC Meeting.

    August 25, 2008: Replies Due regarding AT&T’s Request for an Interim Ruling on Applicability of Access Charges to IP-PSTN Traffic.

    August 28, 2008: Comments due on Hearing Aid Compatibility Rules Revised to Improve Access to Wireless Services (WT Docket 07-250, FCC-08-68A1).

    August 29, 2008: Replies Due regarding the FCC’s efforts to Promote Diversification of Broadcast Ownership.

    September 5, 2008: Extended Reply deadline in the EBS/BRS rulemaking to address the issue of lease term limitations related to EBS leases entered into prior to January 10, 2005.

    September 18, 2008: Comments due on whether certain services should be eligible and included on the Eligible Services List for funding under the schools and libraries universal service support (E-rate) program.

    October 3, 2008: Reply comments due in the FCC’s rulemaking on whether to include services, such as interconnected VoIP on the Eligible Services List for the E-rate program.


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    PATTON BOGGS LLP