Patton Boggs TechComm Industry Update - Week of September 15, 2008

    15 September 2008

    Strengthening Management, Oversight of the Universal Service Fund

    The FCC is seeking comment on ways to strengthen management, administration and oversight of the Universal Service Fund (USF), more clearly define the goals of universal service, identify performance measures and evaluate the Commission’s oversight of the USF and its administrator, the Universal Service Administrative Company (USAC).

    During recent years, the FCC has taken steps to improve oversight of the USF, including spending more resources on audits. A review of 459 audits led the OIG to conclude that E-rate has an unacceptably high improper payment rate of 12.9 percent. Auditors also found non-compliance in several areas, such as record keeping, eligible services, reporting the correct discount, and entering into a contract too early in the process. Based upon those results, the OIG is conducting 650 more beneficiary audits of the E-rate and High Cost programs. The Commission also noted its attempts to strength its oversight and management of the USF administrator through a 2007 Memorandum of Understanding to ensure “greater clarity in administrative and management functions.”

    Among the areas for which the Commission seeks comment are:

    • Additional document retention and enforcement rules, including retaining documents for longer than five years as FCC rules require now.
       
    • Whether USAC should be retained or eliminated and/or whether a permanent administrator of USF is needed. Alternatively, the Commission asks whether it should use a contractor to perform the administrator’s function.
       
    • New performance techniques to improve administration and operation of USF. The FCC also asks commenters whether it should delete or revise previously established performance goals and measures and if the FCC has authority to set long-term goals for USF programs.
       
    • USAC is not permitted to make policy decisions without guidance from the FCC; the Commission asks about the efficiency and effectiveness of this process and encourages comments on actual experience in receiving timely guidance on the interpretation of Commission rules.
       
    • More direct FCC oversight of the USF Administrator with respect to internal controls of USF.
       
    • The application process for each program and what revisions should be made to reduce waste, fraud and abuse.
       
    • With respect to the E-rate program
       
      • Whether the Commission should establish a certain level of connectivity in schools and libraries as an appropriate long-term goal.
         
      • If a certain threshold of connectivity is met, what the Commission should do to the program after that level has been achieved.
         
      • Whether the Commission should create low, mid- and high-range sets of options of services that could be provided by the program under current rules with less, equal or more funding.

    Comments are due 30 days after publication in the Federal Register, which has not yet occurred. Reply comments are due 60 days after date of publication in the Federal Register. Patton Boggs will provide notice of those dates when they are published.

    Court Finds County’s Wireless Facility Ordinance Is Not Preempted by the Communications Act

    Reversing a lower-court decision, the United States Court of Appeals for the Ninth Circuit found that a San Diego County ordinance which imposes restrictions on the construction and location of wireless communications facilities is not an outright ban on wireless facilities and therefore the Communications Act does not preempt the County ordinance. San Diego County’s ordinance established comprehensive guidelines for the placement, design and processing of wireless communications facilities within the county and imposes substantive and procedural requirements on applications for wireless communications facilities. Sprint alleged that the ordinance prohibits or has the effect of prohibiting Sprint’s ability to provide wireless telecommunications services in violation of the Communications Act. The Ninth Circuit found that such local or state law violates the Communications Act when it imposes a city-wide general ban on wireless services or it actually imposes restrictions that amount to an effective prohibition. However, the Ninth Circuit ruled that the San Diego County’s ordinance is not an outright ban on wireless communications facilities, nor does it effectively prohibit the provision of wireless facilities. Accordingly, the Ninth Circuit found that the Communications Act does not preempt the County’s wireless communications ordinance.

     

    Google Cracks Down on Violent Videos, Hate Speech on YouTube

    Bowing to Congressional pressure from the Senate Homeland Security Chairman, Google announced that it would bar videos that incite violence and hate speech from YouTube. The move coincided with the anniversary of September 11, 2001, attack on the World Trade Center and responds to complaints by Homeland Security Chairman Joe Lieberman, ID-CT, about violent Islamist videos that have been posted on the popular Web site.

    Google's community guidelines for YouTube will now bar videos that incite violence, in addition to videos that contain hate speech and gratuitous violence. “YouTube was being used by Islamist terrorist organizations to recruit and train followers via the Internet and to incite terrorist attacks around the world, including right here in the United States, and Google should be commended for recognizing that,” Lieberman said in a statement on Google’s policy change. “I expect these stronger community guidelines to decrease the number of videos on YouTube produced by al-Qaeda and affiliated Islamist terrorist organizations.” Since Lieberman's letter, Google has removed hundreds of videos from YouTube that documented attacks on American soldiers in Iraq and Afghanistan. Lieberman continues to urge Google to remove all videos produced by FTOs, not just those that violate its community guidelines.

    Lieberman’s letter followed the release of a bipartisan report issued by the Senate Committee on Homeland Security and Governmental Affairs staff that described how al-Qaeda created and managed a sophisticated online media strategy. The staff report concluded that the Internet is a critical element in the radicalization process, which could increase incidents of homegrown terrorist plots in the United States.

     

    Sprint Nextel and Clearwire Gear Up for WiMAX Launch

    Sprint Nextel and Clearwire plan to launch a mobile WiMAX network this month in Baltimore, MD and later this year in Washington, D.C. and Chicago, IL. Other cities under development are Boston, MA, Philadelphia, PA, Dallas and Fort Worth, TX. Sprint has been touting the time-to-market advantages of WiMAX over rival technology LTE.

    For WiMAX and broadband networks in general, one of the largest hurdles is acquiring at least 30 MHz of clean spectrum in a market. Sprint and Clearwire have at least 30 MHz and up to 200 MHz of spectrum in many markets throughout the United States. Once their merger is complete, they are set to benefit from a combined $3.2 billion investment from Intel Corp., Google Inc., Time Warner Cable, Comcast Corp., and Bright House Networks.

     

    CTIA Study Reveals Teens are Driving Changes to the Wireless World

    Teenagers are shaping the future of mobility. CTIA in conjunction with Harris Interactive, conducted a national survey called: “Teenagers: A Generation Unplugged.” Teens are the first generation of users born into a wireless environment. Teens now view their cell phones as a necessity and a key to their social life. According to the survey, almost four out of every five teens (17 million) carry a wireless device, a 40 percent increase since 2004 and six in ten teens (57 percent) credit mobility for improving their quality of life. More than half of teens surveyed agreed that they use their mobile device for entertainment purposes and one third of teens use their cell phone to play games. About 80 percent of teens stated that a cell phone provides them with a greater sense of security and a safety net. Teen trends indicate that texting is replacing talking. Looking ahead, teens will want to use their mobile devices for banking, voting, location based services, and personal entertainment. It is expected that teens will continue to shape the mobility market well into the future.

     

    The Marriage of Mobile Devices and GPS

    GPS, like the camera, is quickly becoming a standard functionality for mobile devices. Mobile phones and GPS are now developing together and influencing how each technology works. For example, farmers and the construction industry use GPS with cellular technology to keep track of and monitor the use of equipment. Cities, such as New York City, also use GPS and cellular technology to mark streets in need of repair for workers. Parents use mobile phones to keep track of their children and travelers use them to find restaurants and sites in unfamiliar locations. Most carriers report that all of their mobile devices will contain built-in GPS by the end of 2008 or in 2009. Estimates are for an annual 40% increase in the shipment of GPS-enabled wireless devices for the next five years.

    GPS is not only used for location and traffic information but as a social networking tool. Teens are using the services to locate their friends and to leave electronic breadcrumbs for their favorite locations. Location services and Bluetooth applications are frequently downloaded to mobile devices and such services are beginning to contain banner ads for products and services tailored to the users’ location. Such services allow users to blend together their virtual and physical locations by allowing a user’s friends to see where the user is and what she is doing.

     

    Free-To-End-User Text Messages

    What if third parties could send text messages without the recipient incurring a cost? Mobile marketers are trying to answer this question. The service is called Free To End User (FTEU) text messaging. The benefit of FTEU is there is no per text charge to the recipient and no debit against a monthly text bucket. The Mobile Marketing Association has established FTEU guidelines but the service is still in the trial state and it is unclear how much carriers will charge marketers to send FTEU text messages. It also is unclear whether carrier billing systems will be able to recognize FTEU messages so recipients are not charged. Services such as mBlox are being developed to circumvent this problem. The health care industry has expressed interest in FTEU for sending appointment reminders.

     

    FCC Seeks Comment on Whether To Apply ARMIS Requirements to All Carriers

    As we reported last week, the FCC released a Memorandum Opinion and Order and Notice of Proposed Rulemaking granting forbearance for large incumbent local exchange carriers (ILECs) from certain Automated Reporting Management System (ARMIS) reporting requirements. At the same time, the Commission sought comment on whether those same requirements should be applied to all carriers. The FCC’s action relieves ILECs, for the moment, from having to file much of the information required on ARMIS reports pertaining to service quality and infrastructure development. To date, wireless carriers are not required to submit ARMIS Reports.

    Although the Commission concludes that most ARMIS reporting requirements are no longer necessary to ensure "just and reasonable" rates, terms and conditions of service, the Commission tentatively concludes in the NPRM that "collection of information of this type would be useful to the Commission's public safety and broadband policymaking," and seeks comment on whether and to what extent it should impose ARMIS-like reporting obligations on "all facilities-based providers of broadband or telecommunications service." The Commission suggests collecting ARMIS-like information on FCC Form 477, which is the subject of a separate ongoing rulemaking.

    The proposed ARMIS-like reporting obligations on wireless broadband service providers may be significant because ARMIS reports currently require the submission of detailed data on switch downtime, service quality complaints, number and type of switching equipment deployed, transmission facilities, outside plant and calling statistics. The brevity of the NPRM (just 3 paragraphs) suggests that the Commission is not wedded to any outcomes, and can be convinced that imposition of such reporting obligations on operators of nascent wireless broadband networks who already operate in a highly competitive environment is unwise.

    Commissioner Jonathan Adelstein called the Commission’s ARMIS decision “disappointing” in that it failed to pursue a “thoughtful and comprehensive rulemaking process. Commissioner Tate's separate statement also expressed skepticism regarding the Commission’s mixed message in the MO&O and the brief NPRM. “I find it inconsistent that in this order that we on one hand grant forbearance relief to a specific class of carriers and on the other hand we potentially open the door to further regulation on a broad, industry-wide basis,” Tate stated.

    Comments and reply comments on the NPRM are due 30 and 60 days, respectively, after it is published in the Federal Register, which has not yet occurred. Patton Boggs will provide notice of those dates when they are published.

    Senate Chairman Queries Cell Phone Execs on Rising Price of Text Messaging

    The Chairman of the Senate Antitrust Subcommittee called on wireless telephone executives to explain the spike in rates for sending and receiving text messages. Chairman Herb Kohl, D-WI, sent letters on Sept. 9th to the chief executive officers of Verizon Wireless, AT&T, Sprint and T-Mobile last week. In his letter, Kohl noted that the cost for a customer to send or receive a text message has increased by 100 percent since 2005. Three years ago, the average text message cost 10 cents, whereas the rate is now 20 cents. “What is particularly alarming about this industry-wide rate increase is that it does not appear to be justified by rising costs in delivering text messages,” Kohl wrote to executives. “Text messaging files are very small, as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit. Text messaging files are a fraction of the size of e-mails or music downloads.

    Kohl asked the wireless executives to explain the cost, technical or other factors that justify a 100 percent increase during the past three years. He also sought a comparison of prices charged for text messaging as compared to other services, such as phone calls, e-mails and internet access, from 2005 to the present. The responses are due by October 6th.

     

    European Fiber to the Home Stops Short

    With rising budget deficits and a slowing European economy, international telecommunications carriers do not have much hope for receiving money from the government to help offset the cost of constructing fiber optic broadband networks. Carriers in France, Germany, Italy and the UK will need to find multi-billion Euro funding in order to continue constructing fiber optic broadband networks.

    The large European carriers are taking different steps to make room in their budgets for additional capital expenditures. For example, British Telecom suspended a share buyback program and France Telecom reduced the number of homes it will connect to fiber from 1 million to 200,000. Deutsche Telekom had hopes of using the competitive advantage it would gain with fiber to pay for deployment expenses but the regulators are forcing it to open its fiber ducts to competitors, which will eliminate any competitive advantage it would have gained. Last year Telecom Italia recognized it needed help funding broadband expenditures and entered into a network sharing agreement with broadband operator Fastweb but it still needs to find an additional six billion Euros over the next 10 years to fund all its network plans. The funding obstacles associated with providing fiber to the home may provide an ideal opportunity for cost-effective wireless broadband developments.

     

    FCC Declares Success in Wilmington DTV Transition But Congress Daily Reports Hundreds of Complaints

    The FCC announced that the vast majority of the 400,000 television viewers impacted by the digital television (DTV) transition in a five-county Wilmington television market were aware of the transition and seemed to be prepared for it. To ensure a smooth transition, the FCC and its local partners provided assistance to Wilmington-area residents by establishing a toll-free DTV transition helpline staffed by engineers and outreach staff. According to the FCC, most of the calls came from viewers having difficulty locating the Wilmington NBC affiliate. To a lesser extent, consumers complained of difficulty setting up their converter box or problems with their television reception or other technical issues. The Commission’s helpline received only 23 calls from consumers who were unaware of the switch to DTV and/or did not know the date of the transition.

    Congress Daily reported that the FCC fielded hundreds of complaints from local viewers who could not receive stations or get converter boxes or antennas to work. Stations in the region reported another 226 calls to them and a special hotline established at a local university. With the nationwide conversion less than five months away, Congress will assess the results of the Wilmington pilot this month and assess efforts to promote consumer and broadcaster preparedness. The House Telecommunications and the Internet Subcommittee will hold a September 16 hearing on DTV issues while the Senate Commerce Committee has scheduled a hearing on September 23.

    The stepped-up oversight comes as the Commerce Department prepares to loosen the eligibility requirements for obtaining $40 coupons toward the purchase of converter boxes that attach to older, analog television sets. Rules making application easier for seniors in nursing homes and rural residents using postal boxes could be issued this month, though the changes would not be implemented until October or early November.

     

    Houston Broadcasters Provide Much Needed Public Services After Hurricane Ike

    Houston and Galveston radio and television stations are providing basic information to residents as they return to the area after the arrival of Hurricane Ike. Broadcasters are airing lists of what grocery stores are open, what hospitals are operating, what gas stations are open, and other important public safety information. Galveston was heavily damaged but Houston only faired slightly better. Unlike Galveston where most residents were evacuated, much of Houston was told to stay indoors and wait out Hurricane Ike at home. Houston residents are now starting to emerge from their homes and are in search of basic needs while being faced with debris, power outages, and significant wind damage. Radio and television stations were knocked off the air during the Hurricane but have since resumed operations. Broadcasters are also providing critical announcements from governmental and relief officials.

     

    Radio Station Sales Slow Due to Financing Difficulties

    Nearly two years ago when Clear Channel announced it was selling 450 radio stations, the industry was buzzing with deal talk. Many of those same stations in small and medium sized markets are still for sale because financing opportunities are very few and many investors are not interested in deals under $5 million. Unlike in the past when financing was easy to obtain but there were few stations available for purchase, there are many stations available today, but creative financing will be needed to complete the sale.

    Potential buyers are faced with finding their own financing or approaching friends, family members, or local banks for a loan. Stations in the $500,000 to $1,500,000 are having the most difficulty securing financing. In some cases, owners are funding station acquisitions by taking a note and others are offering interest free payments for the first year.

    For large station purchases, financing is available because these stations are generally in the best markets and purchasers know the value of the station and may already have their own financing. In some of these markets, the seller is at the station limit and may only be selling because of FCC requirements.

     

    Senate Holds Hearing on Improving the Prepaid Calling Card Market

    The Senate Committee on Commerce, Science, and Transportation held a hearing on Improving Consumer Protection in the Prepaid Calling Card Market. At the hearing, the Senate also considered the Prepaid Calling Card Consumer Protection Act of 2008, which was introduced by Senator Bill Nelson, D-FL, in May of this year. The bill requires accurate and reasonable disclosure of the terms and conditions of prepaid telephone calling cards and services. All the witnesses stated that federal legislation was necessary to cure the problems of abuse in the prepaid calling card market because of the low barriers to entry and that federal-state coordination is essential. The committee heard testimony from the Honorable William Kovacic, Chairman of the Federal Trade Commission, Sally Greenberg, Executive Director of the National Consumers League, Gus West, President of the Hispanic Institute, Patricia Acampora, a Commissioner with the New York State Public Service Commission, and Rosemary O’Brien, Director of Marketing for Military Marketing LLC.

    Senator Wicker Introduces Bill to Reserve D Block Spectrum Proceeds for Public Safety Personnel

    Senator Roger F. Wicker, R-MS, has introduced a bill that proposes to reserve proceeds from the auction of spectrum, including the 700 MHz D Block spectrum, for use to provide interoperable devices to public safety personnel. As previously reported, the FCC will consider how to re-auction and license the 700 MHz D Block spectrum at its September 25th Open Meeting. The bill has been referred to the Senate Committee on Commerce, Science, and Transportation.

     

    INDUSTRY CALENDAR

    FCC Rulemakings / Deadlines

    September 17, 2008

    • Comment Deadline: Petition for reconsideration of the FCC’s June 2008 Fifth Report to Congress regarding the availability of broadband services in the United States (replies due September 24)
    • Reply Comment Deadline: Steps to Implement the NET 911 Improvement Act of 2008: E911 Service by VoIP Providers

    September 18, 2008

    • Comment Deadline: Proposed Additions to Services Eligible for Support in the E-Rate Program in 2009 (replies due October 3)
    • Comment Deadline: Intrado Requests FCC Preemption of Virginia Regulator in Interconnection Dispute with Verizon over 911 Services (replies due September 25)

    September 22, 2008

    • Comment Deadline: FCC Seeks Comment on Auction Rules for Unassigned BRS spectrum, a Reinstated Gulf of Mexico Service Area, and other Related EBS and BRS Rules (replies due October 22)
    • Reply Comment Deadline: Petitions for Reconsideration of the InterCall Order Confirming Audio Bridging Services Must Contribute Directly to the USF Fund

    September 24, 2008

    • Comment Deadline: Petition requesting an inquiry into Arbitron’s use of Portable People Meters (replies due October 6)
    • Reply Comment Deadline: Petition for reconsideration of the FCC’s June 2008 Fifth Report to Congress regarding the availability of broadband services in the United States

    September 25, 2008

    • FCC Annual Regulatory Fees due by 11:59 p.m.
    • Reply Comment Deadline: Two Petitions for Reconsideration of FCC Rules Assigning Traditional Ten-Digital Telephone Numbers to IP-Based TRS Users

    September 29, 2008

    • Comment Deadline: CTIA request for Clarification, Preemption of State and Local Review of Tower Siting Applications (replies due October 14)
    • Reply Comment Deadline: Proposed Rule Revisions for Speech-to-Speech Telecommunications Relay Service
    • Reply Comment Deadline: Additional Steps to Establish the Commercial Mobile Alert System

    October 3, 2008

    • Reply Comment Deadline: Proposed Additions to Services Eligible for Support in the E-Rate Program in 2009
    • Comment Deadline: FCC to Prohibit Wireless Microphones, other Low Power Auxiliary Station Operations in 700 MHz Band after the Digital TV Transition (replies due October 20)

    October 6, 2008

    • Reply Comment Deadline: Petition requesting inquiry into Arbitron’s use of Portable People Meters
    • Comment Deadline: Biennial Review of Telecommunications Regulations (Replies due October 27)
    • Comment Deadline: Petition to Coordinate Unlicensed PCS Band with Proposed Service Rules for Advanced Wireless Services

    October 14, 2008

    • Reply Comment Deadline: CTIA Seeks Clarification, Preemption of State and Local Review of Tower Siting Applications

    October 20, 2008

    • Reply Comment Deadline: FCC to Prohibit Wireless Microphones, other Low Power Auxiliary Station Operations in 700 MHz Band after the Digital TV Transition

    October 22, 2008

    • Reply Comment Deadline: FCC Seeks Comment on Auction Rules for Unassigned BRS spectrum, a Reinstated Gulf of Mexico Service Area, and other Related EBS and BRS Rules

    October 24, 2008

    • Reply Comment Deadline: CenturyTel Seeks to Convert from Rate-of-Return to Price Cap Regulation

    October 27, 2008

    • Reply Comment Deadline: Biennial Review of Telecommunications Regulations

    November 10, 2008

    • Comment Deadline Inquiry Regarding “Hybrid” Satellite-Terrestrial Radio Reception Devices (replies due December 9)

     

    Meetings and Events

    September 18, 2008

    • FCC, USDA Regional Broadband Workshop - Austin, Texas: One of four educational workshops on rural broadband to be held during 2008 by the FCC and the US Department of Agriculture
    • FCC Summit on Pandemic Preparedness: Enhancing Communications Response for Health Care and First Responders, 9:00 a.m. - 1:15 p.m. at the FCC

    September 19, 2008

    • NTIA Spectrum Management Advisory Committee Meeting, U.S. Dept. of Commerce - 9:30 a.m. to 12:30 p.m., 1401 Constitution Ave. N.W., Room 5855

    September 25, 2008

    • FCC Open Meeting, 10 a.m.
    • “Innovation Economics for the Next Administration,” Silicon Flatirons Center Program at The Newseum, Washington, DC, 8:30 a.m.

    October 3-4, 2008

    • “Digital Policy in the Information Age,” National Digital Policy Institute Policy Conference, Ball State University (Scheduled Speaker: Jennifer Richter, Chair of the Patton Boggs Technology and Communications Group)

    October 12-15, 2008

    • “The 2008 Wireless Infrastructure Show,” Hosted by PCIA, Westin Diplomat, Hollywood, FL (Sponsor: Patton Boggs LLP)

    October 7, 2008

    • Oral Arguments in Core Communications v. FCC on Forbearance Petition on Intercarrier Compensation. The court will review whether the FCC properly denied Core Communications’ petition for regulatory forbearance to replace the current intercarrier compensation regime of access charges with a reciprocal compensation regime.

    October 10, 2008

    • Oral Arguments in NCTA v. FCC on Inside Wiring. The court will review the FCC’s Multiple Dwelling Unit (MDU) order clarifying its inside wiring rules.

    October 17, 2008

    • “The Structure of the Video Programming Industry: Revolution, Regulation, or the Return of Yesterday’s Battles,” Silicon Flatirons Center Program at The Cable Center, Denver, CO

    November 4-6, 2008

    • “Broadband Wireless @ Work For You, Changing the Way We Live,” WCA’s 14th Annual International Symposium and Business Expo, Fairmont, San Jose, CA (Scheduled Speaker: Jennifer Richter, Chair of the Patton Boggs Technology and Communications Group)

    November 14, 2008

    • “The Colorado Broadband Summit,” Silicon Flatirons Center Program at Level 3 Communications, Broomfield, CO
       

    Congressional Hearings
     

    September 23, 2008

    • Hearing: Senate Committee on Commerce, Science and Transportation will hold a hearing to assess efforts of the FCC and NTIA to promote broadcaster and consumer preparedness for the February 17, 2009 transition to DTV and the test pilot test in Wilmington, NC at 2:30 p.m.

    September 26, 2008

    • Congress expected to adjourn.

    Public Safety

    September 23, 2008

    • Regional Public Safety Planning Committee Meetings for Buffalo and Rochester, New York regarding 700 MHz and 800 MHz
    • Regional Public Safety Planning Committee Meeting for Region 24 in Jefferson City, Missouri regarding 700 MHz and 800 MHz

    September 25, 2008

    • Regional Public Safety Planning Committee Meeting for Region 38 in Pierre, South Dakota regarding 700 MHz and 800 MHz

    October 1, 2008

    • Regional Public Safety Planning Committee Meeting for Region 14 in Indianapolis, Indiana regarding 700 MHz and 800 MHz

    October 12, 2008

    • Regional Public Safety Planning Committee Meeting for Region 1 in Orange Beach, Alabama regarding 700 MHz

       

      If you have any questions about the foregoing or if you require additional information, please contact:  Jennifer Cetta - 202.457.6546, jcetta@pattonboggs.com; Carly Didden - 202.457.6323, cdidden@pattonboggs.com; or Rebecca Murphy - 202.457.5312, rlmurphy@pattonboggs.com.

      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.