Patton Boggs TechComm Industry Update - Week of October 6, 2008

    6 October 2008

    FCC to Hold October Open Meeting in Music City USA

    The FCC has released an agenda for its next open meeting scheduled for Wednesday, October 15, 2008 in Nashville, Tennessee. Among other issues, the FCC will consider Sprint Nextel’s request for modification or waiver of the requirement that it vacate its non-border spectrum in the 800 MHz Interleaved Band, whether to adopt geographic licensing and competitive bidding rules for unencumbered 900 MHz Business/Industrial Land Transportation spectrum, and a Second Annual Report to Congress on competition in domestic and international satellite communications markets. The Commission will reconsider certain aspects of its Secondary Markets leasing rules regarding the scope of prior declaratory rulings on foreign ownership and low power television digital transition issues.

    The final two FCC open meetings of the year are rumored to be on November 4th and December 15th, but have not yet been officially announced. We understand that the FCC will push to consider orders regarding WCS/SDARS and AWS-3 before year end. We also understand that the Sprint-Clearwire merger, the Verizon Wireless-Alltel merger, and TV-White spaces are among the other proceedings that the staff is pushing to make ready for Commission decisions before year end. Pursuant to an order by the U.S. Court of Appeals for the D.C. Circuit, the FCC also is required to provide valid legal justification for its interim rules governing intercarrier compensation for telecommunications traffic bound for internet service providers (ISPs) by November 5, 2008.

    Verizon Wireless – Alltel Merger Inches Closer to Approval

    This week, Verizon and Alltel proposed to the FCC that Verizon will divest 15 additional markets, for a total of 100, in ten states. The move appears to be an indication that the Department of Justice is nearing the end of its merger review. The FCC is trying to act on the merger in November but that depends on the conditions the Commissioners want to impose on Verizon. Some conditions are likely to be unacceptable to Verizon and FCC action on the merger may be further delayed while Verizon and Alltel lobby for less onerous conditions. Verizon will certainly pressure the FCC to act before year end. It is unclear if Chairman Martin needs all three Republican votes to approve the merger, and Commissioner Tate will be gone in January. Verizon also knows that a Democratically-led FCC will want additional time to review the merger and will most likely impose stricter conditions.

    With the credit market crisis, Verizon, as reported by Stifel Nicolaus, may need to renegotiate the purchase price because its financing costs have increased. Alltel may be willing to renegotiate the purchase price once merger approval is received. Verizon also can threaten to walk away from the merger and pay the $500 million break-up fee, which may prompt Alltel to negotiate. Alltel is anxious to complete the merger because its investors Goldman Sachs and TPG want to exit Alltel and Alltel wants to avoid refinancing $7-8 billion in debt due this year.

    FCC to Host Public Safety Speakers Series

    The Commission’s Public Safety and Homeland Security Bureau (PSHSB) plans to host a new speakers series starting in October to provide first responders with the latest news and developments on public safety communications and related-initiatives. The first in the series will be held on Wednesday, October 22, 2008, from 11:00 a.m. to 12:00 p.m. at the FCC. Laurie Flaherty, a Program Analyst with the Office of Emergency Medical Services, National Highway Traffic Safety Administration, will speak about the Transportation Department’s role in 9-1-1 issues, specifically Next Generation 9-1-1. The public can register for the speaker series on the FCC's website.

    Congressmen Stupak and Terry Express Concern over USF Audits

    On October 6, 2008, Representatives Bart Stupak, D-MI, and Lee Terry, R-NE, sent FCC Chairman Kevin J. Martin a letter voicing concern over the manner in which USAC and the FCC are conducting audits of participants in the Universal Service Fund (USF) programs. The Congressmen state that USF audits are causing unnecessary burdens for USF, telecommunications providers, and most importantly rural consumers. Stupak and Terry co-authored the letter and 48 other members signed it. The Congressmen stated that, “among the most significant problems with the current auditing practices”, the FCC and USAC have failed to acknowledge the extreme cost to comply with the audits, to complete, issue, and share final audits with individual companies on a timely basis, and to employ a reasonable level of materiality in identifying and noting potential erroneous payments. The Congressmen noted that they do not question the need for audits, but have asked Chairman Martin to promptly respond to their questions regarding the FCC’s and USAC’s auditing procedures.

    FCC Should Wait Until 2009 to Reform USF and Intercarrier Comp, Says Rep. Pickering

    At CompTel’s fall conference, Representative Chip Pickering, R-MS, said the FCC should wait until next year to address USF and intercarrier compensation reform when the agency will have at least one new Commissioner. As opposed to the current administration, Representative Pickering said that the new President and Congress are more likely to advance positive change. Representative Pickering complained that the current administration’s telecommunications policies have led to consolidation in the industry, dominated by a handful of large service providers. He surmises that we will see new opportunities “with a new Congress, a new administration.”

    Addressing the challenges associated with USF and intercarrier compensation reform, Representative Pickering said USF should be more transparent and decline over time as networks are built out. He said the FCC should not focus on technological neutrality, but rather encouraging the most efficient technology. Representative Pickering believes that wireless service and technology is the future, and the Commission should focus on auctioning unallocated spectrum “to close the gap between the [digital] haves and have nots.”

    Broadband Lifeline/Link-Up Trial Proposed by TracFone Wireless

    TracFone Wireless asked the FCC to establish a Broadband Lifeline/Link-Up trial program for 500,000 to 1 million low-income households in Florida, Virginia, Tennessee and the District of Columbia. The estimated cost of the program for the first year is over $600 million. In support of its request, TracFone claims that its proposed trial will help bridge the digital divide by providing low income customers with access to broadband services. The proposal was filed with the FCC’s Wireline Competition Bureau, who will review it and determine if it should be put on public notice for comment.

    The trial’s “Lifeline” eligibility requirements would be the same as current program requirements – income below 135% of the federal poverty level or documented participation in specified low-income assistance programs such as school lunch programs, Medicaid, or home energy assistance. Eligible households would receive a $30 per month subsidy to offset the cost of broadband Internet access service in addition to any Lifeline subsidy for telephone service. The broadband subsidy would be paid by the Universal Service Administrative Company (USAC) to the service provider.

    The Link-Up trial will consist of a one-time subsidy of $250 for an Internet-accessible device, such as a computer or wireless device, with a one subsidy per eligible household limit. USAC would pay the subsidy directly to the carrier providing the device and related services.

    TracFone also proposed that the FCC not require state or carrier matching requirements and that eligible households in the trial be permitted to remain in the program after the first year if they maintain their eligibility. To maintain the size of the trial, TracFone proposed that carriers file at least monthly notices with USAC containing the carriers’ number of customers enrolled in the program.

    $40 Million in Grants Proposed to Improve 911 Call Centers

    The Transportation Department’s National Highway Traffic Safety Administration (NHTSA) and the Commerce Department’s National Telecommunications and Information Administration (NTIA) are seeking comment on a joint proposal to make available more than $40 million in grants to help states and territories improve their 9-1-1 call centers. The “Ensuring Needed Help Arrives Near Callers Employing 911 (ENHANCE 911) Act of 2004” authorized grants for the implementation and operation of Phase II enhanced 911 services and for migration to an IP-enabled emergency network. In this recent notice, NHTSA and NTIA seek comment on the application, award and administrative requirements for the E–911 grant program. All states, the District of Columbia, Puerto Rico and U.S. territories are eligible for the grants. The funds will be primarily used to implement technologies to deliver wireless 9-1-1 calls with automatic location information and will be awarded in fiscal year 2009.

    FCC Again Extends 800 MHz Rebanding Negotiations

    Due to ongoing international discussions with Mexico, the Commission has again extended the negotiation period for relocating Wave 4 800 MHz licensees in the U.S.-Mexico border region until January 1, 2009, and postponed the beginning of the mediation period until January 2, 2009. Wave 4 is the last wave of negotiations required during the 36-month reconfiguration of the 800 MHz band. The relocation begins with negotiations over relocation costs between affected licensees and Sprint Nextel. Sprint Nextel is vacating the 700 MHz band and giving up certain licenses in the 800 MHz band in exchange for new spectrum at 1.9 GHz for its commercial operations. During the extended negotiation period, Wave 4 licensees are not required to engage in relocation planning or negotiation prior to the receipt of frequency designations. The Commission hopes that extending the negotiation period will alleviate administrative burdens on licensees, avoid unnecessary rebanding expenditures, and provide additional time for resolution of 800 MHz rebanding issues along the border.

    FCC To Review Wireless Carriers’ Numbering and LNP Data

    The FCC has announced its will use information from Numbering Resource Utilization and Forecast (NRUF) reports and local number portability (LNP) data filed by wireless carriers as part of its review of applications filed by AT&T Mobility, Union Telephone Company, and Verizon Wireless for new 700 MHz band licenses won in Auction No. 73. The FCC believes this information will help it assess the competitive effects of granting these new licenses to these large carriers. The FCC treats carrier-specific forecast and utilization data as confidential and exempt from general public disclosure. The FCC has, therefore, issued a protective order so that the NRUF reports and LNP data reviewed in connection with this proceeding are not made available to the public.

    Tate Commends Inouye for Ensuring Children’s Online Safety

    Calling children the nation’s “most valuable resource,” FCC Commissioner Deborah Tate praised Senate Commerce Committee Chairman Daniel Inouye, D-HI, for his leadership in getting Congress to pass legislation that protects children online.

    Congress passed the Broadband Data Improvement Act last week, S. 1492, which included language that protects children from online predators. The provision authorizes $10 million for public education on Internet safety. Commissioner Tate, an advocate for child online safety, called the legislation an international model not only for its child protective measures, but also for its strides in more accurately tracking the deployment of broadband access throughout the country. Commissioner Tate praised Senators Inouye and Ted Stevens, R-AK, in an October 1st letter for “creative and comprehensive solutions from utilizing E-rate program rules, to educating children about appropriate online behavior, to a nationwide public awareness program.”

    House Members To Have Access to Third-Party Websites, Such as YouTube, For Constituent Communications

    A new rule adopted by the House Administration Committee last week allows members of the House to use third-party websites like YouTube to communicate with their constituents. The content, however, must be used for official purposes only and not personal, commercial or campaign communication. "These new guidelines are a step in the right direction for a Congress that has been behind the technological curve for too long," House Minority Leader John Boehner, R-OH, said. "By encouraging the use of emerging and established new media tools, Congress is sending the message that we want to speak to citizens, and receive feedback, in the most open and accessible manner possible."

    House Speaker Nancy Pelosi, D-CA, also praised the new rules that "address the realities of communications in the Internet age." "When a link to a Website outside the member's official site is embedded on the member's official site, the member's site must include an exit notice advising the visitor when they are leaving the House," the rules state. "This exit notice must also include a disclaimer that neither the member nor the House is responsible for the content of the linked site(s)."

    By comparison, Senate regulations create a "nonexhaustive list" of approved websites that must agree to disclose when content is maintained by a Senate office. For the Senate, third-party sites also would be banned from adding commercial or political material or links to an office-maintained page, and would be banned from using data-gathering tools on a Senate-maintained page that collect and distribute personal information on users. The new rules "reflect a greater recognition of the need to provide flexible solutions to the opportunities and challenges presented by new and emerging technologies," and they end a longstanding restriction that has become difficult to abide by, Brady said.

    FCC Extends the Forbearance Request Review Period for Feature Group IP

    The FCC has extended by 90 days the date by which Feature Group IP’s petition requesting forbearance would be deemed granted in the absence of Commission action. On October 23, 2007, Feature Group IP filed a petition asking the Commission to forbear from applying access charges to voice-embedded Internet communications under section 251(g) of the Act. Specifically, Feature Group IP requested that the Commission forbear from imposing regulations related to compensation that would be paid by Feature Group for switched “exchange access, information access, and exchange services for such access to interexchange carriers and information service providers” pursuant to state and federal access charge rules. A petition for forbearance shall be deemed granted if the Commission does not deny the petition within one year after Commission receipt, unless the Commission extends the one-year period for an additional 90 days. The Commission extended the review period because it found that Feature Group IP’s petition raises significant questions regarding whether forbearance from sections 251(g) and 254(g) and their implementing rules for all telecommunications carriers meets the statutory forbearance requirements.

    Wavecom Says “No” to Gemalto’s Hostile Takeover Offer

    France’s Wavecom SA determined that Gemalto NV’s hostile take-over offer is “inadequate” and not in its best interests. Wavecom’s Board will soon issue a formal response to the offer. Gemalto, based in the Netherlands, provides digital security services and is interested in purchasing Wavecom in order to expand into the growing machine-to-machine (M2M) market. Wavecom is an embedded wireless technology provider for M2M communications. It believes Gemalto has undervalued the company and its potential growth opportunities.

    Broadcasters Ask the FCC to Keep Out of the Portable People Meter Dispute

    Broadcasters CBS Radio, Bonneville, Entercom, Buckley Radio Group, Greater Media, Lincoln Financial, Citadel, Emmis, and Megamedia filed joint reply comments in response to the PPM Coalition’s request for an FCC investigation into Arbitron’s rollout of its Portable People Meter (PPM) urging the FCC not to get involved in the dispute. The broadcasters agree with Arbitron that the FCC does not have the jurisdiction to review the PPM Coalition’s claims or to open an investigation into the matter because the issues are outside the scope of the Communications Act. They argue that the matter is a state contract law issue since rating services are voluntary private contractual relationships. The broadcasters also noted that the Media Rating Council, a well established independent industry-created entity responsible for auditing ratings information, is currently reviewing PPM measurements and roll-out, precisely the issues raised in the PPM Coalition’s petition filed with the FCC.

    FCC Rulemakings / Deadlines

    October 10, 2008

    October 14, 2008

    October 15, 2008

    October 20, 2008

    October 21, 2008

    October 22, 2008

    October 23, 2008

    October 24, 2008

    October 27, 2008

    November 1, 2008

    November 3, 2008

    November 5, 2008

    November 10, 2008

    November 12, 2008

    November 20, 2008

    December 2, 2008

    December 9, 2008

    December 12, 2008

    Meetings and Eventss

    October 12-15, 2008

    October 15, 2008

    October 16, 2008

    October 17, 2008

    November 4-6, 2008

    November 6, 2008

    November 14, 2008

    November 20, 2008

    Public Safety

    October 22, 2008

    November 18, 2008

    December 9, 2008



    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.