Patton Boggs TechComm Industry Update - Week of November 17, 2008

    20 November 2008

    FCC Approves Unlicensed 700 MHz White Spaces Operations

    After 4 years of consideration, the FCC adopted an order establishing new rules to allow the use of innovative fixed and personal/portable unlicensed wireless devices in unassigned television spectrum, covering Channels 2-51, except channels 3, 4, and 37, after the digital television transition. The unused spectrum resource is commonly known as “TV white spaces.” Companies such as Google and Microsoft view the spectrum as presenting the potential to create a new unlicensed wireless broadband service alternative for millions of users. The intent is to deploy WiFi-like technology over the vacant television spectrum. The hope is that the superior propagation characteristics of the unlicensed spectrum will enable a ubiquitous, nationwide wireless broadband service.

    The FCC will permit the use of fixed and wireless devices in vacant television spectrum provided such use does not cause interference to incumbent users, such as television stations, cable head-ends, and wireless microphones. White spaces devices must include spectrum sensing technology and in most cases geolocation database capability. The database will provide information on what spectrum is available for use and the spectrum sensing technology will tell the device the spectrum available for use in the device’s location. The FCC will use its public notice process to solicit bids for, and select one or more third parties to establish and administer, the database. Devices that contain only spectrum sensing technology are permitted but will be subject to a more rigorous certification process. All white spaces equipment must be certified by the FCC Labs. The certification process will be open to the public and applications will appear on public notice for comment before FCC action is taken. For now, white spaces equipment certification applications will require full Commission approval.

    In a separate notice of inquiry, the FCC is seeking additional information about increasing the permissible power levels for white spaces devices and the appropriate power level for white spaces devices in rural areas. The FCC will monitor the deployment of white spaces devices and has expressed its commitment to remove white spaces devices from the market that cause harmful interference. The TV white spaces proceeding has been highly contentious, but in the end the Commission supported the desire of companies such as Microsoft and Google to permit the free use of vacant television spectrum by unlicensed wireless devices.

    FCC Unanimously Approves Sprint - Clearwire Merger

    The FCC unanimously approved the $14.5 billion merger of Sprint-Nextel Corporation and Clearwire Corporation to create the new Clearwire. Intel Capital, Google, Comcast Corporation, Time Warner Cable, and Bright House Networks have collectively agreed to invest directly and indirectly $3.2 billion into the new company. The investment by the five strategic investors will be based on a target price of $20.00 per share of Clearwire's common stock, subject to a post-closing adjustment. Trilogy Equity Partners will additionally invest directly in the new Clearwire's common stock. Upon completion of the proposed transaction, Sprint will own the largest stake in the new company with approximately 51% equity ownership on a fully diluted basis assuming an investment price of $20.00 per share. The existing Clearwire shareholders will own approximately 27% and the new strategic investors collectively will acquire approximately 22% for their investment.

    Sprint and Clearwire also recently announced a series of commercial agreements with their strategic investors, including 3G and 4G wholesale agreements. For example, Intel will work with manufacturers to embed WiMAX chips into Intel laptops and other Intel-based mobile Internet devices, and will market the new Clearwire service in association with Intel's performance notebook PC brand. Google plans to develop Internet services, advertising services and applications for mobile WiMAX devices and will be the search provider and a preferred provider of other applications for the new Clearwire's retail product. Additionally, Google will partner with the new Clearwire on an open Internet business protocol for mobile broadband devices. The new Clearwire will support Google's Android operating system software in its future voice and data devices that it provides to its retail customers. Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into wholesale agreements with the new Clearwire for 4G services.

    New Clearwire expects to have a time-to-market advantage over competitors in fourth-generation services, supported by a national spectrum footprint. New Clearwire will also rely on the foundation of its growing subscriber base of nearly 400,000 wireless broadband customers as of December 31, 2007, as well as Sprint's continued XOHM WiMAX network build-out in certain markets. "This agreement is a historic step forward for WiMAX as it represents the first nationwide deployment of a next-generation mobile broadband Internet in the U.S.," said Paul Otellini, Intel president and CEO. "The agreement also signifies growing industry support for WiMAX. Given its flexibility, coverage and speed, WiMAX will enable the mobile Internet and is already opening doors to a host of new and exciting applications, devices and business models around the world." The new Clearwire expects to offer mobile wireless Internet services on a broad array of new devices that will be made possible by integrated WiMAX chipsets and a commitment to an open architecture. The new Clearwire is targeting a network deployment that will cover between 120 million and 140 million people in the U.S. by the end of 2010.

    Shareholders will vote on the merger later this month, and closing is anticipated by year end, perhaps before the end of November. In support of the merger, the FCC found that it will facilitate the build-out of a nationwide WiMAX-based network that will lead to increased broadband competition, greater consumer choice and innovative wireless services. The FCC also found the transaction is in the public interest with no competitive harm in any market. To reach this conclusion, the FCC used a market-specific screen, rather than a nationwide screen to more accurately reflect the current availability of spectrum in each market. As a condition of approval, Sprint Nextel must comply with its voluntary commitment to phase out its requests for federal high-cost universal service support over a five-year period and it must use counties for measuring compliance with the FCC’s handset-based wireless E911 location accuracy rules.

    FCC Grants Globalstar’s Modification Application, Conditioned on RUS Loan

    On October 31st, the FCC granted Globalstar’s request to modify its ancillary terrestrial component (ATC) authority by a 3-2 vote, with the majority focused on enabling Open Range Communications, Globalstar’s terrestrial partner, to take advantage of a $267 million broadband loan from the Department of Agriculture’s Rural Utilities Service (RUS). The relief granted by the FCC is limited in time and scope and is conditioned on Globalstar’s satisfaction of certain FCC gating requirements for ATC operations by Commission-imposed deadlines. The Order only provides the requested ATC relief for 2-3 years, until 2010 or 2011, if the gating requirements are not met. We understand the RUS is presently reviewing the FCC order to determine if it provides sufficient assurance of the availability of ATC spectrum for Open Range’s proposed rural broadband operations. A loan from OneEquity, JP Morgan’s private equity arm, also hangs in the balance.

    As you might recall, Globalstar requested modification of its ATC authorization to allow air interface protocols other than the previously authorized cdma2000, including authority to use four additional protocols: Wideband CDMA (WCDM), Time Division CDMA (TD-CDMA), Long Term Evolution with Frequency Division Duplex (LTE-FDD), and WiMAX with Time Division Duplex (WiMAX-TDD). The FCC limited its grant to WiMAX-TDD. Globalstar also requested that the FCC waive the MSS service coverage requirement, the integration requirement, and the in-orbit spare satellite requirement. The FCC provided interim-only waivers of these gating requirements for a Mobile Satellite Service (MSS)/ATC system and conditioned the interim waivers on certain performance requirements.

    If Globalstar does not comply with FCC’s gating requirements by the established deadlines, the FCC’s waivers will terminate and Globalstar will be forced to suspend its ATC operations until it complies with the FCC’s requirements. More serious than suspension, the FCC order states that “… if the companies are unable to meet the benchmarks imposed by today’s waiver, or the terms of the Department of Agriculture’s loan, the waiver and loan will both automatically terminate.”

    The performance requirements that must be satisfied include:

    (1) Globalstar must comply with the two-way MSS coverage requirement to provide continuous satellite service throughout the U.S., and Globalstar must have at least one spare satellite in orbit capable of operating in its assigned downlink band by July 1, 2010. If Globalstar does not comply with these two gating criteria by July 1, 2010, the FCC’s waivers will immediately terminate and Globalstar must suspend its ATC operations; and

    (2) Globalstar must comply with the integration requirement by providing two-way MSS to customers equipped with dual-mode MSS-ATC terminals by July 1, 2011. If Globalstar does not comply with the integration requirement by July 1, 2011, the waiver will immediately terminate and Globalstar must suspend its ATC operations. Satisfaction of this requirement is contingent on the availability of dual-mode devices. Hughes is making the dual-mode chip and says that it will not be available until 2011. The timing of making suitable equipment available, which is solely in the hands of third parties, could imperil satisfaction of this requirement.

    The FCC’s interim grant is wholly conditioned on continuation of the loan arrangement with RUS. If the RUS loan is terminated or revoked, the ATC waivers granted to Globalstar, and their new authority to use a WiMAX air interface protocol, will automatically terminate.

    Obama Technology and communications Transition Teams Take Shape

    President-elect Barack Obama last week named two academics to lead his transition team on issues and personnel for the FCC.

    Susan Crawford, a communications law professor at the University of Michigan and Kevin Werbach, a Wharton School assistant professor and former counsel for new technology policy at the FCC during the Clinton administration, will lead the team. Obama’s office said the two are part of the Science, Tech, Space and Arts team to be directed by Tom Wheeler. Wheeler is managing director of a private equity firm, Core Capital Partners. He is former CEO of CTIA—the Wireless Industry Association and former president of the National Cable and Telecommunications Association. Dale Hatfield, a consultant and former chief of the FCC's Office of Engineering and Technology, has also been named to the team.

    In addition to the FCC transition team, the President-elect's team also named three members to lead a policy group on technology, innovation and government reform. They are Blair Levin, Julius Genachowski, and Sonal Shah.

    Levin is a managing director at Stifel, Nicolaus & Co., Inc., and former FCC chief of staff under former Chairman Reed Hundt. Genachowski is cofounder of Rock Creek Ventures and LaunchBox Digital, was chief counsel to Hundt, and is close to Obama. Ms. Shah heads Google.org’s global development efforts. Genachowski and Shah also serve on the transition team’s advisory board. Levin and Genachowski also have been mentioned as candidates for FCC Chairman or a top post in the Obama administration.

    New candidates to fill the top slot at the FCC emerged this week. As we previously reported, the choice for FCC chair is critical since the Commission may be tasked with a number of key issues that are key critical to President-elect Barack Obama’s technology plan, including nationwide broadband deployment and reform of the Universal Service Fund.

    The most recent names to be considered include:

    • Julia Johnson, a Florida consultant and chairperson of the Video Access Alliance who also sits on the board of MasTec, a designer and builder of telephone, broadband, electric and other networks.

    • Mignon Clyburn, a South Carolina PSC commissioner and daughter of House Majority Whip Jim Clyburn.

    • Scott Blake Harris, a Managing partner of Harris, Wiltshire & Grannis in Washington, DC.

    • Larry Strickling, who is currently working on the Obama campaign, was previously with Broadwing Communications. He also served as Common Carrier Bureau Chief (now the Wireline Competition Bureau) under former FCC Chairman Bill Kennard.

    • Blair Levin, a managing director at Stifel Nicolaus and former FCC Chairman Reed Hundt’s chief of staff.

    • Karen Kornbluh, who served as Obama's policy director in his Senate office also is considered a potential candidate for FCC chairman.

    WCA Fights Wireless Broadband Reporting Obligations

    The Wireless Communications Association International (WCA) has filed comments in response to the Commission's proposal to extend its Automated Reporting Management Information System (ARMIS) data collection obligations to all broadband service providers. WCA argues that the FCC’s proposed requirements would impose a significant, unnecessary burden on wireless broadband providers. The Commission has acknowledged that ARMIS reports have become obsolete as the telecommunications industry becomes more competitive, and the new broadband reporting requirements would violate the Paperwork Reduction Act. WCA also notes that adopting ARMIS reporting requirements is premature before the FCC implements the recently passed Broadband Data Improvement Act (BDIA), which directs the Commission to generate more specific data about where broadband services are deployed, the number and types of consumers who are purchasing those services, and what they are paying for them. For these reasons, WCA requested that the FCC terminate the proceeding.

    FCC Releases ISP Intercarrier Compensation Order, Delays Reform of Intercarrier Compensation and Universal Service

    As required by the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit), the FCC released an order on intercarrier compensation rules for Internet Service Provider (ISP)-bound traffic by the November 5, 2008 deadline. The FCC found that although ISP-bound traffic is subject to reciprocal compensation under section 251(b)(5) of the Act, ISP-bound traffic is interstate, interexchange traffic and should be afforded different treatment from other section 251(b)(5) traffic. The FCC provided additional justification for its rule which orders a transition to a bill-and-keep regime for ISP-bound traffic compensation. Teeing this order up for another remand, Chairman Martin noted his skepticism that the order, “which retains artificial and unsupported distinctions between types of Internet traffic will be seen any more favorably by the Court than the Commission’s two previous attempts.”

    While the ISP-bound traffic decision is important, what the FCC failed to do is just as significant. Three weeks ago, Chairman Martin announced his intention to consider fundamental intercarrier compensation and universal service reform at the November 4, 2008 Open Meeting. The day before the meeting, at the urging of the other Commissioners, Chairman Martin removed the item from the agenda except for the discrete ISP-bound traffic issue discussed above. The other Commissioners requested that the Chairman release the broader intercarrier compensation and universal service reform proposal to the public for comment before a vote at the December 18, 2008 Open Meeting. In a separate statement, Chairman Martin expressed his disappointment that the Commissioners requested “ . . . once again [to] seek public comment on several proposals. As a result such a notice would make little progress and ask for comment again on the most basic and broad questions.” Comments on the Chairman’s proposals are due November 26, 2008 and reply comments are due on December 3, 2008. Commissioners Adelstein, Copps, McDowell and Tate promised to act on these proposals by the December 18th Open Meeting.

    FCC Backs Verizon-Alltel Deal

    The FCC also approved the Verizon Wireless acquisition of Alltel, smoothing the way for Verizon Wireless to become the nation’s largest mobile phone provider. Chairman Martin and Republican Commissioners McDowell and Tate voted in favor of the $28.1 billion merger. Democratic Commissioners Copps and Adelstein also approved the merger, but dissented on roaming issues that sought more guarantees for existing roaming contracts.

    Prior to the merger Verizon Wireless was the nation's second-largest carrier, and Alltel was the fifth-largest carrier. A combined Verizon-Alltel would boast 83.8 million subscribers. By comparison, AT&T would be second with 74.9 million subscribers, followed by Sprint Nextel with 51 million and T-Mobile with 30.8 million.

    The decision follows the Department of Justice’s October 31, 2008 approval of the merger. Justice Department officials said they would back the merger on the condition that the combined company divest radio spectrum assets in 100 markets in 22 states where the two companies overlap. Verizon earlier had agreed to divest spectrum in 85 markets.

    FCC Grants Open Platform 700 MHz Licenses to Verizon Wireless and Union Telephone Company

    Late last week, the FCC granted 700 MHz licenses to Verizon Wireless and Union Telephone Company. The licenses were won in Auction No. 73 which closed March 2008. To get the FCC’s approval, Verizon Wireless voluntarily agreed to divest 10 MHz of licensed spectrum in one New Jersey market.

    As a result of a petition filed by Google, Auction 73 - 700 MHz - C Block licensees are required to provide a platform that is more open to devices and applications, and that allows consumers use of the handset and applications of their choice, subject to reasonable network management protocols.

    Verizon Wireless, AT&T to Exchange Wireless Licenses in Eight States to Meet Merger Obligations

    The FCC is seeking comment on applications filed by AT&T and Verizon Wireless seeking FCC approval for transfers of control of several wireless licenses, spectrum manager leasing arrangements, and related authorizations in parts of Arizona, Kentucky, Nevada, New York, Ohio, Pennsylvania, Vermont, and Washington. AT&T requests the spectrum exchange to satisfy its obligations under the AT&T-Dobson Order. Verizon Wireless requests the spectrum exchange to satisfy its obligations to divest certain spectrum in connection with its acquisition of Rural Cellular Corporation. The first round of comments on the applications is due November 21, 2008.

    AT&T Acquires Centennial Communications, Still No. 2

    AT&T announced late last week that it will acquire Centennial Communications for $944 million in cash. If the deal closes, AT&T will add 1.1 million customers to its current customer base of 74.9 million. Unfortunately, this acquisition will not restore AT&T as the largest provider. With its acquisition of Alltel Communications, Verizon is the largest. AT&T paid $8.50 per share, plus the assumption of all outstanding debt, for Centennial. The transaction values Centennial Communications at $2.8 billion, implying multiples of $2,594 per subscriber. The transaction is expected to close in the second quarter of 2009.

    FCC Allows Use of DTS to Prevent Loss of Service After the DTV Transition

    The FCC adopted rules allowing broadcasters to use distributed transmission system (DTS) technologies in the digital television (DTV) service to maintain their broadcast coverage without using a booster to send the signal which could cause interference. As a result of the Wilmington, NC DTV pilot test, the FCC learned that some broadcast stations’ coverage areas will be reduced or reconfigured when converted to digital, leaving some analog customers without coverage unless the station boosts its signal. The Commission previously approved the use of DTS technologies. In this order, the FCC defined the parameters of how broadcasters could develop and use DTS. Commissioner Adelstein stated that, "DTS technology will help ensure that the DTV transition does not disenfranchise any viewer or household."

    Hawaii Transitions to DTV Early to Save Rare Bird

    Hawaii plans to transition to digital television (DTV) before the February 2009 deadline to accommodate an endangered, volcano-dwelling bird. Most of the state will switch to DTV on January 15th, more than a month ahead of the nationwide mandatory conversion on February 17th. Federal wildlife officials recommended hastening the transition so that the Hawaiian petrel's nesting season which begins in February on the slopes of Maui's Haleakala volcano won't be disrupted by the destruction of nearby analog transmission towers.

    Broadcast Stations Suffering in Economic Slowdown

    The Wall Street Journal (WSJ) reported last week that cable companies are comfortably surviving the recent economic downturn, but broadcasters that rely on paid advertising for their revenues appear to be struggling. For example, Discovery Communications reported higher profits from its cable networks and cable channels owned by Walt Disney. Time Warner and News Corp. each reported double-digit percentage growth. On the other hand, Disney lost $150 million in its broadcast segment, including ABC. News Corp.'s broadcast-TV operating income fell 70%. CBS's TV segment fell 17%. Cable networks have been insulated from the economic downturn because of recurring subscriber revenues and the growth of cable subscriptions.

    Antitrust Scrutiny to Increase Under Obama Administration

    During his campaign, President-elect Obama pledged to preserve competitive markets "in which entrepreneurs and small businesses can thrive, start-ups can launch, and all enterprises can compete effectively while investors and consumers are protected against bad actors that cross the line." This promise is likely to result in increased antitrust scrutiny for telecommunications, high-tech and media companies after eight years of what some observers say has been a restrained approach to marketplace competition within the Justice Department, the FCC and the FTC.

    Obama pledged to redouble merger reviews and stop or restructure mergers that may harm consumers while clearing those that do not pose such risks, Congress Daily recently reported. Obama is expected to strengthen antitrust programs to make certain that special interests do not use regulation to insulate themselves from the competitive process. He pledged to boost competition advocacy domestically and internationally and take steps to ensure that antitrust law is not used to interfere with competition or undermine efficiency to the detriment of U.S. consumers and businesses. Obama has said he will improve the administration of those laws in the U.S. and work with foreign counterparts to change their unsound laws and avoid needless duplication in enforcement.

    Obama has criticized the Bush administration for having a weak record of antitrust enforcement. Between 1996 and 2000, the FTC and the Justice Department under President Clinton challenged on average more than 70 mergers annually on the grounds that they would harm consumers. Between 2001 and 2006, the same agencies challenged less than half that number, and Justice did not bring a single monopolization case, Obama has said. Earlier this month, the Justice Department and the FCC approved Verizon Wireless' purchase of Alltel Corp., a deal that would create the nation's largest mobile phone company.

    "Everything will flow from who is appointed to head the antitrust agencies and the FCC and what their priorities are within the overall Obama administration," Barbara Esbin, who runs the Progress and Freedom Foundation's Center for Communications and Competition Policy, told Congress Daily. "I would fully expect that the administration as a whole will pay more attention and give closer scrutiny to mergers in the tech and telecom fields." Esbin said she expects to see "the FCC's activities in reviewing mergers become more regularized and more economies-based than they have been."

    From a high-tech standpoint, Obama's antitrust officials will inherit some key pending cases. One involves Advanced Micro Devices' (AMD) antitrust lawsuit against Intel Corp. AMD claims Intel has a monopoly in the PC processor industry where the firm has offered deep discounts to equipment manufacturers. A court date has been scheduled for February 2010. Meanwhile, the FTC opened a formal investigation in June and international regulators have taken actions against Intel. In recent months, Intel has expanded its Washington presence, bringing on several new senior staffers to deal with competition issues in light of the heightened scrutiny.

    Google's Internet ventures also may face scrutiny in the new administration. The company's acquisition of Internet advertising firm DoubleClick and its proposed advertising partnership with Yahoo already have raised regulators’ concern. The FTC approved the $3.1 billion DoubleClick deal in late 2007 after an eight-month investigation. Last week, Google and Yahoo scuttled their ad-sharing plan after the Justice Department said it would file an antitrust lawsuit to block the deal due to competition concerns.

    Nortel Cuts Jobs

    Canadian telecommunications equipment maker Nortel Networks blamed declining market conditions for a $3.4 billion quarterly loss and a new round of cuts, including a salary freeze, layoffs and the suspension of some preferred stock dividend payments. “In light of the economic and market conditions...Nortel continues to experience significant pressure on its business and the deterioration of its cash and liquidity,” the company reported earlier this week.

    Vodafone Announces Cost Reduction Plan Amid Scaled Back Revenue Forecast

    Vodafone this week cut its revenue forecasts for the second time in four months. The news came as the world’s largest mobile phone operator (by revenue measurements) announced a rise in earnings of nearly 20 billion pounds, but said underlying profits were lower in the six months to September. The changing economic and market conditions are prompting the company to focus on free cash flow and a 1 billion pound cost reduction plan, according to Vittorio Colao, Chief Executive of the British company, which jointly owns Verizon Wireless with Verizon. “We will pursue growth opportunities in total communications, specifically mobile data, enterprise and broadband,” Colao said.

    MetroPCS, Leap Announce Roaming Partnership

    MetroPCS and Leap announced free roaming on each other's networks for users on certain monthly plans. The two regional carriers now claim to offer a "nationwide" network, although it does not yet cover some cities, including New York and Washington, D.C. MetroPCS will offer roaming on Leap's network for subscribers with $45 and $50 monthly plans. This will let it access major markets like San Diego, Portland, Nashville, St. Louis and Houston. Outside of their combined networks, roaming still costs 49 to 79 cents per minute for MetroPCS customers. Leap, which operates under the Cricket brand, will start offering MetroPCS roaming for subscribers on $50 and $60 plans. Major market gains include Los Angeles, San Francisco, Atlanta, Dallas and Miami.

    As we reported earlier this month, the roaming agreement is one of a series of pacts the two companies entered into. Other agreements include a spectrum swap, and a plan to resolve their pending litigation. The new 10-year roaming agreement includes existing and future markets and allows the customers of each company to access wireless services at reduced rates.

    MetroPCS had 4.8 million subscribers at the end of September, and Leap had 3.5 million.

    The roaming agreement will be useful to subscribers because unlike other regional carriers like Alltel, the coverage areas for MetroPCS and Leap are not usually contiguous, with long distances between covered cities. For instance, MetroPCS customers in Dallas will now be able to roam for free in Austin. The roaming partnership is another indication of the reformed relationship between the carriers. In 2006, Leap sued MetroPCS, saying it had stolen the concept of flat-rate mobile service. The companies have since settled the lawsuit. In 2007, MetroPCS offered to buy Leap Wireless last year, but was rejected. MetroPCS withdrew its unsolicited offer to merge the pay-as-you-go wireless carriers. MetroPCS had offered 2.75 of its own shares for each one of Leap's, a deal Leap immediately rejected as insufficient.

    Mastercard Unveils Mobile Phone Wallet

    The world's biggest payment card company, Mastercard, recently unveiled a service for banks, enabling them to install payment cards in clients' mobile phones, possibly breaking the deadlock that has prevented this market from taking off. Mastercard executives expect to see substantial activity from retail-focused banks, whose plans to develop mobile payment services have been little affected by the financial crisis. Greater availability of phones equipped with such technology is not expected for the next couple of years and the financial industry and telecom operators still need to agree on a revenue and role split.

    Nokia, the world's leading phone maker, has introduced four products using the technology, called Near Field Communication (NFC), and other handset vendors are getting ready to roll out such phones. Wireless customers will be able to use a mobile phone as a wallet or as an access card simply by waving it over a wireless reader, and in some cases punching a PIN number into the phone — a practice used by travelers in Tokyo and London to access public transport. Last year, Nokia and large European and Asian carriers joined 14 mobile operators that initiated a project for common technology for electronic wallets. China Mobile, Vodafone, Cingular and Telefonica already support a common wireless chip format on the mobile phones they distribute. Together with chip makers NXP and Sony, which pioneered the NFC chip, companies plan a global standard for electronic wallets in mobile phones. MasterCard also is part of the initiative, which is cheaper and faster than other wireless payment alternatives, such as SMS text messages.

    NARUC Plans to Promote National Wireless Standards with Congress and the FCC

    The National Association of Regulatory Utility Commissioners (NARUC) has issued a resolution on national wireless consumer protection standards. In September 2008, NARUC established an Ad Hoc Committee to propose an initial set of national consumer protections standards for wireless phone service to be sent to Congress for consideration. The Committee on National Wireless Consumer Protection Standards consists of 16 state regulators, chaired by Commissioner John Burke of Vermont.

    The Committee was developed as part of a previous NARUC resolution that requests Congress to create a state-federal task force to create national wireless consumer standards. The resolution recommends that task force consist of five state regulators, three FCC Commissioners, an industry representative, a representative of the State Attorneys General, and a consumer advocate. The task force will be charged with establishing uniform national wireless consumer protections standards within six-months of creation and submit the standards to the FCC. The resolution recommends that if the FCC does not act within 120 days, the standards are deemed approved.

    The resolution proposes that state commissions retain co-extensive authority to: (1) resolve consumer complaints in their states; (2) enforce the national uniform wireless standards; (3) conduct investigations regarding violations of these national uniform wireless standards; (4) utilize existing state law to enforce the national uniform wireless standards; and (5) impose penalties to further enforce compliance with the national uniform wireless standards. The resolution also authorizes NARUC to promote its national consumer protections standards for wireless service with Congress, the FCC and other federal policy makers.

    Republican Reichart Prevails in Microsoft District; Five Other House Seats Remain in Balance

    For the second time in as many years, Democrat Darcy Burner - a former officer of technology giant Microsoft - has come up short against Rep. Dave Reichert, R-Wash., in the contest for the Seattle, Washington, 8th District. Burner conceded the contest Friday night, shortly after the Associated Press announced that Reichart was the winner. Reichart sits on the House Energy and Commerce Committee. In 2006, Burner lost the district - which includes the headquarters of her former employer, Microsoft - to Reichert by a 51-49 percent margin.

    There will be at least 255 Democrats in the House come January, a gain of 20 seats over the current Democratic majority of 235, and at least 174 Republicans, a drop from the 199 Republicans now in the chamber. Democrats are certain to add another seat in the December 6 general election in Louisiana, when Democratic Rep. William Jefferson is expected to easily win another term in the New Orleans-based, heavily Democratic 2nd District. Despite an indictment on corruption charges for which he is facing trial, Jefferson easily won a Democratic runoff and faces only minor party opposition on December 6.

    That leaves five seats in the 435-member House still up in the air in advance of the 111th Congress, four of them contests considered still close to call as the counting continues from Tuesday's election. They include:

    • Alaska At-Large, where GOP Rep. Don Young currently leads former state House Minority Leader Ethan Berkowitz. But there are absentee and provisional ballots to be counted, a process not expected to be completed for at least another 10 days.

    • California District 4, where GOP state Sen. Tom McClintock now leads Democrat Charlie Brown, a retired Air Force officer who nearly toppled retiring GOP Rep. John Doolittle in 2006. The contest hinges on absentee and provisional ballots, and the outcome may not be known until early December.

    • Ohio District 15, where GOP state Sen. Steve Stivers leads his Democratic opponent, Franklin County Commissioner Mary Jo Kilroy, by a small margin with absentee and provisional ballot counts continuing. Two years ago, Kilroy nearly ousted retiring GOP Rep. Deborah Pryce in a contest whose outcome remained in doubt for weeks after Election Day.

    • Virginia District 5, where Democratic challenger Tom Perriello declared victory with his margin standing at less than 1000 votes. But GOP Rep. Virgil Goode declined to concede pending the certification of the vote on November 24 - at which point Goode would be entitled to a recount under state law, given the closeness of the race.

    • Louisiana District 4, where long-time Caddo Parish District Attorney Paul Carmouche won a Democratic runoff, and will face Republican physician John Fleming in a faceoff in the December 6 general election. Democrats hope to pick up the northwest Louisiana seat, now held by retiring GOP Rep. Jim McCrery.

    House Leadership Elections Take Place This Week

    House party leaders will hold leadership elections for the 111th Congress this week. The Senate met Monday to address a potential vote on an economic stimulus plan, while the House’s session starts today.

    In the House, the Democratic hierarchy is expected to remain largely intact, the process could shake up the GOP lineup, given the seats the party lost on Election Day.

    At least one influential committee chair may be unseated in the chamber’s most dramatic power play. Oversight and Government Reform Chairman Henry Waxman is challenging Energy and Commerce Chairman John Dingell. Waxman won a steering committee vote 25-22. A full caucus vote is scheduled for Thursday.

    CongressDaily reported that senior Democratic aides said Waxman had taken an early lead in member support after announcing his unexpected bid for Dingell's slot the day after the election, but the level of overall support is no fairly even.

    Meanwhile, House Speaker Pelosi of California, Majority Leader Steny Hoyer and Majority Whip Jim Clyburn of South Carolina are expected to continue in their posts, while Democratic Congressional Campaign Committee Chairman Chris Van Hollen of Maryland will stay on for another cycle, with the added rank of assistant to the speaker for policy.

    With House Democratic Caucus Chairman Rahm Emanuel of Illinois becoming chief of staff for President-elect Obama, Democratic Caucus Vice Chairman John Larson of Connecticut will take over as Caucus chairman. Rep. Xavier Becerra of California, the assistant to the speaker, is favored to win his bid for vice chairman against Rep. Marcy Kaptur, D-Ohio.

    Judiciary Intellectual Property Subcommittee to be Abolished

    House Judiciary Committee Chairman John Conyers intends to scuttle the Subcommittee on Courts, the Internet, and Intellectual Property in the new Congress and elevate intellectual property issues to the full committee level, CongressDaily reported last week. A Subcommittee on Courts and Antitrust also is expected to be established.

    During the 110th Congress, Rep. Howard Berman, D-CA, chaired the IP subcommittee, making it among the House's most active subcommittees. Berman is expected to chair the House Foreign Affairs Committee next year. Reform of the nation’s patent system and revising copyright statutes that address musical tracks, writings, images, videos or other content whose owners cannot be easily identified are expected to resurface early in the 111th Congress.

    Senate Committee Chairmen Emerge

    A tentative list of Senate Committee Chairmen emerged late last week. The changes were set off in part by the announcement of Sen. Robert Byrd, D-WV, that he would step down as Senate Appropriations Chairman.

    • Agriculture: Tom Harkin, Iowa

    • Appropriations: Daniel Inouye, Hawaii

    • Armed Services: Carl Levin, Michigan

    • Banking: Christopher Dodd, Connecticut

    • Budget: Kent Conrad, North Dakota

    • Commerce: Jay Rockefeller, West Virginia

    • Energy and Natural Resources: Jeff Bingaman, New Mexico

    • Environment and Public Works: Barbara Boxer, California

    • Finance: Max Baucus, Montana

    • Foreign Relations: John Kerry, Massachusetts

    • Health, Education, Labor and Pensions: Edward Kennedy, Massachusetts

    • Homeland Security and Governmental Affairs: Joseph Lieberman, Connecticut

    • Indian Affairs: Byron Dorgan, North Dakota

    • Intelligence: Dianne Feinstein, California

    • Judiciary: Patrick Leahy, Vermont

    • Rules and Administration: Charles Schumer, New York or Ben Nelson, Nebraska

    • Small Business: Joseph Lieberman, Connecticut or Mary Landrieu, Louisiana

    • Veterans Affairs: Daniel Akaka, Hawaii or Patty Murray, Washington

    INDUSTRY CALENDAR

    FCC Rulemakings / Deadlines

    November 20, 2008

    • Reply Comment Deadline: Proposed 2009 Local Switching and High-Cost Loop Universal Service Support Formulas

    November 21, 2008

    • Reply Comment Deadline: Inquiry and Proposed Revisions to ‘Sponsorship Identification Rules’ to Address Embedded Advertising
    • Comment Deadline: Verizon Wireless, AT&T to Exchange Wireless Licenses in Eight States to Meet Merger Obligations

    November 26, 2008

    • Comment Deadline: FCC Acts on 2002 Court Remand of ISP-Bound Traffic Rules; Seeks Further Comments on Proposed Revisions to Universal Service and Intercarrier Compensation Rules

    November 28, 2008

    • Comment Deadline: Request for Increased Operating Power for FM Digital Audio Broadcasting (DAB)

    December 1, 2008

    • Reply Comment Deadline: Verizon Wireless, AT&T to Exchange Wireless Licenses in Eight States to Meet Merger Obligations
    • Comment Deadline: Six Nominations Sought for USAC Board

    December 2, 2008

    • Comment Deadline: NTIA and NHTSA on Implementation of E-911 Grant Program (NTIA)
    • Comment Deadline: Rural Cellular Association Seeks Rulemaking to Prohibit Exclusivity Arrangements between Wireless Carriers and Handset
    • Comment Deadline: Rural Telecommunications Group, Inc. Seeks Rulemaking to Impose ‘Spectrum Cap’ on Wireless Operators

    December 3, 2008

    • Reply Comment Deadline: FCC Acts on 2002 Court Remand of ISP-Bound Traffic Rules; Seeks Further Comments on Proposed Revisions to Universal Service and Intercarrier Compensation Rules

    December 8, 2008

    • Comment Deadline: ACS of Alaska Seeks to Convert from Rate-of-Return to Price Cap Regulation
    • Third Round: Verizon Wireless, AT&T to Exchange Wireless Licenses in Eight States to Meet Merger Obligations

    December 9, 2008

    • Reply Comment Deadline: Inquiry Regarding “Hybrid” Satellite-Terrestrial Radio Reception Devices

    December 10, 2008

    • Comment Deadline: Reclassifying a CLEC as an ILEC: The Case of South Slope Cooperative Telephone Company

    December 12, 2008

    • FCC Deadline: Qwest's Request for Forbearance from ARMIS Reporting Requirements
    • Comment Deadline: Proposed DOJ Consent Decrees for the Acquisition of Alltel by Verizon Wireless

    December 15, 2008

    • Reply Comment Deadline: FCC Lifts ARMIS Reporting Requirements for Incumbent Carriers, Proposes Industry-Wide Reporting of Public Safety and Broadband Data
    • Reply Comment Deadline: Inquiry to Further Strengthen the Administration, Management and Oversight of the Universal Service Fund (USF)

    December 22, 2008

    • Reply Comment Deadline: Rural Cellular Association Seeks Rulemaking to Prohibit Exclusivity Arrangements between Wireless Carriers and Handset Manufacturers
    • Reply Comment Deadline: Rural Telecommunications Group, Inc. Seeks Rulemaking to Impose 'Spectrum Cap' on Wireless Operators

    December 23, 2008

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

    December 31, 2008

    • Reply Comment Deadline: Reclassifying a CLEC as an ILEC: The Case of South Slope Cooperative Telephone Company
    • Reply Comment Deadline: Six Nominations Sought for USAC Board

    January 4, 2009

    • Reply Comment Deadline: Request for Increased Operating Power for FM Digital Audio Broadcasting (DAB)

    January 17, 2009

    • FCC Deadline: Embarq’s Request for Forbearance form Contract Tariff Filing Requirements

    January 21, 2009

    • FCC Deadline: Feature Group IP's Request for Forbearance from Application of Access Charges to ‘Voice-Embedded Internet’

    February 6, 2009

    • 911 and E911 Network Redundancy, Resiliency, Reliability Reports Due

    Meetings and Events

    November 20, 2008

    • FCC-USDA Regional Broadband Workshop in Phoenix, Arizona

    December 5, 2008

    • Law and Ethics of Network Monitoring, Silicon Flatirons, Boulder, CO

    December 11, 2008

    • Summit on Lessons Learned: Hurricane Season 2008, FCC 9:00am - 1:00pm

    December 18, 2008

    • FCC Open Meeting

    January 5, 2009

    • Reforming the Federal Communications Commission, Silicon Flatirons, National Press Club, Washington, DC

    January 26, 2009

    • Antitrust Law for the New Administration, Silicon Flatirons, Boulder, CO

    February 8-9, 2009

    • The Digital Broadband Migration: Imagining the Internet’s Future, Silicon Flatirons, Boulder, CO

    March 19, 2009

    • Evaluating Software Patents, Silicon Flatirons, Boulder, CO

    Congressional Hearings

    January 6, 2009

    • 111th Congress begins

    Public Safety

    November 20, 2008

    • Regional Public Safety Planning Committee Meeting for Region 24 in Jefferson City, Missouri regarding 800 MHz
    • Regional Public Safety Planning Committee Meeting for Region 35 in Salem, Oregon regarding 700 MHz

    December 4, 2008

    • Regional Public Safety Planning Committee Meeting for Region 39 in Nashville, Tennessee 700 MHz

    December 9, 2008

    • Regional Public Safety Planning Committee Meeting for Region 19 in Putney, Vermont regarding 700 MHz

    December 15, 2008

    • Regional Public Safety Planning Committee Meeting for Region 16 in Topeka, Kansas regarding 700 MHz

    January 14, 2009

    • Regional Public Safety Planning Committee Meeting for Region 7 in Centennial, Colorado regarding 700 MHz

    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.

    PATTON BOGGS LLP