Patton Boggs TechComm Industry Update - Week of January 27, 2009

    28 January 2009

    House Poised to Vote on Economic Stimulus on Wednesday: Senate Unveils Its Version

    Honoring President Obama's call to cure the ailing economy, the House will take up the $825 billion economic stimulus package on Wednesday, while the Senate Finance and Appropriations committees will consider their sections today.

    Following a bipartisan stimulus meeting on Friday between Obama and congressional leaders, House Speaker Pelosi and Senate Majority Leader Reid said Congress is expected to send a bill to Obama by mid-February. Obama is scheduled to visit Capitol Hill today to meet with GOP lawmakers. Neither the House nor the Senate stimulus measures have much support among Republicans.

    House Stimulus. Last Thursday, the House Energy and Commerce Committee voted to approve spending provisions that include $1 billion for wireless broadband grants and $1.8 billion for grants that would fund fiber, cable or satellite broadband networks. The wireless and wireline grants would be administered by the National Telecommunications and Information Administration (NTIA), with 25 percent of grants dedicated to service of unserved areas and 75 percent to underserved areas. The FCC would be charged with defining “unserved” and “underserved.”

    The House bill would require each state to submit to NTIA a report defining which state regions are in most need of broadband deployment. Committee Chairman Henry Waxman (D-CA) offered a substitute amendment that would require NTIA to issue an annual report assessing the impact and effectiveness of the grants. Waxman’s amendment also expanded the universe of potential applicants for grants, including satellite companies.

    The open access provisions contained in the House bill received relatively little debate during committee markup. However, Ranking Member Joe Barton (R-TX) said network neutrality and open access provisions would discourage broadband investment and innovation.

    The House Energy and Commerce Committee also passed an amendment by Rep. Ed Markey (D-MA) that would require the FCC to formulate a national broadband plan within a year of the bill’s enactment. The plan, which must be submitted to Congress, would include benchmarks for ensuring that all Americans have access to broadband service.

    Meanwhile, the House Ways and Means Committee cleared $275 billion in tax cuts on a party-line vote of 24-13. For businesses, the House measure includes $29 billion in tax cuts to encourage investment in new plants and equipment, and to permit money-losing firms to claim refunds on taxes paid up to five years ago, during more profitable times.

    The House Rules Committee will combine all portions of the economic stimulus package, including other portions that were not included in the Energy and Commerce and Ways and Means committee packages, such as $1 billion for the Education Department’s Education Technology grants to modernize classrooms with computers and broadband technology, $650 million for the digital-to-analog converter box program, and $2.825 billion for the Agriculture Department’s Rural Utilities Service (RUS) for installing open access broadband infrastructure. Once the House Rules Committee takes up the stimulus on Tuesday, the bill will head to the full House for a vote on Wednesday.

    Senate Stimulus. The recently unveiled $365 billion Senate stimulus package would direct more funds to extending broadband service: $9 billion for competitive grants awarded to state and local governments, non-profits and public-private partnerships through NTIA's Broadband Technology Opportunities Program (compared to the House’s $6 billion).

    Of the $9 billion proposed by the Senate, up to $8.19 billion would be directed toward accelerating broadband deployment in unserved and underserved areas and to institutions that are likely to create jobs. In addition, $250 million would fund “sustained broadband adoption;” $200 million would go toward upgrading technology and capacity at “public computing centers” such as libraries and community colleges; and $350 million would fund the development of broadband data under the Broadband Data Improvement Act. Finally $10 million would be set aside for audits and oversight of the grants.

    Up to 50 percent of the $9 billion may be transferred to the Agriculture Department for administration through RUS. Funds also may be transferred to the FCC for developing a national broadband plan.

    The Senate spending plan has stringent safeguards on the NTIA grants. For example, the Senate package would impose a 20 percent match requirement for grants; require specific progress on meeting the grants’ goals; require that grant applications would not occur without federal funding and quarterly reporting, among other requirements.

    Finally, the Senate plan calls for $200 million in Agriculture Department budget authority to support $813 million in RUS loans and $180 million in RUS grants for the distance learning and telemedicine program to improve access to services in remote rural areas.

    The Senate spending measure would be combined with economic recovery tax cuts and mandatory programs announced by the Senate Finance Committee, bringing the total Senate package to $825 billion.

    Tax Provisions. The tax portion of the Senate plan unveiled by the Finance Committee is the same size as the version approved on a party-line vote Jan. 22 by the House Ways and Means Committee and includes many identical or similar elements, such as a payroll tax credit championed by Obama, costing $142.2 billion over 10 years, and an $11 billion provision that would allow businesses to use their losses in 2008 and 2009 to offset profits from five previous years instead of the two allowed under current law.

    Like the House tax bill, the Senate proposal would also extend, for another year, the bonus depreciation provisions enacted in last year’s stimulus law.

    Health IT. Along with its tax title, the Senate Finance Committee unveiled language that would provide an estimated $17.9 billion to upgrade health information technology. The announcement follows the House Energy and Commerce and Ways and Means committees’ approval to include $20 billion for health IT.

    Under the House health IT proposal, hospitals would be eligible for payments of at least $2 million beginning in fiscal 2011 if they adopt electronic records technology meeting the federal standard. Individual physicians would receive up to $65,000 for switching to electronic records.

    Similar to the House version, the Senate version would require that the Health and Human Services Department establish a standard-setting process for interoperability and minimum functionality for electronic medical records. A pair of committees within the agency would offer guidance on policy and standards development to the HHS national health IT coordinator.

    Among those eligible for HHS grants to buy technology, would be inner-city and rural hospitals and small medical practices. The Senate plan would authorize a 100 percent federal match for a portion of payments made for certified e-health technology to certain Medicaid providers and a 90 percent match for payment to the states for administrative expenses.

    For more detail about any of the stimulus proposals, do not hesitate to contact us.


    Compromise to Extend the DTV Transition is Moving Forward

    A compromise on the legislation to extend the DTV transition deadline was reached late last week. Yesterday the Senate passed S. 328, the DTV Delay Act, which will extend the DTV transition deadline to June 12, 2009. House Energy and Commerce Committee Chairman Henry Waxman (D-CA) announced last night that he will introduce the Senate bill on the House floor in order to avoid the need for a conference. The bill will: continue to permit television stations to cease analog operations under the FCC’s existing rules; permit expedited use of vacated spectrum by public safety users; extend 700 MHz wireless license terms by 116 days to reflect the delay in the DTV transition; make improvements to the converter coupon program; impose new reporting requirements on NTIA and the FCC; and extend the FCC's auction authority by an additional year.

    An extension is a blow to Qualcomm’s MediaFLO mobile TV service, which had plans of a nationwide rollout on February 18th, the day after the DTV transition deadline. Qualcomm has been lobbying Congress to require nine television stations in Boston, Houston, Miami and San Francisco to move forward with the transition on February 17th even if there is an extension, so that Qualcomm may launch its MediaFLO service in those markets as planned on February 18th.

    Sprint Nextel’s $2B Public-Safety Communications Plan

    Sprint Nextel proposed to Obama’s transition team a $2 billion plan to provide interoperable voice and light data wireless communications to first responders anywhere in the U.S. within 4 hours using a fleet of trucks equipped with cellular equipment and satellite backhaul. The proposal could be funded out of the economic stimulus package and is an entirely different approach than the FCC’s proposal for a public/private partnership using auctioned 700 MHz spectrum. Sprint estimates that the network could be deployed in approximately one year at a significant cost reduction than the FCC’s proposed 700 MHz D-Block plan. One drawback to Sprint’s plan is that it does not offer the type of broadband connectively that first responders are requesting and was included in the D-Block plan supported by former FCC Chairman Kevin Martin. In meetings with the Transition Team, Sprint suggested that 4G wireless broadband capability could be added to its proposed plan but it would require additional funding beyond the initial $2 billion.

    Copps Named Acting FCC Chair

    Still waiting for the FCC Chair appointment, President Obama has named Michael J. Copps as the acting Chair of the FCC. As we previously reported, Obama has reportedly chosen Julius Genachowski as the new FCC Chair. It’s rumored that Obama wants to announce his FCC pick at the same time he announces the new Federal Trade Commission Chairman. The announcements are expected any day. In the meantime, President Obama has asked FCC Commissioner Michael Copps to chair the FCC until Obama’s nominee is confirmed and takes office.

    Obama, and Genachowski, have a tremendous opportunity to reform the FCC and shape telecommunications policy. In addition to appointing a new Chair, President Obama has at least one additional seat to fill on the 5-member panel, replacing Commissioner Deborah Tate who left the Commission in December. The plans of Commissioner Adelstein, whose term expired last June, also are uncertain and could present an additional spot to fill. President Obama pledged that his administration will be the most transparent administration ever, including the FCC. One of the most consistent criticisms of the FCC under Chairman Martin was the lack of transparency. Last week, President Obama issued two orders to that end. The first order instructs all agencies to "adopt a presumption in favor" of Freedom of Information Act requests and the second order directs the Office of Management and Budget to issue recommendations on making the federal government more transparent.

    In an effort to implement President Obama’s vision for a transparent Commission, Acting Chairman Copps addressed FCC staff on Monday, outlining his own vision for governing the FCC. We are living in the Digital Age, Copps stated, which means there is a greater convergence of communications. He envisions the same convergence within the FCC which requires “an open exchange of ideas in an effort to find solutions to the challenges confronting us.” Copps wants the FCC’s Bureaus and Offices to more closely collaborate with each other on issues of mutual interest. Copps said, “Communications is as cross-cutting as anything can be and the agency dealing with communications needs to be cross-cutting, too. If we can’t communicate with ourselves, we shouldn’t have the word ‘Communications’ in our title.” To promote greater transparency, Copps announced, beginning this week, weekly Chairman’s Office Briefings with Bureau and Office chiefs and representatives from each Commissioner’s office. Copps hopes these measures will improve the quality of decision-making at the FCC.

    WCS/SDARS Order Still Circulating for Commission Consideration

    On Friday, the FCC updated its list of items on circulation for Commission vote. This week’s list is much shorter than in months past. It appears that the FCC removed several controversial items including AWS-3. Notably, the FCC left the WCS/SDARS rulemaking and an order addressing wireless service renewals on the circulation list. It is not clear whether Chairman Martin pulled the items before he left the FCC last week or whether Acting Chairman Copps, as the new head, removed the items.

    In December, the FCC planned to address WCS/SDARS and AWS-3 at its Open Meeting, but the meeting was cancelled after pressure from Congress to concentrate the Commission’s attention and resources on the digital television transition.

    West Virginia Alliance Seeks RFPs for Rural Health Care Pilot Program

    The West Virginia Telehealth Alliance (Alliance) posted a request for proposals (RFP) to help it build a teleheath network as part of the FCC’s Rural Health Care Pilot Program administered by USAC. The RFP, posted on Jan. 22, must be made publicly available under program rules for 28 days. As a result, the earliest that the Alliance may award a contract is Feb. 19.

    The RFP seeks a provider to install a fiber optic backbone to serve 450 eligible hospital and medical research facilities in West Virginia. Under the proposal, Marshall University will serve as the procurement agent and manager. The network will connect Internet2 with speeds ranging from T1 lines at 1.5 Mbps to 1 Gbps. The maximum funding for the project is $8.39 million.

    McCain Leaves Senate Commerce Committee

    Faced with a smaller caucus and fewer committee seats, Senate Republican leaders have positioned important members on key panels in an effort to have a stronger hand in shaping legislation.

    Some examples: Michael Enzi of Wyoming, who has a strong interest in health care and health information technology, and John Cornyn of Texas, will go to the Finance Committee. John McCain of Arizona will join Energy and Natural Resources.


    McCain, who is widely known for his work on energy and climate change issues, could serve as a strong Republican voice on Energy and Natural Resources. The four-term senator and 2008 GOP presidential nominee will also pick up seats on Health Education Labor and Pensions and Homeland Security and Governmental Affairs. McCain’s departure from the Senate Commerce Committee leaves Kay Bailey Hutchison of Texas as the Ranking Member.

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    New Sprint Nextel and Microsoft Layoffs Announced

    Sprint Nextel announced 8,000 layoffs throughout the company, which will reduce expenses by $1.2 billion per year and should be complete by March 31, 2009. Sprint also announced plans to suspend 401(k) matching for 2009, continue the current salary increase freeze, and suspend its tuition reimbursement program.

    Last week Microsoft announced 5,000 layoffs over the next 18 months, including 1,400 immediate layoffs. It also announced it will be hiring in key areas. Net headcount reduction is expected to be closer to 2,000. To further reduce costs, Microsoft is cutting travel expenses by 20%, decreasing vendor and contingent staff expenses, scaling back its Puget Sound campus expansion and eliminating merit increases for FY2010 that would have been effective September of 2009.

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    President Obama Keeps His BlackBerry

    Prior to taking the Presidential oath of office, President Obama was rarely seen without his BlackBerry. White House spokesman Robert Gibbs said a compromise with the Secret Service was reached and President Obama is allowed to use his BlackBerry “to stay in touch with senior staff and a small group of personal friends. The use will be limited and the security enhanced.” Once the President looks at an e-mail, it becomes a presidential record under the Presidential Records Act. The Act contains a few narrow exceptions for personal communications but it is unclear if it will be possible to separate personal and official e-mails. President Obama will either use a BlackBerry with increased security and disabled GPS, or an NSA approved Sectera Edge.

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    Construction Continues on New York City Public Safety Network with Northrop Grumman and d IPWireless; State-Wide Public Safety Contract with M/A-Com Cancelled

    Effective January 15th, New York State officials cancelled a $2 billion contract with M/A-COM because the company failed to deliver an acceptable state-wide public safety communications network and the state is demanding the immediate return of $50 million. M/A-COM states it met the terms of the contract and is threatening legal action. In August of 2008, the state notified M/A-COM that the network it constructed using OpenSky technology was unreliable and not acceptable for public safety use. The state identified 19 deficiencies and M/A-COM fixed 14 of 19 deficiencies. The state’s Office for Technology is researching and developing an alternate plan for a state-wide public safety communications network without M/A-COM.

    In spite of the State’s difficulties with the M/A-Com network, New York City continues to add functionality to its public safety communications network built through a partnership with Northrop Grumman and IPWireless. The city’s network is comprised of 400 cell sites, which provide service to the city’s five burrows and more than 90% of the city’s major roadways.

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    FCC Releases 13th Annual Report on CMRS Competition – Data from 2007

    The FCC released its Thirteenth Annual Report to Congress on the state of competition in the CMRS marketplace. The report concluded that there is effective competition in the mobile marketplace because U.S. consumers continue to reap significant benefits from the wireless industry including low prices, new technologies, improved service quality, and choice among providers. Mobile telephone subscribership increased from 241.8 million in 2006 to 263 million by the end of 2007. Wireless nationwide penetration increased to 86%, and 99.6% of U.S. residents have one or more choices in wireless operators and service. In 2007, the U.S. mobile penetration rate surpassed Japan’s mobile penetration rate for the first time.

    Wireless providers continued to deploy new technologies and services including mobile broadband networks. According to the report, approximately 92% of the U.S. has at least one mobile broadband provider. At the end of 2006, 21.9 million mobile wireless devices capable of accessing the Internet at broadband speeds were in use in the United States, up from 3.1 million at the end of 2005. Several companies launched new mobile services and devices in 2007. AT&T launched a mobile TV service using Qualcomm’s MediaFLO network. AT&T also launched the Apple 3G iPhone, and Apple launched its App Store, an online software clearinghouse that sells third-party applications and content developed for the iPhone. Google and T-Mobile unveiled the T-Mobile G1, one month after the Commission approved the first Android-based phone.

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    FCC Releases 13th Annual Report on Video Programming – Data from 2007

    The FCC released its Thirteenth Annual Report to Congress on the status of competition in the market for the delivery of video programming. The report concludes that consumers continue to enjoy the benefits of competition in the delivery of video programming services including increased choice, better picture quality, and greater technological innovation. However, prices for video programming services continue to outpace the general rate of inflation. The largest MVPD remains a cable operator, but cable subscribership declined slightly since the 2005 Report. The second and third largest MVPDs are DBS operators. LECs, such as AT&T and Verizon, have expanded the areas where they provide facilities-based video services, and continue to partner with DBS providers to offer video service. DBS competition appears to have led cable operators to add more programming services to their channel line-ups, but it has not constrained cable prices like wireline competition. Most consumers, 68%, who subscribe to MPVD services, subscribe to cable services, 29.2% subscribe to DBS, and 2.6% subscribe to other types of MVPD services.

    The FCC also examined whether more regulation of cable TV operators is necessary to promote diversity of information. The Communications Act allows the FCC to establish additional regulations when cable TV systems with 36 or more activated channels are available to 70% of households within the U.S. and when 70% of those households subscribe to them. The FCC found that previous reports are inconclusive and cannot determine whether this threshold has been reached. Accordingly, all cable TV companies are now required to submit data for each system on a zip code basis on cable TV penetration and subscribership within 60 days from release of this report. This information must be filed for calendar year 2006 and cable operators must also file their most current data for 2007. This information will help determine whether the 70/70 threshold has been reached, potentially clearing the way for additional cable regulation.

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    Verizon Announces New Broadband Landline Telephone System – Verizon Hubub

    Verizon Hub is a new touch-screen telephone system that integrates landline, wireless, and voice-over IP (VoIP) service, using any broadband connection. The device will directly compete with AT&T’s HomeManager, a similar device launched last fall. Verizon hopes the Verizon Hub will persuade consumers to keep a landline home telephone. The new device features visual voicemail, contact list management, text messaging options, turn-by-turn directions, a digital picture frame, news and weather updates, movie trailers and the ability to purchase movie tickets using Handango. Future upgrades will include access to Vcast music and videos. Users will need a Verizon Wireless account in order to send information from the Verizon Hub to a wireless device, in addition to purchasing the Verizon Hub for $199 after a $50 mail-in rebate and a $35 monthly fee.

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    Arbitron Changes Sampling Methods

    Arbitron’s Chief Research Officer Bob Patchen recently announced that “Arbitron has developed, test and is presently implementing an address-based sampling method to identify and contact cellphone-only households.” He stated the various methodologies now in use are more efficient than previous procedures and capture more young adults, Hispanics and African Americans.

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    INDUSTRY CALENDAR

    Meetings and Events

    January 28, 2009

    WRC-11 Advisory Committee - Informal Working Group 1: Maritime, Aeronautical and Radar Services

    WRC-11 Advisory Committee - Informal Working Group 2: Terrestrial Services

    January 29, 2009

    WRC-11 Advisory Committee - Informal Working Group 3: Space Services

    WRC-11 Advisory Committee - Informal Working Group 4: Regulatory Issues

    January 30, 2009

    FCC Consumer Advisory Committee meeting, Washington, D.C.

    February 2-4, 2009

    4G Wireless Evolution, Miami Beach, FL

    February 5-7, 2009

    CEA 2009 Winter Retreat, Jackson Hole, WY

    February 8-9, 2009

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

    February 9-10, 2009

    Radio Ink: Convergence ’09, San Jose, CA

    February 15-18, 2009

    NARUC Winter Committee Meetings, Washington, D.C.

    February 23-25, 2009

    Telecom Expense Management, New York, New York

    NCTA Winter Educational Conference, Charlotte, NC

    February 25-26, 2009

    Digital Music Forum East, New York, NY

    February 26, 2009

    Catholic University, Columbus School of Law’s 2009 Spring Symposium presented in association with the FCBA, Washington, D.C.

    February 27, 2009

    Greener Gadgets Conference, New York, NY

    February 27-28, 2009

    The 4th Annual Syracuse University Communications Law & Policy Symposium presented in associated with the NY Chapter FCBA, Syracuse, NY

    March 19, 2009

    Evaluating Software Patents, Silicon Flatirons, Boulder, CO

    March 22-24, 2009

    NAB Futures Summit, Pebble Beach, CA

    April 1-3, 2009

    International CTIA Wireless, Las Vegas, NV

    The Cable Show, Washington, D.C.

    April 18-23, 2009

    NAB Show, Las Vegas, NV

    April 22-23, 2009

    CEA Washington Forum, Washington, D.C.

    April 27-29, 2009

    Broadband Properties Summit 09, Dallas, TX

    May 6-7, 2009

    Radio Ink: Hispanic Radio Conference, Los Angeles, CA

    May 11-15, 2009

    2009 Technology and Standards Spring Forum, St. Louis, MO

    July 19-22, 2009

    NARUC Summer Committee Meetings, Seattle, WA

    August 5-8, 2009

    Radio & Records: Triple A 2009 Summit, Boulder, CO

    September 15-17, 2009

    WiMAX World 2009, Chicago, IL

    September 23-25, 2009

    The NAB Radio Show, Philadelphia, PA

    October 7-9, 2009

    International CTIA Wireless I.T. & Entertainment, San Diego, CA

    October 18-21, 2009

    2009 Technology and Standards Fall Forum, Phoenix, AZ

    CEA Industry Forum, Phoenix, AZ

    October 25-30, 2009

    Cable Connection, Denver, CO

    November 3-5, 2009

    WiMAX World Emerging Markets, Prague, Czech Republic

    November 15-18, 2009

    NARUC Annual Convention, Chicago, UL

    December 2, 2009

    Radio Ink: Forecast, New York, NY



    FCC Rulemakings / Deadlines

    February 2, 2009

    Comment Deadline: Rural Cellular Association Seeks Rulemaking to Prohibit Exclusivity Arrangements between Wireless Carriers and Handset Manufacturers

    Reply Comment Deadline: Petition for Reconsideration of Rules to Verify AM Directional Antenna Performance

    Opposition Deadline: AT&T's Acquisition of Centennial under FCC Review

    February 6, 2009

    911 and E911 Network Redundancy, Resiliency, Reliability Reports Due

    February 9, 2009

    Reply Comment Deadline: Revised Rules to Verify AM Directional Antenna Performance, Proposed Rules for Tower Construction Near AM Stations

    February 20, 2009

    Comment Deadline: Rural Cellular Association Seeks Rulemaking to Prohibit Exclusivity Arrangements between Wireless Carriers and Handset Manufacturers

    February 23, 2009

    Comment Deadline: CTIA Petition to Transition Cellular Services to Geographic Market Area Licensing

    February 24, 2009

    Deadline for Action on Verizon's Request for Forbearance from Recordkeeping and Reporting Requirements

    February 27, 2009

    Reply Comment Deadline: FCC Actions on Closed Captioning Requirements for Digital Programming, Consumer Complaints

    Comment Deadline: Fourteenth Inquiry on Competition for the Delivery of Video Programming

    March 2, 2009

    Comment Deadline: FCC Launches Review of Rules Adopted in 1997 Affecting Small Entities

    Compliance Deadline: Annual CPNI Certifications Due

    March 5, 2009

    Deadline for Action on Virgin Mobile's Request for Forbearance from ETC Facilities Ownership Rules

    March 9, 2009

    Reply Comment Deadline: CTIA Petition to Transition Cellular Services to Geographic Market Area Licensing

    March 27, 2009

    Reply Comment Deadline: Fourteenth Inquiry on Competition for the Delivery of Video Programming

    March 31, 2009

    Deadline: Interconnected VoIP Providers to Transmit 'Nomadic' 711 Calls to Relay Providers

    Deadline: TRS Provider Delivery of 711 Calls to PSAPs

    April 11, 2009

    Deadline: Embarq's Request for Forbearance from ESP Access Charge Exemption



    Public Safety

    January 27, 2009

    Regional Public Safety Planning Committee Meeting for Region 55 in Buffalo, New York regarding 700 MHz and 800 MHz

    February 11, 2009

    Regional Public Safety Planning Committee Meeting for Region 15 in Des Moines, Iowa regarding 700 MHz

    March 10, 2009

    Regional Public Safety Planning Committee Meeting for Region 19 in Kennebunkport, Maine regarding 700 MHz

    April 8, 2009

    Regional Public Safety Planning Committee Meeting for Region 15 in Des Moines, Iowa regarding 700 MHz