TechComm Industry Update ~ November 2, 2012


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TechComm Industry Update ~ November 2, 2012

  1. 1. November 2, 2012 TechComm Industry Update PATTON BOGGS LLPPowered by In this update:Patton Boggs • FCC Incentive Auction Proceeding LaunchedTechComm Team • Broadcasters File Brief in Aereo AppealIf you have any questions • FCC Opens Proceeding on Limits on Mobile Spectrum Holdingsabout the foregoing or if yourequire additional • T-Mobile and MetroPCS to Mergeinformation, pleasecontact: • Softbank to Acquire Sprint • FCC Proposes Reform of Rules and Policies on Foreign CarrierJennifer L. Richter • U.S. Court of Appeals Upholds FCC Policy of Permitting Security Interests in License Sale ProceedsPaul C. Besozzi202-457-5292 • FCC Seeks Comment on Seven TCPA • Additional Comments Sought on the Video Service Relay ProgramMonica S. Desai • Wireline Competition Bureau Conducting a Virtual Workshop on202-457-7535 Connect America Phase II Cost • Proposed Amendment to the Electronic Communications Privacy ActMichael E. Drobac202-457-7557 • FCC Creates Public Safety Answering Point (PSAP) Registry • FCC Adopts Wireless Communications Service (WCS) TechnicalRyan W. King Rule Settlement • All-Digital Cable Systems Allowed to Encrypt Basic TV Service • FTC Holds Robocall SummitCarly T. Didden202-457-6323 • FCC Reminds ETCs That They Must Recertify Before Year • Comments Sought on Lifeline Annual Recertification RuleJennifer A. Cetta • Liberty Media Seeks Consent to Acquire Control of Sirius XM202-457-6546 • CTIA Releases Whitepaper on CybersecurityMelanie C. Goggins • FCC Approves E-Rate Eligible Services List for FY • Update on Mobility Fund Phase I Auction • Court Denies Stay in Viewability Appeal • Ban on Certain Exclusive Programming Contracts Expires; FCC Seeks Further Comments • FCC Seeks Comment on LightSquared Request for Relief • FirstNet Seeks Comment on Public Safety Broadband Network
  2. 2. • FCC Initiates Comprehensive Satellite Licensing and Operational Rule Review • FCC Announces Planned mHealth Task Force Report Implementation Steps • Internet Radio Fairness Act Introduced in House and Senate • Legislation Introduced to Prevent FCC Reforms to Rural Subsidy FormulaFCC Incentive Auction Proceeding LaunchedOn Friday, October 26, the FCC hosted a workshop for broadcasters tolearn more about the FCC’s recently released incentive auction Notice ofProposed Rulemaking (NPRM). The workshop provided informationabout issues raised in the NPRM, including proposed auction designs,the mechanics of participation, and station eligibility. It also focused onissues of interest to broadcasters that may choose not to participate,including proposed band plans and possible approaches to repacking.According to the NPRM, the incentive auction will consist of three majorcomponents: (1) a reverse auction in which broadcast televisionlicensees may submit bids to voluntarily relinquish spectrum usagerights in exchange for payments; (2) a reorganization or “repacking” ofthe broadcast television bands in order to free up a portion of the UHFband for wireless use; and (3) a forward auction of initial licenses forflexible use of the newly available spectrum. The FCC seeks publiccomment on the NPRM. The Chairman seeks to issue a final order in2013, and hold the auction in 2014. Comments are due December 21,2012, and Reply Comments are due February 19, 2013. For a copy ofthe NPRM click here.Broadcasters File Brief in Aereo AppealA group of associations representing broadcasters filed an Amicus Briefsupporting an appeal before the U.S. Court of Appeals for the SecondCircuit. Appellants asked the Second Circuit to overturn a district courtdecision not to issue a preliminary injunction that would have preventedAereo from retransmitting the Appellant’s broadcast program over theAereo network while the program is in progress. Aereo has developed atechnology that records broadcast television signals using a network ofsmall antennas and then sells a service to consumers that can receivethese recorded broadcast signals over the Internet. Aereo does nothave the broadcasters’ consent and does not pay any royalty fee tocompensate the broadcasters for retransmitting their signal over theInternet.Broadcasters argued that Aereo’s retransmission of broadcasters’ signal“irreparably harms broadcasters by undermining their two mostimportant sources of revenue: advertising and retransmission consentfees,” as well as “undermines contractual arrangements by whichbroadcasters negotiate and pay to be the ‘first run’ outlet for manypopular programs and otherwise threatens the sustainability ofbroadcasters’ investment in high-quality local and nationalprogramming.” They urged the court to conclude that Aereo has violatedcopyright laws by publically performing the broadcast content withoutpermission.
  3. 3. FCC Opens Proceeding on Limits on Mobile Spectrum HoldingsThe FCC released an NRPM seeking comment on how much wirelessspectrum a single company can hold. The agency asks interestedparties whether it should apply a case-by-case analysis to transactionsand auctions or whether to adopt a different approach, such as creatinga bright line “spectrum cap.” The FCC further seeks comment on whichspectrum bands should be included in these evaluations and otherimplementation issues. Comments are due by November 23, 2012 andreply comments are due by December 24, 2012.T-Mobile and MetroPCS to MergeDeutsche Telekom and MetroPCS Communications have reached anagreement to combine T-Mobile USA and MetroPCS. The resultingcompany will retain the T-Mobile name, but will operate T-Mobile andMetroPCS as separate customer units. According to the press release:“This transaction will create the leading value carrier in the U.S. wirelessmarketplace, which will deliver an enhanced customer experiencethrough a wider selection of affordable products and services, deepernetwork coverage and a clear-cut technology path to one common LTEnetwork.” The transaction is expected to close in the first half of 2013,subject to approval by MetroPCS shareholders, regulatory approvals,and other customary closing conditions. Petitions to Deny the request forFCC approval of the transaction are due by November 26, 2012.Oppositions are due by December 6, 2012 and replies are due byDecember 17, 2012.Softbank to Acquire SprintSoftBank, a Japanese carrier, has reached a deal with Sprint to acquireapproximately 70 percent of the U.S. wireless carrier. As part of thedeal, $12.1 billion will be distributed to existing Sprint stockholders and$8.0 billion will be invested in Sprint to strengthen its balance sheet.The companies expect the deal to close in mid-2013, subject to approvalby Sprint stockholders, regulatory approvals, and the satisfaction orwaiver of other closing conditions.FCC Proposes Reform of Rules and Policies on Foreign CarrierEntryThe FCC adopted an NPRM to change the criteria under which itconsiders applications by foreign telecommunications carriers or theiraffiliates that seek entry into the U.S. market for internationaltelecommunications services. The proposal would eliminate, or in thealternative, simplify the effective competitive opportunities (ECO) testthat applies to FCC review of Section 214 applications to serve the Developments since 1995, including the decision to replace theECO test for applicants from World Trade Organization (WTO) Membercountries, justify considering whether there is a reason to apply all of the
  4. 4. ECO test requirements absent complaints or evidence of anti-competitive conduct on routes between the U.S. and countries that arenot WTO members. The FCC will re-examine the current ECO testrequirements as it applies to Commission review of Section 214applications, cable landing license applications and foreign carrieraffiliation notifications. Comments and reply comments are due 30 daysand 50 days, respectively, after publication of the NPRM in the FederalRegister.U.S. Court of Appeals Upholds FCC Policy of Permitting SecurityInterests in License Sale ProceedsSince lenders cannot take a security interest in an FCC license becauseit would be possible for the lender to acquire the license without FCCconsent, the common practice is to take a security interest in theproceeds of the sale of an FCC license. In the Tracy BroadcastingCorporation bankruptcy proceeding, a District Court based on its readingof the Bankruptcy Code concluded that a security interest in theproceeds of the sale of a broadcast station license that was not enteredinto until after the licensee declared bankruptcy was not enforceable.The U.S. Court of Appeals overturned the District Court and stated thatthe lender’s security interest was in the economic value of the license,including the proceeds of the sale of the license. It concluded that thoserights vested before the licensee filed for bankruptcy and could not bedischarged.FCC Seeks Comment on Seven TCPA PetitionsThe FCC seeks comment on several requests for clarification ordeclaratory ruling regarding the application of the Telephone ConsumerProtection Act to autodialed and prerecorded message calls, textmessages, or faxes. For example, questions are raised about whetherpredictive dialers that are not used for telemarketing purposes and donot have the current ability to generate and dial random or sequentialnumbers are “automatic telephone dialing systems,” and whether theTCPA applies to users of Internet-to-phone text messaging technologyand similar technologies involving the storage and automatic dialing ofwireless telephone numbers. Comments on three of the petitions aredue by November 15, 2012 (with reply comments due by November 30),and comments on the remainder of the petitions are due November 23,2012 (with reply comments due by December 10, 2012).Additional Comments Sought on the Video Service Relay ProgramThe FCC seeks further comment on proposals to reform the structure ofthe video relay services (VRS) program and on proposed compensationrates. CSDVRS, LLC (a VRS provider) proposed that VRS accesstechnologies be migrated to a standard, software based VRS accesstechnology that could be used on commonly available off-the-shelfhardware. CSDVRS also proposed changes to industry structure thatwould in effect “separate the video communication service component ofVRS from the ASL relay CA service component by providing thefunctions of the former from an enhanced database.” The FCC furtherseeks comment on the Fund Administrator’s proposed rate structure,
  5. 5. proposed rates and cost calculations. Comments are due by November14, 2012, and reply comments are due by November 29, 2012.Wireline Competition Bureau Conducting a Virtual Workshop onConnect America Phase II Cost ModelThe FCC’s Wireline Competition Bureau has commenced a virtualworkshop to inform the development and adoption of a forward-lookingcost model through which the agency will provide Connect AmericaPhase II universal support. Participants may share information andideas with Bureau staff in near real-time by posting comments throughvarious subject-matter-specific online discussion forums that are hostedon the FCC’s website (which is available here). Posts also will beplaced in the relevant FCC dockets. Comments must be posted byNovember 19, 2012.Proposed Amendment to the Electronic Communications PrivacyActThe Senate Judiciary Committee adopted an amendment fromChairman Patrick Leahy (D-VT) to the Electronic CommunicationsPrivacy Act (ECPA). The 1986 law sets forth standards governing lawenforcement access to electronic communications. Chairman Leahy’samendment would require that, except for emergencies, the federalgovernment must obtain a probable cause warrant in order to obtain e-mail, texts, or other electronic communications, including documentsstored “in the cloud.” The amendment would help bring FourthAmendment safeguards into the digital age. Under current law, thegovernment can often access individuals’ e-mails and documents stored“in the cloud” by issuing a subpoena to the Internet service provider.Leahy’s measure also would amend the Video Privacy Protection Act(VPPA) to allow companies to obtain one-time consent from a customerto share user viewing histories on an ongoing basis and that consentmay be secured via the Internet. This disclosure provision would allowcompanies to link users and products. Currently, users of socialnetworking services must take an affirmative action, such as liking orsharing on Facebook, in order to associate themselves with a product.The VPPA portion of the bill is a variation of what was previously passedby the House of Representatives. Although the amendment wasadopted as a substitute, it was not reported out of committee. TheJudiciary Committee is expected to mark up the bill during the lame-ducksession in November.FCC Creates Public Safety Answering Point (PSAP) Do-Not-CallRegistryThe FCC voted to create a do-not-call registry of PSAP telephonenumbers and prohibit an operator of automatic dialing or robocall
  6. 6. equipment from calling or texting a telephone number on this list, otherthan for emergency purposes. The agency staff is working through theoperational details of the registry and will release a Public Notice whenthat process is complete. The effective date of these changes has yet tobe determined, but it will be no sooner than six months after the releaseof that Public Notice.FCC Adopts Wireless Communications Service (WCS) TechnicalRule Settlement ProposalIn order to resolve challenges to the FCC’s WCS technical rules thatwere adopted in 2010, a recent FCC order adopted the joint technicalproposal of AT&T and SiriusXM and made other rule changes. 20 MHzof the available 30 MHz WCS spectrum is now available for mobilebroadband services. The remaining 10 MHz is available for fixedbroadband services and will act as an interference buffer betweenmobile WCS operations and the adjacent spectrum used for SDARS.The technical rule changes will facilitate the deployment and co-existence of WCS and SDARS operations, provide a mechanism forresolving harmful interference on roadways, clarify when notice andcoordination of WCS operations is required, and extend the WCSconstruction deadlines.All-Digital Cable Systems Allowed to Encrypt Basic TV ServiceThe FCC has lifted the restriction on encrypting the basic service tier onall-digital cable television systems. According to the agency, thischange will allow operators to enable and disable service remotely,reduce theft of cable service, and provide regulatory parity betweencable operators and satellite providers. Cable operators that choose toencrypt basic service must comply with consumer protection measures,including providing notice and offering free set-top boxes orCableCARDs to certain subscribers for a limited time. In addition,Comcast, Time Warner Cable, Cox, Charter, Cablevision, and BrightHouse have committed to a process that will provide basic service tieraccess to certain third party devices that would other otherwise beuseless once the basic service tier is encrypted.FTC Holds Robocall SummitOn Thursday, October 18, 2012, the Federal Trade Commission (FTC)hosted a summit on stopping illegal robocalls. Industry and governmentleaders discussed at length the state of the industry, the current legallandscape, and technical issues such as caller-ID spoofing, data mining,and call-blocking technology.The summit culminated with the announcement of the FTC RobocallChallenge – a contest for the best new solution to block illegal robocallson landlines and mobile phones. Individuals, groups, and organizationsare encouraged to submit new proposed technical solutions or functionalsolutions and proofs of concept to the agency by January 17, 2013.Proposals will be judged on whether they work, are they easy to use,and what it will take to roll them out. Individuals, teams or small
  7. 7. organizations with fewer than 10 people are eligible to win a $50,000prize. Organizations with more than 10 employees are also encouragedto participate, but are not eligible for the cash prize. The FTC plans toannounce the results in April 2013.FCC Reminds ETCs That They Must Recertify Before Year EndThe FCC recently reminded Eligible Telecommunications Carriers(ETCs) and state agencies that they must re-certify the eligibility of thebase of their subscribers as of June 1, 2012 and must complete the re-certification process by December 31, 2012. Each ETC must report theresults of its re-certification process to the FCC and the UniversalService Administrative Company (USAC) by January 31, 2013. Wherestate agencies perform re-certification, the agencies must provide noticeto each ETC so that the ETC can initiate all de-enrollments byDecember 31, 2012 and file its annual recertification report by January31, 2013. The FCC also provided guidance on compliance with the one-per-household rule, and how states can opt-out of the National LifelineAccountability Database.Comments Sought on Lifeline Annual Recertification RuleThe FCC seeks comment on whether carriers that receive Lifelineuniversal support must recertify the eligibility of their Lifeline subscribersonce per calendar year or every twelve months. The issue was raised ina Petition for Clarification filed by General Communication, Inc. (GCI), inwhich the company argued that the “annual” recertification requirementin FCC Rule 54.410(f) should be interpreted as requiring recertificationonce per calendar year. GCI also claimed that interpreting the provisionas requiring recertification every 12 months imposes unnecessary andunjustified costs without any corresponding public benefit. Commentsare due by November 23, 2012, and reply comments are due byDecember 10, 2012.Liberty Media Seeks Consent to Acquire Control of Sirius XM RadioLiberty Media has filed applications with the FCC for regulatory approvalfor the company to take control of Sirius XM Radio. Through variousstock purchases and the conversion of its preferred stock, and uponapproval of the transaction by the FCC, Liberty Media will own morethan 50 percent of Sirius’ common stock. Petitions to Deny were due byNovember 1, 2012, oppositions are due November 13, 2012, and repliesare due by November 20, 2012.CTIA Releases Whitepaper on CybersecurityCTIA-The Wireless Association® released a white paper oncybersecurity in which the association stressed the need for sharing of“cyberthreat information among industry players and between industryand government.” More broadly, the paper provides: (1) a brief overviewof the cybersecurity landscape of the mobile communications industry;(2) the extent of its interdependence in responding to an environment ofrapidly changing threats, (3) a summary of the many cybersecurity
  8. 8. features and solutions at work today, and (4) a sampling of the manyadvanced protections available for device users. The white paper isavailable here.FCC Approves E-Rate Eligible Services List for FY 2013The FCC released the approved E-Rate eligible services list (ESL) forfunding year (FY) 2013, which will start July 1, 2013, and indicated thatthe window for filing FY 2013 applications for E-Rate support shouldopen no earlier than November 26, 2012. The FCC did not make majormodifications to the ESL, but it did consolidate all Priority One servicesinto a single list to reduce regulatory and administrative burdens onapplicants. Thus applicants are no longer expected to separate servicerequests into telecommunications services, telecommunications orInternet services. In approving the ESL, the FCC did not take action onthe issue of bundling of ineligible equipment with eligible services.Update on Mobility Fund Phase I AuctionThe FCC announced the results of the Mobility Fund Phase I auction inwhich nearly $300 million in funding will be distributed to help close gapsin mobile coverage in the U.S. The funding will cover deployment of 3Gand 4G service in 31 states. Winning bidders, which include T-Mobileand U.S. Cellular, must complete their projects within three years andallow other carriers to roam on their networks. Each winning biddermust submit a completed long-form application by November 5, 2012.Court Denies Stay in Viewability AppealThe U.S. Court of Appeals for the D.C. Circuit denied a request to staythe FCC’s Viewability Order pending judicial review, stating that thepetitioners did not meet the stringent requirements for issuing a stay.The Order allows the FCC’s “viewability” rules to sunset – these rulesrequire cable systems that offer both analog and digital service to carrydigital must-carry signals in analog format. Must-carry broadcastersargued that they will lose viewership and audience share if the Ordertakes effect, and that declining viewership will cause them to loseadvertising revenue. Broadcasters further claimed that absent a staythey will have to eliminate or reduce programming, which willdisproportionately harm low income and minority viewers.Ban on Certain Exclusive Programming Contracts Expires; FCCSeeks Further CommentsThe FCC did not extend its general ban on cable operators entering intoexclusive contracts with cable-affiliated programming vendors thatdeliver programming via satellite. Instead, the FCC will generally reviewthese agreements on a case-by-case basis, except that the agencycreated a rebuttable presumption that an exclusive contract involving asatellite-delivered, cable-affiliated Regional Sports Network (RSN) hasthe “purpose and effect” of “significantly hindering or preventing” acomplainant from providing satellite-delivered programming. The FCCalso sought comment on related program access issues, including
  9. 9. whether to establish a number of additional rebuttable presumptions.Comments are due by November 30, 2012 and reply comments are dueby December 17, 2012.FCC Seeks Comment on LightSquared Request for ReliefThe FCC seeks comment on a request from LightSquared that theagency declare that build-out requirements adopted in a prior order donot apply until the status of LightSquared’s authorizations have beenresolved. These conditions include that LightSquared provide terrestrialmobile broadband coverage to at least 100 million people by the end ofthis year. The FCC proposed in February 2012 to either suspendindefinitely or revoke all of LightSquared’s Ancillary TerrestrialComponent (ATC) authorizations, but the proposal is still pending beforethe Commission. Petitions to Deny and other comments onLightSquared’s request are due by November 9, 2012. Oppositions aredue by November 19, 2012, and replies are due by November 28, 2012.FirstNet Seeks Comment on Public Safety Broadband NetworkThe National Telecommunications & Information Administration (NTIA)released a Notice of Inquiry on behalf of the First Responder NetworkAuthority (FirstNet) seeking public comment on a network architecturepresentation made at the September 25 FirstNet Board meeting.Comment also is sought on network design, business planconsiderations and applications for public safety. The presentationmade by FirstNet Board member Craig Farrill outlined a possibleframework for designing the public safety network architecture in amanner that leverages existing resources and infrastructure ascontemplated by the Middle Class Tax Relief and Job Creation Act. Thepresentation explores three options, but appears to favor creating adiverse nationwide network with multiple wireless networks and systems.Comments were due November 1, 2012.FCC Initiates Comprehensive Satellite Licensing and OperationalRule ReviewFor the first time since 1996, the FCC is undertaking a comprehensivereview of its satellite licensing and operational rules. The rule review willeliminate unnecessary rules, update the rules to reflect technologicaladvances, and streamline the licensing process.The proposed rule changes include: • A change in the regulatory approach for licensing from “tell us how you built it” to “tell us how you avoid interference with your neighbors”;
  10. 10. • Elimination of unnecessary filing requirements; • Expansion of the number of earth station applications that are eligible for routine and streamlined processing; • Revising the information collected on space and earth station applications to reflect evolving technology; • Providing additional methodologies for use by earth station applicants to verify antenna performance; • Reinforcing emergency contact reporting requirements, consolidating annual reporting requirements, and removing unnecessary reporting rules; and • Simplifying and clarifying space station milestone requirements.Comments and reply comments are due 45 days and 75 days,respectfully, after publication of the NPRM in the Federal Register.FCC Announces Planned mHealth Task Force ReportImplementation StepsThe FCC announced plans to act on recommendations from a mHealthTask Force Report. The independent Task Force released itsrecommendations to the FCC, other federal agencies and to industry,with the goal of making mHealth a routine medical best practice by 2017.Among the specific actions that FCC Chairman Genachowski committedto taking include renewing the search for a permanent FCC Health CareDirector. He also indicated that the FCC would consider an Order tocomprehensively reform and modernize the Rural Health Care Programand an Order to streamline the FCC’s experimental licensing rules topromote and encourage the creation of wireless health device “testbeds.” The Commission will also develop and execute a health carestakeholder outreach plan to promote greater collaboration between theFCC and the health care sector.Internet Radio Fairness Act Introduced in House and SenateCongressmen Jason Chaffetz (R-UT) and Jared Polis (D-OR) andSenator Ron Wyden (D-OR) introduced the Internet Radio Fairness Act(HR 6480; S. 3609) in the House and Senate. The bill seeks to applythe same method for establishing royalty rates for Internet radio as iscurrently applied to cable and satellite radio. According to SenatorWyden, the current method used to set royalty rates for Internet Radiohas “led to webcasters paying five times the amount of royalty rates – asa percentage of revenue – as other digital music broadcasters likesatellite and cable.”Legislation Introduced to Prevent FCC Reforms to Rural SubsidyFormulaRepresentative Jeffrey Landry (R-LA) introduced legislation, the RestoreEffective Statistics to the Calculation of USF Expenditures Act of 2012(RESCUE Act), to prevent the FCC from decreasing payments to rural
  11. 11. telecommunications companies. Specifically, the bill seeks to end the FCC’s use of statistical caps in determining universal service support as part of the FCC’s 750-page order reforming the Universal Service Fund (USF). The RESCUE Act would also mandate that an alternative methodology for funding be created within 120 days. Though the bill has support from the National Telecommunications Cooperative Association, it currently has no cosponsors. It is unlikely Rep. Landry’s bill will receive consideration this year. However, the FCC’s order to reform the USF is being challenged in court by 29 petitioners and is expected to be heard in the coming months. ************* If you have questions regarding any of the items discussed above, or if you are interested in filing comments or receiving copies of filed comments in any of the FCC proceedings mentioned, please contact the Patton Boggs TechComm practice group. More information about our team can be found at information is not intended to constitute, and is not a substitute for, legal or other advice. You should consultappropriate counsel or other advisers, taking into account your relevant circumstances and issues. While not intended, thisUpdate may in part be construed as an advertisement under developing laws and rules.