TMT Law Watch : Washington, DC Telecom & Technology Attorneys & Lawyers : K&L Gates Law Firm

By Marty Stern

With Federal Communications Commission Chairman Julius Genachowski and Commissioner Robert McDowell announcing their departures, we have received many questions on the terms and tenures of the FCC Commissioners. Here, we provide in one place, a “TMT Cheat Sheet” that will help you fill your own brackets for the FCC Commissioners.

First, a little background. Under the Communications Act, the FCC has five Commissioners, with one designated as the Chairman by the President and with no more than three from the same political party. So not surprisingly, the Chairman and majority of the Commissioners are typically from the President’s party.

Commissioners are appointed for five-year terms, except when an appointee fills out the unexpired term of a predecessor. In that case, the Commissioner only gets appointed for the balance of the predecessor’s term. This is why one cannot just go to the FCC website’s Commissioner page, look at the date of appointment, and know when a Commissioner’s term expires.

For the current Commission, for example, Chairman Genachowski was appointed to complete the term of former Commissioner Jonathan Adelstein when he joined the Rural Utilities Service, and the Chairman’s term expires on June 30, 2013. Here are the terms of the remaining Commissioners:

• McDowell (R):  Exp. June 30, 2014
• Clyburn (D):  Exp. June 30, 2017
• Rosenworcel (D):  Exp. June 30, 2015
• Pai (R):  Exp. June 30, 2016 

Upon resignation of the Chairman and Commissioner McDowell, the Commission will have three sitting members, but will retain a Democratic majority. According to reports, this was one reason the Chairman waited for Commissioner McDowell, a Republican, to announce his resignation before the Chairman, a Democrat, announced his own.

An FCC Commissioner’s term does not really expire when it expires. Rather, the Communications Act allows a Commissioner to serve past the end of his or her term until a replacement is appointed and confirmed. So a holdover Commissioner, unless reappointed, can serve until the end of the Congress following the one in which his or her term expired.

Information on FCC nominations and Commissioner terms are available on Thomas, the online database of Congressional documents, through a site that tracks presidential nominations. The site can be searched both by nominee name and by nomination number. The entry includes information on when the Commissioner was nominated and confirmed, the expiration of his or term, and whether the Commissioner was appointed to fill the unexpired term of a former Commissioner and who that was. The entry also includes other interesting information, such as how long between receipt of the nomination by the Senate and confirmation.

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By Nick Milonas and Marty Stern

With 2012 coming to a close, Internet TV channel Broadband US TV recently featured a live, year-end review of key developments in the sector over the last year, with guests making various predictions on what 2013 will bring. The webcast archive is available here (free registration required).

In addition to Broadband US TV co-hosts Marty Stern of K&L Gates and Jim Baller of the Baller Herbst Law Group, the webcast featured special guests Gigi Sohn, President and CEO of Public Knowledge, Scott Cleland, President of The Precursor Group and Chairman of advocacy group NetCompetition, Jeffrey Silva, Senior Policy Director at Medley Global Advisors, and Paul Gallant, Telecom Policy Analyst at Guggenheim Securities, LLC.

Panelists engaged in a lively and robust hour and a half discussion, with numerous exchanges between public interest advocate Gigi Sohn and Scott Cleland, whose NetCompetition group promotes a free market, deregulatory broadband agenda and is a prolific critic of the Federal Communications Commission. The discussion also featured commentary from analysts Jeff Silva and Paul Gallant. Among other issues, the wide-ranging discussion covered:

Spectrum —­ Numerous developments on the spectrum front, including conflicting predictions on the likely outcome of the broadcast spectrum auctions, the FCC’s recent decision on AWS-4 spectrum held by Dish Network, and thoughts on the deployment by Dish of a new, commercial wireless service.

Net Neutrality — The state of net neutrality, predictions on the likely outcome of the pending DC Circuit challenge to the FCC’s Open Internet Order, and the range of potential responses from the FCC.

Network Transitions — The IP transition from a circuit-switched voice network to an IP-based network, the recent petition filed at the FCC by AT&T, and a discussion of the key issues that need to be resolved.

ITU Internet Governance — The recently-concluded International Telecommunications Union (ITU) World Conference on International Telecommunications (WCIT-12) and ITU Internet governance efforts, which according to panelists, will continue to play out over the next couple of years.

Copyright Reform — Copyright reform, including panelists’ discussions of the continued importance of the retransmission consent regime between broadcasters and cable/satellite providers, with updates and predictions on the pending court challenge to the Aereo service, which retransmits broadcast signals to subscribers using individual subscriber antennas at a headend location.

Gigabit Fiber Initiatives — Updates on new community broadband gigabit networks, with differing views on claimed subsidies provided by local governments for new networks and impacts vis-à-vis competition from commercial providers.

Telecom Legislation — Potential for telecom and broadband legislation in 2013 and key topics to be addressed, including potential rebalancing of rules governing relationships between broadcasters and cable/satellite providers.

FCC Leadership — Speculation on the potential departure of FCC Chairman Julius Genachowski, his potential replacement, and impacts on various pending broadband issues.

The show concluded with the guests’ boldest predictions for 2013, including the prospects for a Telecom Act rewrite, key issues to be faced by a new FCC Chair, likely court action on the FCC’s Open Internet rules, and the predicted outcome of a pending Supreme Court case (City of Arlington v. FCC), involving the “shot clock” adopted by the FCC for local wireless siting decisions and a unique twist on the deference owed to the FCC in matters of statutory interpretation under the Chevron doctrine.

You can access the webcast archive here (free registration required).

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By J. Bradford Currier

The Federal Communications Commission recently released its Final Plan for analyzing existing communications regulations to identify “duplicative, obsolete or repealed rules that should be taken off the books.” The Final Plan comes in response to President Obama’s Executive Order issued last July, which requested federal agencies to review their regulations and develop strategies for eliminating or streamlining burdensome or outdated rules.

The Final Plan stated that the FCC has already eliminated 219 regulations since 2009, including rules related to the E-rate program, Fairness Doctrine, international service reporting requirements, and tariff filing. The FCC highlighted its recent reforms designed to streamline the Universal Service Fund and Intercarrier Compensation regimes in response to the National Broadband Plan, as well as its Data Innovation Initiative aimed at eliminating unnecessary data collection obligations. The Final Plan identified a wide range of regulations that the FCC recently reviewed or is currently reviewing, including rules related to the Lifeline program, broadcast ownership, broadcast television spectrum allocation, Emergency Alert System, outage reporting requirements, wireless E911 accuracy, and wireless tower siting. The Final Plan set out three factors that the FCC will consider when reviewing whether to reform a regulation: (1) whether a regulation has been affected by changes in technology, new scientific research, or market structure; (2) whether a regulation disproportionately affects particular entities, caused unintended negative effects, or could result in greater net benefits to the public if modified; and (3) whether a regulation has been subject to frequent waiver requests or identified by the public as needing revision.

FCC Chairman Julius Genachowski called the rule reforms necessary to promote private investment, innovation, and job creation, while newly appointed Commissioner Ajit Pai suggested that some of the rules identified in the Final Plan may be reformed as part of the FCC’s upcoming biannual review of its regulations mandated by the Communications Act.

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By J. Bradford Currier, Marc Martin, and Marty Stern

In a move that FCC Chairman Julius Genachowski called “an important step towards enabling a new wave of wireless innovation,” the FCC approved the first-ever television White Spaces database and compatible device. Spectrum Bridge will operate the new White Spaces database and is authorized to begin service on January 26, 2012. Koos Technical Services received FCC approval to sell products authorized to operate within the White Spaces on an unlicensed basis.

White Spaces, sometimes referred to as “Wi-Fi on steroids” or “Super Wi-Fi,” consist of unused spectrum between licensed broadcast television stations. White Spaces devices operate on lower frequencies than normal Wi-Fi devices, allowing for better signal penetration into building interiors. White Spaces proponents suggest that unlocking White Spaces for unlicensed use will lead to an expansion in low-cost wireless Internet access options, an increase in public Internet “hotspots,” and improved connectivity for smart grids designed to make energy consumption more efficient.

In addition to Spectrum Bridge, the FCC has conditionally designated a number of entities as White Space database administrators that must receive final FCC authorization after a 45-day public trial before commencing commercial service. One such company, Telcordia, is in its public trial now and its White Spaces database can be accessed by clicking here. Under the FCC’s rules, authorized White Spaces devices must connect to an authorized White Spaces database, securely transmitting their location information, in order to receive a list of nearby unoccupied channels available for use. White Spaces devices, utilizing the authorized database, are required to protect a number of licensed services included in the database from potential interference, particularly broadcast television stations. Wireless microphone users and operators of temporary broadcast auxiliary service links will need to register their sites with the White Spaces databases in order to receive protection.

Spectrum Bridge will be initially limited to covering the Wilmington, North Carolina metropolitan area. The FCC placed the geographic limitation on Spectrum Bridge’s authorization after initial testing uncovered issues with database registration by a number of entities, which Spectrum Bridge promised to correct before it begins full operations.

Public interest groups hailed the FCC’s announcement, claiming that unlicensed White Spaces use will spur innovation and create jobs in the tech industry. While the scope of the new White Space plan remains limited for now, broadcasters have continued voicing concerns that White Spaces use interferes with their digital and high definition signals, and unfairly restricts broadcasters’ spectrum footprint.

It remains to be seen how White Spaces will fair in spectrum reform legislation that is currently being considered by Congress. The spectrum reform language was expected to be passed as part of the year-end payroll tax extension legislation, but was not included in the final two-month deal. The House version of the spectrum legislation would prevent certain auctioned spectrum from being used for unlicensed wireless services, over the objection of House Democrats and tech interests. If spectrum reform is passed as part of a one-year tax extension deal, there is some question as to whether White Spaces will be preserved in some form in the final bill. Reports indicate that today’s announcement will be the first of many White Spaces database and device authorizations, setting the stage for a major increase in unlicensed wireless service nationwide – assuming Congress can reach a compromise that preserves White Spaces in the pending spectrum reform legislation.

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By Marc Martin and Marty Stern

The Federal Communications Commission adopted what FCC Chairman Julius Genachowski termed a “once in a generation” reform to the Universal Service Fund (“USF”) and Intercarrier Compensation system (“ICC”) at its recent open meeting. 

The USF is a longstanding system by which fees are collected from traditional landline, mobile wireless and interconnected voice-over-internet-protocol (“VoIP”) providers, among others, (which, in turn, collect USF surcharges from their customers) to subsidize the provision of telecommunications services in high-cost areas, among other purposes, as authorized by statute and the FCC’s rules. The ICC is the system by which carriers compensate each other to originate, terminate or transport telecommunications traffic as it travels from points of origin to termination. Under the new rules, all eligible telecommunications carriers that receive USF funding would be required to offer broadband services to their customers. The proposed reforms are intended to expand broadband coverage to 7 million customers in underserved areas.

Pending release of the full text of the order, the FCC released an executive summary detailing the key reforms, including the creation of a Connect America Fund (“CAF”). The CAF will disburse approximately $4.5 billion per year in high-cost support to subsidize broadband deployment to homes, businesses, and community anchor institutions located in underserved areas. CAF funding would come from a gradual phase out of subsidies for traditional landline phone services. CAF funding will proceed in two phases, with service providers receiving $300 million for immediate broadband build-out projects beginning in 2012. Providers receiving funding in the first round of CAF funding must meet specific build-out milestones and provide service exceeding certain speed requirements. The exact details of phase two CAF funding will be developed through a Further Notice of Proposed Rulemaking that will accompany the order and will include competitive bidding for USF funding and payments based on proposed cost models included in the Further Notice. 

The new rules also establish a Mobility Fund, which will support mobile voice and broadband services offered by mobile broadband carriers. As with the CAF, Mobility Fund disbursements will proceed in two phases, with the first phase involving a “one-time” payment of $300 million, which will be awarded through a nationwide reverse auction in late 2012 where service providers will attempt to underbid competitors to receive funding. The FCC will require successful auction participants to deploy 4G service within three years or 3G service within two years. Service providers to Tribal lands will also receive $50 million in funding to bolster broadband development in these historically underserved areas. Phase two of the Mobility Fund will provide up to $500 million annually in continuing funding, with $100 million targeted for Tribal areas. Recipients of Mobility Fund payments will be obligated to meet public service obligations involving data roaming and information collection requirements. The Further Notice will also address additional details regarding the proposed distribution methodology, eligible participants, and public interest obligations under the Mobility Fund.

The FCC will also allocate at least $100 million per year for a new Remote Access Fund intended to provide affordable access in the most remote areas of the country through alternative technology platforms, including satellite and unlicensed wireless services. Details of the Remote Access Fund will be addressed in the Further Notice, with final rules expected in 2012 and implementation in 2013. 

The ICC component of the order takes aim at the alleged “arbitrage practices” of certain carriers involving traffic pumping and phantom traffic, which, according to the FCC, are aimed at unduly increasing a carrier’s receipt of ICC payments, such as practices to misrepresent the origin of traffic that terminates on other carrier networks. To provide a technical solution to curb these apparent abusive practices, the FCC will require all telecommunications carriers and providers of interconnected VoIP services to include the calling party’s telephone number in all call signaling, and require intermediate carriers to pass this signaling information on to the next provider in the call path.

Significantly, the FCC adopted a national “bill and keep” framework as the ultimate end state for traffic exchanged with a local exchange carrier, abandoning the current “calling-party network-pays” model. Over the next decade, carriers will gradually reduce their termination rates to bill and keep, with an immediate cap to most ICC rates as of the date of the order. By 2013, carriers will be required to bring interstate and intrastate termination rates into parity, with a phasing out of those rates over the next six years for price cap carriers and nine years for rate of return carriers. The order permits incumbent telephone carriers to offset the loss of ICC revenue through limited monthly customer charges. Given the limitations it has imposed on this recovery mechanism, the Commission believes that customers will receive more than three times the amount of the charges through benefits such as lower calling prices and increased value.

The USF and ICC reforms follow a public comment period in which over 20,000 filings were submitted to the rulemaking docket. In response to the FCC’s order, some consumer groups applauded the FCC’s imposition of public service obligations on support fund recipients, although other organizations noted the potential for customer price increases. A number of leading lawmakers on telecom issues also expressed support for the reforms, citing the importance of broadband access for economic growth. By contrast, wireless industry groups suggested that the reforms provide too little long-term funding for mobile services. State utility commissioners warned that the new rules threaten to preempt state authority over local telecommunications issues. Providers of VoIP services also saw their earlier concerns confirmed as interconnected VoIP services will be subject to the payment of access charges under the new rules. However, the FCC order will require traditional circuit-based telecommunications carriers to “negotiate in good faith” in response to requests from VoIP providers for IP-to-IP interconnection of voice traffic. Industry observers also expect court challenges to the new rules.

Update:  On November 18, 2011, the FCC released the full text of the Order and Notice of Proposed Rulemaking

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In a major step forward for what one telecom observer called “the defining saga” of Federal Communications Commission Chairman Julius Genachowski's tenure, the Office of Management and Budget approved the information collection requirements of the controversial 2010 Open Internet Order. The approved provisions concern new network management disclosures required from broadband service providers and formal complaint procedures under the net neutrality rules. The new rules are expected to be published in the Federal Register in one to three weeks and will go into effect 60 days later.

While the OMB’s approval marks the final regulatory hurdle before implementing the Open Internet Order, the publication of the rules is expected to set off a flurry of long-awaited legal and legislative challenges to the net neutrality rules. Both Verizon and MetroPCS are expected to refile their appeals of the Open Internet Order challenging the FCC’s authority, which were dismissed without prejudice by the D.C. Circuit earlier this year because they were filed before publication of the rules in the Federal Register. The net neutrality rules would prohibit Verizon and other fixed broadband providers from slowing or discriminating against the delivery of content (a process known as “throttling”) from third-party content websites such as Netflix. Reports indicate that online video issues will become more heated over the next few years as more viewers forgo traditional cable and satellite television services.

On the legislative side, opposition to the Open Internet Order reached its peak last April, when the House of Representatives passed a Resolution of Disapproval under the Congressional Review Act seeking to invalidate the net neutrality rules while also attempting to limit the federal funds available to enforce the new regulations. The disapproval resolution followed months of hearings and criticism regarding the initial delay in publishing the net neutrality rules. Republican opponents of the net neutrality rules on the House Energy and Commerce Committee, led by Chairman Rep. Fred Upton (R-MI), are expected to continue questioning the FCC’s jurisdiction to regulate broadband traffic.

While opposition to the net neutrality rules increases, the FCC has already taken steps to notify companies affected by the Open Internet Order of their compliance obligations, releasing draft guidance last July on the network management transparency disclosures required from broadband service providers once the rules become effective.

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By Marc Martin and Marty Stern

The FCC launched a review of its foreign ownership rules for common carrier radio licensees, such as wireless carriers, as well as certain aeronautical radio licensees and spectrum lessees in a Notice of Proposed Rulemaking adopted earlier this month. The NPRM aims to reduce the regulatory hurdles on companies petitioning the FCC to exceed the agency’s 25% foreign ownership benchmark, adopted under Section 310(b) of the Communications Act, which in general requires an FCC public interest finding for 25% indirect foreign ownership of common carrier, aeronautical, and broadcast licensees. According to the Commission, the streamlined procedures would reduce the number of required filings by more than 70%. The NPRM does not affect radio or television broadcast licensees.

The Commission noted the continued difficulties companies encounter under the agency’s foreign ownership rules which were last significantly revised in 1998. Specifically, companies must currently compile detailed records concerning the citizenship and principal places of business of their investors, including entities which hold only de minimus interests through intervening investments and holding companies. The NPRM also recognized that under the current rules, companies must repeatedly submit foreign ownership updates to the FCC. To reduce these burdens, the NPRM offered a number of suggestions for comment, including:

• Eliminating the requirement that companies obtain specific approval for named foreign investors, unless the foreign investor seeks to acquire an interest in the parent company that exceeds 25 percent or represents a controlling interest at any level

• Allowing parent companies to request specific approval for foreign investors named in their initial petitions to increase their interests in the parent at any time after issuance of the initial ruling up to and including a non-controlling 49.99 percent equity and/or voting interest

• Issuing foreign ownership rulings in the name of the parent company of the licensee, allowing for automatic extension of the parent’s ruling to cover any of its subsidiaries or affiliates, provided that the parent company remains in compliance with the terms of its ruling

• Authorizing parent companies with a foreign ownership ruling to have up to and including 100 percent aggregate foreign ownership by investors that are not named in its initial foreign ownership petition, provided that that no single foreign investor or “group” of foreign investors acquires an interest in the parent that exceeds 25 percent, or a controlling interest at any level, without prior FCC approval

• Permitting internal reorganizations of a parent company in certain circumstances where a new, foreign-organized controlling parent is inserted into the vertical ownership chain above the U.S. company

• Amending the FCC’s practice of issuing foreign ownership rulings on a service-specific basis and on a geographic-specific basis

In a statement accompanying the NPRM, FCC Chairman Genachowski predicted the proposed paperwork reductions would save companies both time and money while increasing transparency and predictability for foreign investors. Commissioner Clyburn similarly highlighted the importance foreign investment plays in encouraging broadband deployment and economic growth. By contrast, Commissioner Copps questioned whether the current review process actually discouraged foreign investment and warned that the elimination of some foreign ownership rules carries potential risks.

Comments on the NPRM will be due 45 days after its publication in the Federal Register, which is pending, and reply comments will be due 30 days later.

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