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

By J. Bradford Currier and Marc Martin

In a move likely to further disrupt the voice services market, Facebook recently announced that it will offer free calls via Wi-Fi for users of its Messenger app on Apple devices in the United States. The Messenger calling feature, tested in Canadian markets earlier this month, allows users to “call” their Facebook friends who have installed the Messenger app and linked their mobile number with Facebook by clicking their contact information. While data charges will still apply for Messenger calls made over a wireless carrier’s 4G or 3G network, there will be no separate charge for calls made over a device connected to the Internet via a Wi-Fi connection. Facebook’s announcement marks another example of the growing trend of using mobile apps to end-run traditional public switched telephone network (“PSTN”)-based voice services.

While Messenger will allow users of Apple’s mobile operating system to call Facebook friends, calls to landlines or devices using non-Apple operating systems are not currently available. The Messenger app can be used to make calls not only on the iPhone, but any device running Apple’s mobile operating system, such as the iPad tablet. Consumers with Messenger already installed on their Apple device will not need to update the app to access the new calling feature, which was automatically downloaded to existing users. Facebook has not indicated when the Messenger calling feature will be available in other countries or for non-Apple operating systems. 

Industry observers praised the new Messenger features as critical for consumers with poor wireless network coverage or who want to conserve cell phone minutes and costs. However, Facebook may face opposition from the wireless industry, which may view the Messenger app as an unfair competitive threat. If the wireless industry attempts to block the Messenger app, it could result in an interesting test of the “no blocking” provisions of the FCC’s Open Internet Order (i.e., net neutrality), which generally prohibit mobile wireless providers from blocking lawful applications that compete with the provider’s voice or video telephony services. In addition, if the Messenger app begins to offer the capability to make calls to and receive calls from the PSTN, it would be subject to the same regulatory requirements applicable to PSTN-interconnected VoIP service. 

Depending on the traction Facebook Messenger gets, the service has the potential to further disrupt markets for traditional landline voice services, which are already facing pressure from the wireless industry and interconnected VoIP providers.

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Update (11/22/11): The FTC extended the deadline for comments on the proposed COPPA reforms until December 23, 2011, citing the complexity of the questions and issues raised by the proposed amendments. The original comment deadline was November 28, 2011.

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The Federal Trade Commission recently announced a set of proposed revisions to the Children’s Online Privacy Protection Act (“COPPA”) which would expand the Act’s application to a greater number of websites and online services. COPPA requires that website operators notify parents and obtain parental consent before they collect, use, or disclose personal information from individuals under 13 years of age. Specifically, the proposed rules would expand the definition of personal information to include so-called “persistent identifiers,” which represent unique user identification information obtained for purposes other than for the support of the internal operations of a website or online service. The new rules would also extend COPPA protections to photographs, videos, or audio files that include a child’s image or voice. The FTC will consider a wider range of factors, including whether a website includes child celebrities and music content, when determining whether the site or online service is directed to children. The proposed rules rejected a number of alternative means of obtaining parental consent proposed by stakeholders and declined to establish a safe harbor for websites and online services which follow best practices guidelines issued by the Direct Marketing Association.

A K&L Gates Client Alert providing a detailed summary of the FTC’s proposed COPPA revisions and an analysis of the potential impacts of the reforms on websites and online services may be found here.

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By Susan Altman

The Ninth Circuit Court of Appeals, in its October 3, 2011 decision in Suzlon Energy Ltd v. Microsoft Corporation, has taken another step in defining the rights of people to protect their emails from being disclosed in civil court proceedings. The question before the Suzlon court was whether a party can require a U.S. electronic communication service provider to produce emails stored on a U.S. server for the account of a non-U.S. national without regard to the safeguards and restrictions imposed by the Electronic Communications Privacy Act of 1986 (ECPA). The court answered with a clear “no,” stating that the protections of the ECPA against unrestricted disclosure of emails by an electronic communication service provider apply to non-U.S. nationals as well as to U.S. citizens.

The Suzlon case originated out of an Australian civil claim by Indian wind energy company Suzlon against Indian citizen Rajagopalan Sridhar, a former employee accused of committing fraud against the Suzlon empire through a multijurisdictional shipping scam. In the course of the Australian action, Suzlon’s lawyers sought to obtain Sridhar’s emails, which resided in a Microsoft Hotmail email account on a server located in the U.S. Sridhar did not consent to the production of his emails (nor did he consent in a related case where Google was the electronic communication service provider). Microsoft objected to the production of the emails and both the U.S. District Court for the Western District of Washington and the Ninth Circuit agreed that Sridhar was protected by the ECPA. (In an interesting procedural sidenote, the court summarized the arguments presented to the lower court relating to assistance to foreign tribunals and outlined how a U.S. federal court ends up in the position of ruling on what is essentially a discovery issue relating to an Australian case.)

The Suzlon case provides useful guidance to electronic communication service providers offering cloud services in the U.S. Certainly those within the jurisdictional reach of the Ninth Circuit, and most likely service providers throughout the U.S., can operate with the expectation that the ECPA will apply to all customers using a U.S. account. The service providers will not have to distinguish between U.S. citizens and non-U.S. nationals in determining rights to stored emails. Litigants will have to follow the same procedures in filing motions to compel production regardless of citizenship. The decision will not affect issues of national security as it does not address law enforcement action in any way. The Suzlon case doesn’t change the world, but it does add a small measure of clarity.

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