Category: Industry Sectors

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Marriott agrees to $600,000 penalty for blocking personal hotspots
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FCC and Wireless Carriers Reach “Bill Shock” Accord
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FCC Releases Hurricane Irene Emergency Communications Procedures
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Mobile Telecommunications Market Nearly 2% of World’s GDP
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Net Neutrality Transparency Guidance Issued by FCC
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FCC Proposes to Extend Outage Reporting Rules to Internet-based Services [Updated: 6/9/11]
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Spectrum Auction Legislation Passes Senate Commerce Committee
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Verizon Challenges FCC Data Roaming Rules
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FCC’s New Pole Attachment Rules Become Effective
10
No Group Hugs: The Supreme Court Says “Yes” to Class Action Arbitration Waivers

Marriott agrees to $600,000 penalty for blocking personal hotspots

Marriott International, Inc. recently entered into a Consent Decree with the Federal Communications Commission to end an investigation into whether the company intentionally disabled consumers’ personal Wi-Fi hotspot connections at its Gaylord Opryland Hotel and Convention Center in Nashville, Tennessee. As part of the Consent Decree, Marriott will pay a $600,000 civil penalty and must file compliance reports with the FCC every three months for three years. Read More

FCC and Wireless Carriers Reach “Bill Shock” Accord

FCC Chairman Julius Genachowski recently announced an agreement with the mobile wireless industry by which it has agreed to abide by new voluntary guidelines to prevent “bill shock” through the delivery of advance warning messages to subscribers at risk of incurring high charges on their monthly mobile service bills. Bill shock is a term used by the FCC to describe when a consumer claims a sudden, unexpected increase in their monthly bill, usually as the result of exceeding limits on voice, data, or messaging plans. As a result of the agreement, the FCC suspended its plans to adopt new wireless billing regulations that it proposed last year, but warned that the Commission would not hesitate to adopt regulations in the future if the industry self-regulation proves ineffective.

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FCC Releases Hurricane Irene Emergency Communications Procedures

As Hurricane Irene threatens the Eastern seaboard with the potential to cause billions of dollars in damages, the FCC’s International Bureau released a public notice providing procedures for emergency communications in areas affected by the impending severe weather. Specifically, emergency requests for special temporary authority (“STA”) for satellite earth and space stations as well as submarine cables may be submitted by letter, e-mail, or telephone to be handled on an expedited basis by the International Bureau. Hurricane-related STA requests will be subject to the Commission’s “permit-but-disclose” ex parte rules. The International Bureau also designated special phone and e-mail contacts for satellite station and submarine cable operations during the emergency. 

Mobile Telecommunications Market Nearly 2% of World’s GDP

Representing the growing prevalence and indispensability of mobile telecommunications worldwide, a recent study estimates that the mobile industry comprises almost 2% of global gross domestic product. The report, released by technology consulting group Chetan Sharma, found that mobile telecommunications currently accounts for nearly $1.3 trillion in global revenue as subscriptions rise exponentially in the U.S. and international markets. Research indicates that an explosion in data usage through smartphones and other next-generation mobile devices represents a key driver of the mobile industry, bringing in approximately $67 billion in the U.S. and $300 billion worldwide. The U.S. wireless data market grew 26% and per-month data usage more than doubled from 2009 to 2010. The gains for the mobile industry follow a critical turning point late last year, as smartphones outsold personal computers for the first time in history and data devices such as e-readers and tablets saw a jump in sales. 

Global data usage growth has already led some telecommunications providers to rein in or terminate their previously unlimited data plans as worldwide demand continues to climb unabated. Cisco Systems estimated that 48 million people in the world have mobile phones while lacking electricity at home. The same report concluded that over 7.1 billion mobile-connected devices will be in use by 2015, nearly one mobile device for every person on the planet. As a result, the mobile industry will likely soon account for an even larger slice of the global GDP pie.

Net Neutrality Transparency Guidance Issued by FCC

In a preview of the disclosure obligations required by the FCC’s controversial net neutrality rules, the Commission recently issued advisory guidance to broadband service providers for meeting the transparency requirements of the 2010 Open Internet Order. The guidelines present a number of options by which broadband providers will disclose information regarding their network management practices, performance standards, and commercial terms to potential customers. The advisory guidance comes in response to requests from the broadband industry and Internet watchdog groups calling for flexible reporting requirements and regulatory clarity in advance of any enforcement of the transparency rules. Significantly, the advisory was issued by the Commission’s Enforcement Bureau and Office of General Counsel, reinforcing the potential for compliance exposure and that implementation issues will potentially be addressed in enforcement and complaint proceedings. The advisory guidance focused on five key areas:

      1.         Point-of-Sale Disclosures

The FCC clarified that the transparency rules do not require the distribution of information in hard copy or extensive training of employees regarding disclosure procedures. Broadband providers can normally meet their disclosure requirement by directing prospective customers to a web address at which the required disclosures are clearly posted and updated. In the case of “brick-and-mortar” retail outlets, broadband providers relying on the web for their point-of sale disclosure will need to make available equipment “such as a computer, tablet, or smartphone, through which customers can access the disclosures.”

      2.         Service Description

The Open Internet Order established an FCC broadband performance measurement project to assess network metrics such as connection speeds which broadband providers will need to disclose. The service description requirements vary depending on whether the provider offers fixed or mobile broadband. For fixed broadband, any provider which participates in the Commission’s performance measurement project can present the project’s results to customers to satisfy their disclosure requirement. Fixed broadband providers opting not to participate in the project may provide actual performance data based on internal testing, consumer speed reports, or reliable third-party sources.  

For mobile broadband, the FCC recognized the increased difficulties with obtaining accurate performance measurements. The guidance states that mobile providers “that have access to reliable information” may disclose the results of internal or third-party testing of mean upload and download speeds as well as mean roundtrip latency. The FCC will permit smaller mobile providers lacking advanced testing resources to provide a “typical speed range” experienced by most customers for each service tier offered along with a statement that the submitted data represents the provider’s best estimate of its service performance.

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FCC Proposes to Extend Outage Reporting Rules to Internet-based Services [Updated: 6/9/11]

Update [6/9/11]:  The FCC’s Notice of Proposed Rulemaking extending outage reporting requirements to interconnected VoIP and broadband-based services was published in today’s Federal Register.  Comments are due by AUGUST 8, 2011 and reply comments are due by OCTOBER 7, 2011.  As we previously noted, the proposed rules raise a number of the same jurisdictional issues as the FCC’s net neutrality order and other Commission initiatives extending various regulatory requirements to IP-based services, and will likely be hotly contested. 

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The FCC believes Internet-related outages are a growing problem for which providers lack sufficient accountability and consumers lack appropriate notice. To address these issues, yesterday the FCC adopted a Notice of Proposed Rulemaking which would require interconnected VoIP, broadband Internet, and broadband backbone providers to report service outages lasting longer than 30 minutes. The proposal would impose reporting obligations similar to those currently borne by wireline and wireless carriers, cable operators, and certain satellite providers, and represents the latest example of FCC efforts to layer traditional carrier regulations on VoIP and broadband providers. The Commissioners voted 4-0 in favor of the proposed rules (Commissioner Meredith Baker recused herself following her announced upcoming departure from the FCC to join NBC/Universal). Citing the recent natural disasters affecting Japan and the Midwest and Southern states of the United States, Chairman Julius Genachowski stated the reporting obligations would provide the FCC with the data necessary to rapidly respond to emergency situations.

Leading Internet service and VoIP providers immediately criticized the proposed new rules, arguing that regulations designed for traditional circuit switched phone service are ill-suited for Internet-based technologies. By contrast, public service commissions of states like California and New York hailed the proposal as an effective means of improving local emergency communications.

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Spectrum Auction Legislation Passes Senate Commerce Committee

With wireless Internet traffic expected to increase 26-fold over the next few years, the Senate Commerce Committee yesterday approved the Public Safety Spectrum and Wireless Innovation Act, sending the divisive legislation on to the full Senate for consideration. The bill further stokes the ongoing battle across industry sectors over how best to apportion spectrum and who should bear the burden of reallocation, addressing in one bill issues surrounding both the public safety D-Block spectrum and broadcast spectrum reallocation.

The cornerstone of the new legislation is the establishment of controversial “incentive auctions,” where television broadcasters and other licensees will voluntarily cede some of their existing spectrum inventory to the FCC in exchange for a share of the auction proceeds. The Act would also compensate broadcasters that retain their spectrum but agree to be “repacked” to adjacent channels, potentially freeing up new swaths of spectrum for public use. Auction income would be used to fund the construction and maintenance of a nationwide wireless broadband network dedicated to public safety services. Any surplus revenue obtained from the auctions would go to the U.S. Treasury targeted for deficit reduction. The Act further allocates 10 megahertz of spectrum known as the D-Block for the creation of the public safety broadband network and would permit public safety officials to lease capacity on their network subject to certain restrictions.

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Verizon Challenges FCC Data Roaming Rules

In a move expected by many industry analysts, Verizon Wireless filed a notice of appeal last week in the U.S. Court of Appeals for the District of Columbia challenging the data roaming obligations imposed on wireless carriers adopted by the FCC last month. The FCC order required all wireless carriers to allow customers of competitors to roam on their data networks and mandated “commercially reasonable terms” for intercarrier roaming agreements. The Commission adopted the data roaming order through a close 3-2 vote, with Commissioners Robert McDowell and Meredith Baker questioning the FCC’s authority to impose common carriage-like requirements on an information service.

Verizon’s appeal echoes the dissenting Commissioners’ concerns, characterizing the data roaming order as an arbitrary and capricious exercise of the FCC’s power that unduly burdens major carriers such as itself and AT&T. The company further contends that the new regulations are unnecessary due to the many data roaming agreements the company has with small- and medium-sized wireless companies. Verizon stated that the company now has less incentive to expand its wireless infrastructure if it must share its network with outside users. Meanwhile, consumer watchdog groups hailed the order as necessary to sustain competition during a time when AT&T’s attempted purchase of T-Mobile may lead to further market consolidation.

The data roaming appeal marks Verizon’s most recent challenge to the FCC’s statutory authority at the D.C. Circuit. Just last month, the court dismissed suits brought by Verizon and another carrier against the FCC’s net neutrality regulations because the carriers filed their complaints prematurely.

FCC’s New Pole Attachment Rules Become Effective

The FCC’s amended pole attachment rules, which are intended to expedite the rollout of advanced telecom, video and broadband services, promote competition and reduce the costs of network buildout, have been published in the Federal Register and have become effective.  The FCC’s pole attachment rules, adopted under Section 224 of the Communications Act, govern the rates and conditions imposed by local exchange carriers, electric and other utilities on cable television and telecom carriers for access to their poles, conduits, and rights-of-way to ensure access is provided in a nondiscriminatory manner and at reasonable rates. The FCC’s new rules include:

(1) a four-stage timeline governing utility grants of pole attachment access to speed the processing and provide greater administrative clarity to applicants. The new rules would limit utilities’ right to halt attachments for emergencies under a “good and sufficient” cause standard; 

(2) modified procedures to expedite attachment-related complaints. In order to encourage meaningful negotiations between utilities and those seeking attachment, the FCC will now require the parties to engage in “executive-level” discussions before filing a complaint with the Commission. The rule institutes additional system reforms designed to expedite the pole access and complaint processes; 

(3) changes to the telecommunications rate formula and procedures applied to pole attachments; and

(4) permitting local exchange carriers to file complaints with the Commission regarding pole attachment rates and conditions while confirming that wireless providers remain entitled to the same attachment rates and conditions as landline telecom providers.

No Group Hugs: The Supreme Court Says “Yes” to Class Action Arbitration Waivers

By Andrew Glass and Robert Sparkes III

The Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion continues the Court’s string of arbitration decisions bringing greater clarity to what has been a cloudy subject.  In this decision, the Court addresses the question of whether businesses can enforce class action waivers in their consumer arbitration agreements, answering unequivocally “yes.” Indeed, the decision is an important victory for businesses, and is likely to help businesses avoid the costs of what are more often than not meritless class lawsuits.

The Concepcion decision finds its roots in the Court’s recent decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corporation. There, the Court established the principle that parties cannot be forced to submit to class-wide arbitration unless they have actually agreed to do so. In Stolt-Nielsen the Court did not have the occasion to address whether parties can expressly waive arbitration on a class-wide basis. Now, applying Stolt-Nielsen to express class action arbitration waivers, Concepcion finds the Federal Arbitration Act (FAA) invalidates state law aimed at barring such waivers. State law is preempted by the FAA where it presents “an obstacle” to accomplishing Congress’s objective of promoting the efficiency of arbitration.

The telecommunications, consumer credit and finance, and sales industries, as well as other businesses that offer consumer services, are likely to benefit from the lower costs of individual arbitration. AT&T contends that consumers will also benefit from the streamlined procedures offered by arbitration.

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