Category: Wireless

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Mobile Telecommunications Market Nearly 2% of World’s GDP
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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
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No Group Hugs: The Supreme Court Says “Yes” to Class Action Arbitration Waivers
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FCC Launches Proceeding to Review AT&T Acquisition of T-Mobile and Answers Questions
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House Votes to Overturn FCC’s Net Neutrality Order
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Court Dismisses Appeal Against FCC’s Net Neutrality Rules
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Net Neutrality Supporters Delay House Subcommittee Vote to Reverse FCC Rules [UPDATED: 3/7/11]
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The FCC’s Net Neutrality Order: Substance and Status for Mobile Wireless Broadband

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.

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.

FCC Launches Proceeding to Review AT&T Acquisition of T-Mobile and Answers Questions

Today the FCC announced the opening of a docket and the issuance of a protective order related to AT&T’s proposed acquisition of T-Mobile USA. Presentations by interested parties before the FCC will be exempt from the agency’s ex parte procedures until the applications seeking FCC approval are filed. When filed, ex parte communications before the FCC must follow the "permit but disclose" ex parte procedures applicable to non-restricted proceedings, although it reserved the right to treat the proceeding as restricted.

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House Votes to Overturn FCC’s Net Neutrality Order

In a setback to one of the FCC’s key policy proposals, the House of Representative today voted in favor of a Resolution of Disapproval under the Congressional Review Act aimed at invalidating the Commission’s Net Neutrality Order adopted late last year. The vote follows months of heated industry and Congressional debate, including sharply partisan debate  about the Resolution’s merits, court challenges brought by wireless carriers, and procedural delays in bringing the Resolution to the House floor. While the Resolution seeks to overturn the FCC’s new anti-blocking, network management transparency, and traffic discrimination rules, it faces an uphill battle to become law. The Resolution would need to get passed by the Democrat-controlled Senate and get signed by the President. The White House recently said it plans to veto any measure overturning the FCC’s Net Neutrality Order.

Court Dismisses Appeal Against FCC’s Net Neutrality Rules

Today the FCC prevailed in the continuing skirmish over Net Neutrality in Washington. The U.S. Court of Appeals for the District of Columbia dismissed the lawsuits filed last January by Verizon and Metro PCS seeking to overturn the FCC’s Net Neutrality order adopted in December. The court found that the two wireless carriers filed their challenges too early and should have waited until the Net Neutrality order was published in the Federal Register. Both wireless carriers have indicated they will re-file their appeals.

Net Neutrality Supporters Delay House Subcommittee Vote to Reverse FCC Rules [UPDATED: 3/7/11]

In response to a request by House Democratic supporters of the Federal Communications Commission’s Open Internet (or Net Neutrality) order, the House Energy and Commerce Subcommitee on Communications and Technology has postponed its vote, scheduled for this morning, on the resolution to reverse the FCC order.  Although no new date has been announced, we understand that a hearing will likely be scheduled for next week.

Yesterday, Energy and Commerce Committee ranking member Henry Waxman (D-CA) and Rep. Anna Eshoo (D-CA), the ranking member on the Communications and Technology Subcommittee, wrote to Communications and Technology Subcommittee Chairman Greg Walden (R-OR) urging him to first hold hearings on the proposed resolution of disapproval under the Congressional Review Act in which supporters of the FCC’s order could be heard before having the vote.  Note that even if the House approves the resolution of disapproval, it must still pass the Senate and survive a presidential veto to successfully reverse the FCC’s order.

UPDATE: A hearing has been scheduled for March 9, at 10:30 a.m. in 2123 Rayburn House Office Building.

SECOND UPDATE (3/7/11): Representatives Waxman and Eshoo sent a letter on behalf of a group of net neutrality supporters in the House asking Chairman Walden and Rep. Fred Upton (R-MI), Chairman of the Energy and Commerce Committee, to allow lawmakers to offer amendments to the resolution of disapproval. The Democrats requested the Chairmen bring the disapproval measure as a regular House Resolution instead of under the Congressional Review Act.

The FCC’s Net Neutrality Order: Substance and Status for Mobile Wireless Broadband

On December 21, 2010, a divided Federal Communications Commission adopted its long-awaited, but highly controversial, Preserving the Open Internet order (“Order”), which requires broadband service providers to treat all web traffic equally and protect open access to the Internet for web consumers and other stakeholders. While Congressional and industry opposition continues to ferment, a closer look at the Order reveals that mobile wireless broadband providers will retain considerable flexibility in how they manage their networks when compared to their fixed provider counterparts.

The Order focused on three primary goals underpinning the Commission’s net neutrality policy: 1) transparency 2) no blocking and 3) no unreasonable discrimination. For “transparency,” both fixed and mobile providers must publicly disclose the network management practices, performance, and commercial terms of their broadband services. By contrast, the application of the “no blocking” condition differs depending on the type of provider. Fixed providers are subject to a broad obligation to not block lawful content, applications, services, or non-harmful devices. Mobile wireless providers are subject to a narrower obligation to not block lawful websites and applications that compete with the provider’s voice or video telephony services. Most importantly, the Order’s “no unreasonable discrimination” provision applies solely to fixed providers, leaving mobile operators free to favor or disfavor certain types of network traffic. According to the Commission, these new rules for mobile wireless providers will not harm customers because most consumers have more choices for mobile wireless service than for fixed broadband. The Commission also noted favorably the mobile industry’s recent moves towards openness, including the introduction of open operating systems like Android. As a result, when the rules finally go into effect, mobile wireless broadband providers will be exempt from the obligation to manage network traffic in a nondiscriminatory manner.

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