On January 18, 2011, the Federal Communications Commission granted its approval to the acquisition by Comcast, the nation’s largest cable service operator and cable modem Internet access provider, of NBC Universal, Inc. (NBCU), the owner of the broadcast television network, several cable networks, Internet websites, and a leading Hollywood studio. The merger should fundamentally affect the businesses of programming, production and distribution across many platforms, including broadcast television, cable, online, and film. With significant control over both content and its distribution, the Comcast/NBCU merger created a potential incentive for the combined firm to raise prices and limit access to its programming to the disadvantage of its broadcast and online rivals. Working in coordination with the Department of Justice’s Antitrust Division, the FCC imposed a number of “targeted” conditions aimed at ameliorating the merger’s potential harms and quashing impending antitrust suits from states such as California. The Commission highlighted four key conditions to the government’s approval:
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.
K&L Gates recently published its Global Government Solutions 2011 Annual Outlook, which contains articles from around the firm on key governmental developments expected in 2011.
The Annual Outlook includes an article addressing developments affecting the Telecom, Media and Technology sector in 2011 by DC partners Marc Martin and Marty Stern, noting that the TMT sector enters 2011 with significant regulatory uncertainty and the FCC facing an uphill battle on many signature regulatory initiatives.
The article reviews the FCC’s net neutrality order and the challenges it faces in court and on Capitol Hill, discusses the recent FCC and Department of Justice approvals of the Comcast/NBCU transaction, and a number of additional issues getting significant focus in 2011. These include retransmission consent battles between broadcasters and cable/DBS providers and the FCC’s expected rulemaking proceeding on this issue, the Commission’s implementation of new communications accessibility requirements under the new 21st Century Communications and Video Accessibility Act, and continued efforts to reform the Universal Service Fund and make it broadband-centric.
Seattle partner Mark Wittow recently authored an article on cloud computing legal issues, specifically examining recent cases involving cloud computing issues and describing new types of claims that likely will arise as a result of the increased importance of internet-based connectivity (in contrast to desktop or local network-based resources) to provide all types of computing needs and related services. The article – “Cloud Computing: Recent Cases and Anticipating New Types of Claims” – appears in the January 2011 issue of The Computer and Internet Lawyer.
Mark’s article explains how cloud computing, as a leading means of digital distribution, has created new types of business models, which in turn have led to unique legal issues. Cases relevant to cloud computing arise in a variety of areas of law, including contracts, copyrights and privacy.
by Henry L. Judy (Washington D.C.), Holly K. Towle (Seattle), Samuel R. Castic (Seattle), Jonathan D. Jaffe (San Francisco).
On December 1, 2010, the FTC released a preliminary staff report entitled “Protecting Consumer Privacy in an Era of Rapid Change” that has the potential to materially change the privacy obligations of all businesses in the United States. The staff report poses important policy choices regarding who controls data and what information will freely flow in the United States. It proposes a broad privacy framework and articulates a number of new and strengthened data privacy obligations that are almost certain to increase business compliance costs and potential litigation.
While the staff report is only a preliminary recommendation, the final privacy proposal that emerges from the FTC will likely serve as both a guide for future enforcement actions, and as a basis for future legislation. The FTC is accepting comments on its proposed framework until the end of January 2011, and it is strongly recommended that businesses do so if they want to register their concerns before the FTC issues its final privacy framework.
by Susan P. Altman (Pittsburgh) and Todd A. Fisher (Dallas).
If your client or customer asks you to input data into its database, do you readily agree, or do you first ask if you have the right to do the inputting?
Most service providers are more than happy to show their responsiveness and helpfulness and sometimes forget to check whether they have the right to use the technology licensed by their client.
The Fifth Circuit in Compliance Source Inc. v. GreenPoint MortgageFunding Inc. reminded us recently that use of someone else’s technology, even if it is only on behalf of and for the benefit of a licensee, may require explicit permission of the owner (not just the licensee) and failure to obtain that explicit permission may result in a lawsuit.
Recent leaks to the New York Times, as reported in September and October, indicate that the Obama administration will next year be pushing for sweeping expansions of the Communications Assistance for Law Enforcement Act (CALEA). CALEA facilitates government surveillance by, among other things, requiring companies subject to the law both to design their systems so that the government can easily plug in and intercept communications in real-time and to provide assistance to the government in these efforts.
A task force comprised of representatives from DOJ, Commerce, the FBI, and other agencies, are discussing amendments to the law. These changes would greatly expand the reach of CALEA, would significantly increase the costs of non-compliance for covered companies, and would include other requirements which may fundamentally change business models for companies promising encryption and decentralized communication services.
You can access the free webcast by clicking here (free registration is required).
K&L Gates partner Marty Stern joined co-host Jim Baller, together with guests Cecilia Kang, Communications Industry Journalist, the Washington Post, Gigi Sohn, President, Public Knowledge, Jeffrey Silva, Senior Policy Director, TMT, Medley Global Advisors, and Scott Cleland, President, the Precursor Group, for a lively and provocative review of 2010, particularly of the day-old FCC net neutrality decision, and for some bold predictions for 2011.
The President signed the 21st Century Communications and Video Accessibility Act of 2010 on October 8, 2010 (the “ComVid Accessibility Act” or “Act”). The ComVid Accessibility Act expands various disability access requirements to VoIP phones, browser-enabled smart phones, text messaging, Internet-enabled video devices, on-line video of TV programming, TV navigation devices, and programming guides and menus, among other things.
Karen Peltz Strauss, who has the lead at the Federal Communications Commission (“FCC” or “Commission”) on implementing the ComVid Accessibility Act, appeared on a recent live program on Internet TV channel Broadband US TV and discussed the FCC’s “enormous mandate” to implement the new Act. Click here for a clip of Ms. Peltz Strauss’ comments on the program. (with permission from TV Worldwide). According to Ms. Peltz Strauss, “Every segment of the industry that has anything to do with broadband, television, including cable, satellite or broadcast, Internet-based television, as well as . . . Internet-based providers, traditionally regulated [telephone] companies, wireless companies” needs to be paying attention to the new Act. “Virtually every segment that has anything to do with communications or video programming is covered.”
On December 13-14, 2010, Law Seminars International presented a seminar exploring different cloud computing service models and the challenges they pose. They explored what cloud computing is, how it works and the benefits it offers.
Leading practitioners, including Dan Royalty (K&L Gates Seattle), described the contracting and compliance challenges their clients face on a daily basis and shared their strategies for meeting them. Among other things, the program provided pointers on identifying the legal and compliance issues around cloud computing and addressing them in cloud computing transactions.