CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

New BIP deadline: March 29; New BTOP deadline for CCI projects: March 26

NTIA and RUS have announced extensions of the deadlines for some, but not all, submissions in response to the Second Notice of Funds Availability (NOFA) issued as part of the Big Money Hand-out made possible by the American Recovery and Reinvestment Act of 2009.  Applications for Broadband Initiatives Program (BIP) funding will now be due at RUS by 5:00 p.m. (ET) on March 29, 2010. Applications for Comprehensive Community Infrastructure (CCI) projects under the Broadband Technology Opportunities Program (BTOP) will now be due at NTIA by 5:00 p.m. (EDT) on March 26, 2010. 

It’s not clear why one agency opted for March 26 while the other opted for March 29, but would-be applicants should be sure to note that the deadlines for NTIA and RUS applications responsive to the Second NOFA are no longer identical.

Also, the extensions do NOT apply to requests for NTIA/BTOP funds for Public Computer Center projects or Sustainable Broadband Adoption projects. The deadline for applications for such projects remains 5:00 p.m. (EDT) on March 15.  Check out our blog post about the Second NOFA for further details about the different types of projects.

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Chairman confirms upcoming effort to re-purpose TV spectrum for mobile broadband

For several months now the question on many TV broadcasters’ minds has been: will they or won’t they take away my spectrum and turn it over to smartphones? And while various FCC higher-ups have dropped conflicting hints about what the answer might be, the fact is that no one has expected to know for sure until the release (currently set for March 16) of the FCC’s National Broadband Plan (NBP).   But late this month Chairman Genachowski tipped the Commission’s hand, albeit without adding much practical detail. 

The FCC’s answer appears to be: TV spectrum is not being used efficiently, and would be better allocated to mobile broadband use, so the FCC plans to devise some mechanism to encourage TV licensees to cough up some or all of their spectrum in return for the prospect of taking home some portion of the proceeds when their spectrum is auctioned off for broadband.

According to the Chairman, the NBP will call for the “freeing up” of 500 MHz of spectrum over the next decade.  And one way the FCC hopes to achieve that, at least in part, will involve “establish[ing] market-based mechanisms that enable spectrum intended for the commercial marketplace to flow to the uses the market values most.” 

Can you spell “a-u-c-t-i-o-n”?

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Limited non-educational use of E-Rate-subsidized services OK’d temporarily with strings attached, as FCC considers making change permanent

For more than a decade schools and libraries have been eligible, under the E-Rate program, for discounts on a number of telecommunications services, Internet access, internal connections and related maintenance.  The idea has been to promote the availability of affordable Internet connections for educational purposes. And to assure that the program is used for that focused goal, the FCC’s rules governing the E-Rate program have flatly prohibited schools from allowing E-Rate-subsidized facilities to be used for anything other than educational activities.

But now the Commission has loosened that prohibition, at least temporarily: through June 30, 2011, E-Rate-subsidized service in schools may be made available for use by the general community when school is not in session, as long as the cost to the government is not increased and the public is not charged for the Internet access. In the meantime, the FCC has invited comments on whether to make that change permanent.

Since the inception of the E-Rate program, subsidized service at schools could be used only for “educational purposes”. That means students and faculty may use the service at any time, but the general public may never do so. The result is that school computers are often idle at night, on weekends or during school breaks, when they could be put to use by adults who cannot afford broadband service at home or who live in geographic areas where broadband is not readily available. In the current difficult economic circumstances, Internet access could be used to apply for jobs, fill out government forms, and the like.

The FCC gets the point, so on its own motion it has declared that, from now through June 30, 2011, schools may choose to allow members of the community at large to use school equipment and Internet access when students are not around. But to assure that those facilities continue to be primarily dedicated to education, the FCC has attached strings:

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Billions in broadband stimulus cash up for grabs – Deadline for applications: March 15, 2010

In the American Recovery and Reinvestment Act of 2009, known to some as the Gravy Train Act, but more generally known as the Stimulus Act, Congress allocated $2.5 billion to the Rural Utilities Service (RUS) and $4.7 billion to the National Telecommunications and Information Administration (NTIA). The money was to be doled out, in the form of grants or loans, to worthy projects designed to bring new or improved broadband service to America. As we reported last year, NTIA and RUS originally planned to make these awards in three tranches beginning in June, 2009 and ending before the September 30, 2010 award deadline imposed by the Stimulus Act.

Unfortunately, it’s harder to give out millions of dollars than you might expect. So far these agencies have managed to open only one application tranche, and have issued only a handful of grants.   Of course, they did get far more applications (2,200) than they had expected, which slowed things down. And the applications themselves required vast amounts of supporting data that was onerous in the extreme (the word “overkill” comes to mind) that had to be generated by the applicants and digested by the agencies. That slowed things down, too.

With the September 30 deadline fast approaching, each of these agencies has issued a second “Notice of Funds Availability” (NOFA) to distribute the remaining Stimulus Act funds for broadband projects.  Given the time constraints and the amounts of money already applied for, the third application window has been eliminated – meaning that this is the last opportunity to make a grab for any of this stimulus cash.    The deadline for filing applications for these funds is March 15, 2010. While applications can be submitted as early as February 16, there is no advantage in filing early other than beating the last minute rush.

Even if you are familiar with the NOFAs issued last year for the first tranche of funding, you still need to study these new NOFAs closely, because substantial changes have been made to the funding programs. Happily, many of these changes simplify what was universally understood to be an unnecessarily complex application process developed for tranche 1. Other changes relate to the prioritization of the awards.

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January 31 brings deadlines for payment of annual minimum fees and filing of election notices

Attention NONcommercial webcasters. January 31, 2010 brings deadlines for you just as it does for your commercial counterparts.  But the January 31, 2010 deadline – for making the annual payment and, if appropriate, filing a Notice of Election to participate in one of the available Noncommercial Webcasting Settlement Agreements – is perhaps more important to noncommercial webcasters. That’s because most noncommercial webcasters, whether or not they have elected to participate in a settlement agreement, will end up paying the $500 per channel annual minimum payment and nothing more (unless the webcaster exceeds the allowable 159,140 aggregate tuning hour monthly maximum triggering additional payments). So there’s no reason that you’d be late with this lone payment.

Timely filing of a Notice of Election to participate in either the General Noncommercial Webcasting Settlement Agreement or the Noncommercial Educational Webcasting Settlement Agreement is equally important, as it can alleviate some of the onerous playlist filing requirements the webcaster must make through the year. 

What follows is a summary of the immediate and ongoing filing and payment obligations applicable to noncommercial webcasters for 2010. Note that, for webcasting purposes, the commercial v. noncommercial distinction rests with the webcaster’s status under Section 501 of the Internal Revenue Code, not the webcaster’s FCC license (if there is one). 

If you are (a) a webcaster exempt from taxation under Section 501 of the Internal Revenue Code (or have applied for that status) or (b) a government organization operating your webcast consistent with your public purpose, read on. If none of these apply, you should go here for our similar summary applicable to commercial webcasters.

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The January 31 deadline for payment of annual minimum fees and filing of election notices is fast approaching

This the first, last, and,  possibly, only reminder to all commercial webcasters that January 31 is the deadline for filing the first of what will be many Statements of Account to SoundExchange with payment of copyright royalties for performance of sound recordings over the Internet during 2010. For some of you, there is a concurrent requirement to file a Notice of Election to obtain or retain the special status offered under one of the many webcasting settlement agreements. 

If you are a noncommercial webcaster (determined not by your FCC license but by whether the webcasting entity is exempt from taxation under Section 501 of the Internal Revenue Code), click here for a similar guide laying out your deadlines. 

Set forth below is a summary of the immediate and ongoing obligations for every commercial webcaster in 2010. And guess what? It's now in 3D! On Ice! Well, not exactly, but we do offer a direct link to every form as it appears on the SoundExchange website.

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Maine Senator urges FCC to wrap up pending proceedings before committing to spectrum policy

Like famed producer the Bruce Dickinson – who had a fever the only prescription for which was cowbell (actually, MORE cowbell) – the FCC in recent months has seemed to have a fever the only prescription for which is “MORE Broadband”. And that fever, in turn, has sent the agency on an intense quest for available spectrum, a quest which has led the Commission to ogle the TV band as a potential source of spectrum ripe for re-purposing. 

But now Senator Olympia Snowe (R-ME) has sent a letter to the Commission which may encourage TV broadcasters fearful that their spectrum is doomed to be sacrificed in the short term to the seemingly bottomless Broadband Maw. Before they get too far down the line in designing the National Broadband Plan, Senator Snowe urges the Commissioners to “clear the table” of five long-running proceedings relating to approximately 100 MHz worth of “currently unused or severely underutilized” spectrum. She refers in particular to:

• WCS Band at 2305-2320 MHz and 2345-2360 MHz;
• AWS-3 Block spectrum at 2155-2175 MHz;
• 700 MHz D Block at 758-763 MHz and 788-793 MHz;
• 2 GHz Mobile Satellite Band at 2000-2020 MHz and 2180-2200 MHz;
• H Block spectrum at 1915-1920 MHz and 1995-2000 MHz ; and
• J Block spectrum at 2020-2025 MHz and 2175-2180 MHz

The issue of spectrum availability is not new to Senator Snowe. She is a co-sponsor of S.649, a bill calling for a comprehensive and accurate inventory of spectrum between 300 megahertz and 3.5 gigahertz. (While that bill has shown little sign of life since its introduction early last year, the Senator has expressed her continued optimism that it will be passed by the Senate this year.)

Whether or not Senator Snowe is correct with respect to the particular details of each of the proceedings she lists, she is definitely correct in her underlying point: the Commission really should have a handle on exactly what spectrum is available, and how it is being used, before the agency starts to scavenge one particular portion of the band, parting it out like car thieves cannibalizing a boosted Escalade. After all, if there is considerable spectrum just sitting around unused – whether that’s because the FCC hasn’t yet handed it out to anyone to use, or because the folks to whom it has been handed out are simply warehousing it – it makes sense to focus on using that spectrum first, before disarranging other folks who are, in fact, actually using the spectrum they have.

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Chief Judge to FCC lawyer: “How do you want to lose?”

If a recent oral argument before the U.S. Court of Appeals for the D.C. Circuit is any guide, the FCC may have a tough time imposing its proposed network neutrality policies. Unless Congress steps in to give it a hand.

The case (argued on January 8) arose from complaints that Comcast’s Internet service had deliberately and selectively interfered with BitTorrent file-sharing services. Comcast claimed it was just managing traffic on the network; opponents suspected Comcast of trying to shield the parent company’s cable operations from competition.

The FCC sided with the complainants. It did not fine Comcast, but imposed conditions intended to ensure that the practice had ended. Read the details here.

Comcast brought an appeal to the D.C. Circuit, raising two main grounds: (1) the FCC had no actual rule in place prohibiting what Comcast did (due process argument); and (2) the FCC could not have had such a rule because it lacks authority over an Internet provider’s handling of content (jurisdictional argument).

While it is always risky to predict the outcome of a case on the basis of oral argument, things look bad for the FCC – not only as to the Comcast case, but also in regards to its stated goal of adopting network neutrality rules.

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Congress consents to roll the NBP deadline back from February 17 to March 17.

Maybe now the FCC will look at requests for extensions of deadlines more sympathetically.

The Commission has been working at breakneck speed for months in an effort to meet the February 17 deadline which Congress imposed for the delivery of the National Broadband Plan. It’s a huge undertaking, as our readers have probably figured out from our efforts to chronicle the FCC’s myriad inquiries, notices, etc.

But despite an “all hands on deck” total immersion approach involving pretty much every warm body on the Commission’s staff, it became apparent to the FCC higher-ups that they won’t be able to make the February 17 deadline. Since that deadline was set by Congress, the FCC couldn’t just ignore it. Rather, the Commission had to ask for an extension from the Senate and House Commerce Committees – just like so many of us have to ask the FCC for extensions every now and then. So Chairman Genachowski went to Congress and asked for four more weeks.

At least one published report indicates that, fortunately for the Commission, Congress was feeling charitable: word is that the NBP deadline has officially been shifted four weeks, to March 17.

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Agency addresses spread of digital voice technology 

The telephone system formerly relied on the technology called “circuit switching”: by dialing a number, a caller caused the equipment to set up a temporary, private connection with the person being called. This is inherently an analog technology. Now, however, calls are increasingly carried in data packets moving over heavily shared facilities, either the on public Internet or on private networks that operate in much the same way. But the FCC rules are still geared to the old analog circuit-switched system. They are not well suited to handling IP-related innovations like VoIP and Google Voice. Recently we harrumphed that these advances would soon trigger the need for a regulatory overhaul.

Either our harrumphings carried across the Potomac, or else (and more likely) the people at the FCC saw the same facts we did and reached similar conclusions. The FCC has now released a short public notice with the momentous title, “Comment Sought on Transition from Circuit-Switched Network to All-IP Network.” It solicits input on the contents of a possible future Notice of Inquiry. Responses to the NOI in turn would inform a Notice of Proposed Rulemaking. And comments in response to the NPRM would help the FCC to formulate new rules. With three comment cycles planned, and allowing a year or two for each, the rules will take a while. (If you’re inclined to stake out your position early in the process, the deadline for responding to the initial comment invitation is December 21, 2009.)

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Comment deadlines set in “parental empowerment” inquiry

Last month we reported on the FCC’s Notice of Inquiry into parental empowerment. That notice has now made it into the Federal Register, which in turn establishes the comment and reply comment deadlines. If you’re moved for whatever reason to chime in on any or all of the questions posed in the notice – sample question: Is there “a minimum level of media literacy that parents, teachers, and children must have to ensure that children can participate effectively in modern society and enjoy the benefits of electronic media while avoiding the potential harms” – you have until January 25, 2010. Reply comments are due on February 22, 2010.

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It is hard (or maybe not so hard) to believe that back in February when the American Recovery and Reinvestment Act was enacted, the administrators at the Departments of Agriculture and Commerce were promising that grants would start to be made in May, with most of the first round funds awarded in June.  Here we are fast approaching December and nary a grant for infrastructure projects has been made.  To be sure, wizened and calloused observers of the bureaucratic process predicted that it would take considerably longer than the original estimates, but the same wizened and calloused observers also expected that, having later committed to an autumn award date, the BIP and BTOP folks would have been driven to get something out by September, October or even November, if for no other reason than to keep their street cred. The difficulty seems to be that they made the application process so cumbersome, but nevertheless got so many applicants, that it's taking months to sift through all the requests.   Surprisingly, when millions of dollars in free money is put up for grabs, lots of people ask for it.

BIP and BTOP are now moving seriously into Phase II of the first round. Phase II is like that part of the Miss America pageant where the field is reduced to 10 swimsuit-clad lovelies with preternaturally gleaming smiles, only here no Miss Congeniality points are awarded. At the same time, the administrators are thinking ahead toward the next round of applications. It had already been widely reported that the number of rounds would be reduced from three to two. The next round is supposed to be opened early in 2010, which means that the rules and procedures governing that round need to be established pronto.  The folks in charge have therefore released a "Request for Information" with a very abbreviated comment date seeking input on both the procedures that should apply to the next round and what funding criteria should be substantively applied. Would-be applicants should take heed, since changes in both of these categories could have a serious impact on their chances of obtaining funding.

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FCC’s proposed rules good on paper, may do little in practice

The IEEE, a widely respected association of electrical engineers, posted the reflections of FH&H lawyer (and former engineer) Mitchell Lazarus on why the FCC’s proposed network neutrality rules may miss their target.  Read the piece here:

http://spectrum.ieee.org/telecom/internet/policing-net-neutrality

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Giving ISPs a choice about giving customers a choice

As we have reported elsewhere, the FCC has proposed rules to mandate “network neutrality.” Those rules would bar a broadband Internet service provider (ISP) from, among other things, discriminating for or against a provider’s content.

The big ISPs are implacably opposed to all such rules. We own the networks, they say, and we can run them any way we want. On the other side, in favor of the rules, are content providers who fear discrimination by the ISPs. The big providers in particular, like Google, not only want to compete with the cable and telephone companies, but they want to do it through the cable and telephone companies’ own ISPs.

Ironically, the problem that network neutrality would solve is one of the FCC’s own making.

In the dial-up days, there were two kinds of ISPs: (a) the ones run by the phone companies, and (b) all the others. The phone company ISPs had an enormous potential advantage in easy access to the innards of the phone system. Other things being equal, they could have out-performed and undersold everyone else and had the industry to themselves. But the FCC wanted a competitive market. In the 1985 Computer III proceeding, it required the phone companies to offer to all ISPs the same functional network access available to the phone companies’ own ISPs. (This oversimplifies a very complex ruling; for more, click here.)

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FCC solicits comments, information on interplay of broadband deployment and education at all levels

As part of its ongoing efforts to get a handle on All Things Broadband before the FCC’s homework (i.e., the National Broadband Plan, a/k/a the NBP) is due in February, the Commission has released yet another Public Notice, this time seeking comments on issues relating to the educational use of broadband. 

To ensure that the information is thoughtfully prepared and presented in a manner that will maximally assist the Commission to draft the NBP in the next three months, the Commission generously gave parties 17 days to prepare their submissions. Initial comments are due to be filed by November 20, so you can get that project off your desk before Thanksgiving. No such luck with reply comments: they’re due by December 11.

The latest Public Notice invites comments on virtually every aspect of the educational use of broadband technology.  By “educational”, it means everything from pre-K to grad school, including both institutions and students. The kind of input it’s looking for? Pretty much anything and everything, including “implementation strategies, budgets/expenses, financing strategies, programmatic goals, measured outcomes, and other detailed operational and strategic information about the programs using broadband for educational purposes.” Again, this information is to be presented by November 20.

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Trouble in River City?

If you’re looking for a good example of your tax dollars being spent – spent, yes, but not necessarily being put to work – you should check out the Notice of Inquiry (NOI) issued by the Commission on October 23. Entitled “Empowering Parents and Protecting Children in an Evolving Media Landscape”, it reads like a cross between an undergraduate course in child psychology and a weekend program on “modern parenting” that might be offered at the local community center. 

While no one can fault the Good Intentions presumably underlying the NOI – after all, Looking Out For The Kids ranks right up there with apple pie, the flag and motherhood in the pantheon of unassailable motivations – the NOI is grossly flawed in numerous ways. It lacks legislative authority, raises the specter of unconstitutionality, largely duplicates an inquiry just completed by the Commission, inserts the FCC into a regulatory area which other, presumably better suited, agencies are already working, and asks questions which are unanswerable.

If this is how the Genachowski Commission plans to deploy its resources, we’d all better fasten our seatbelts – it could be a bumpy night.

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Regular readers of the CommLawBlog who know a lot about Network Neutrality (see, e.g., recent posts here, here and here) also knew the FCC planned to open a proceeding to adopt formal Net Neutrality rules. True to its word, on October 22 it issued a Notice of Proposed Rulemaking (NPRM) that did just that.

In 61 pages of detailed legal, economic, technical and policy analysis, the FCC proposed:

• to codify the four principles the Commission previously articulated in its 2005 Internet Policy Statement;
• to codify a fifth principle that would require a broadband Internet access service provider (IASP) to treat lawful content, applications, and services in a nondiscriminatory manner;
• to codify a sixth principle that would require an IASP to disclose information concerning network management and other practices reasonably required for users and providers of content, applications and services to enjoy the protections specified in this rulemaking; and
• to make clear that the principles are subject to reasonable network management, and would not limit an IASP in delivering emergency communications or addressing the needs of law enforcement, public safety, or national or homeland security.

The NPRM also requests comments on:

• a category of “managed” or “specialized” services, how to define them, and what principles or rules, if any, should apply;
• how the new rules should govern non-wireline forms of Internet access, such as mobile wireless (an especially fertile ground for dispute), unlicensed wireless, licensed fixed wireless, and satellite; and
• enforcement procedures that the Commission should use to ensure compliance.

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An FCC letter shows why new phone services like Google Voice must soon trigger a regulatory overhaul.

An innocuous-looking letter from the FCC to Google marks the beginning of the end of the telephone system we have known for the past 130 years.

The old phone system, the one started by A.G. Bell and still in use today, has a dedicated connection between each pair of people talking to each other. Whether plugged in by a switchboard operator, in the early days, or dialed by the user, later on, whether carried by copper wire, microwave radio, satellite signal, or fiber-optic cable, every individual phone conversation has its own separate circuit which is (a) set up for just that one call and (b) taken down when the parties hang up. This is called a “circuit-switched” system.

The FCC has regulated this set-up since 1935. The details evolved over the decades. But the FCC rules, then and now, have always been geared specifically to a circuit-switched system.

One element of these rules recently became controversial. When you place a long-distance call to your Aunt Mildred in Boston, say, you pay the long-distance carrier, and it in turn pays the Boston phone company to accept the call and ring Aunt Mildred’s phone. In telephone-speak, the money changing hands is called an access charge for terminating the call. It is an important source of revenue for local phone companies. If Mildred lives in rural South Succotash, the access charges are higher, because it costs more to run a phone system where the customers are farther apart.

The differences in access charges present an opportunity for abuse. Some companies that generate a lot of inbound long-distance traffic, like conference-call bridges and sex-call services, deliberately locate in rural areas. The incoming calls then generate high access-charge revenues for the local phone company, which may split the take with the conference-call or sex-call provider. The practice is called traffic pumping. For now, at least, it is legal.

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Final playlist reporting requirements for webcasters announced

After years of proposals and deliberations and interim policies, the Copyright Royalty Board (CRB) has at long last published “final rules” dictating the playlist reporting requirements for webcasters. But like so many things in this day and age of fast-paced technological and regulatory development, the “new” rules, which take effect on November 12, 2009, are likely to be of little more than academic interest to many. That’s because intervening events – including multiple separate agreements among various webcaster groups and SoundExchange – have largely marginalized the significance of the CRB’s role in this aspect of webcasting.

The rules won’t be of particular interest to

• “smaller” Internet-streaming broadcasters, i.e., operators with such a small on-line listenership that they never exceed the $500 annual minimum payment in a given year, to whom the full-time “census” reporting of playlist information does not apply; or
• broadcasters who have elected to participate in one or more of the agreements (general noncommercial and noncommercial educational or CPB or commercial broadcaster) to settle outstanding appeals of the March 2, 2007 decision of the CRB to institute rates and terms for the statutory license for the period 2006-2010. 

Still, if you are in the dwindling universe of webcasters who remain subject to the CRB’s reporting requirements, you should familiarize yourself with the “new” rules.

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A good slogan perhaps, but NOT the law

As the FCC prepares to impose its version of net neutrality upon wireless and wired Internet service providers (ISPs), the Internet is buzzing with comments on how such governmental intervention may affect the future development of the Internet. 

On the one hand are the application service providers (with Google leading the charge) who promote net neutrality as necessary for the preservation of the Internet. These folks did not invest in any of the transmission facilities that comprise the hardware pipeline of the Internet – but they are happy to rely on that pipeline to distribute their services.

On the other side are the ISPs (including folks who DID invest in the hardware) and technical experts who believe net neutrality is a solution in search of a problem and a dangerous overlay of regulation upon a dynamic, constantly evolving set of relationships.

This battle presents a range of legal issues. The question mentioned perhaps most often involves the FCC’s authority to regulate at all here:  the Commission (with a thumbs-up from the Supreme Court in the Brand X case) has held Internet data transmission to be an “information service” that cannot be regulated – well, at least not as common carriage. But if that’s the case, how can the Commission now try to impose common carrier-like obligations on ISPs?

Then there is the First Amendment of the U.S. Constitution.

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Abrupt reversal precedes FCC announcement of network neutrality proposals

Here is one of those little coincidences that make Washington such an interesting place to work.

Regular readers know about the friction among Apple, maker of the iPhone; AT&T, the iPhone’s broadband provider; and Google Voice, a VoIP service (among other things) that seeks to carry the calls of iPhone users.

The iPhone and its close competitors, like the Palm Pre, have two ways to access broadband: a “3G” channel provided by the carrier and paid for as part of the subscriber’s data plan; and Wi-Fi, much like that in a laptop, which of course works only at Wi-Fi-equipped locations. Apple has long allowed VoIP on the iPhone's Wi-Fi link, but never on the 3G channel. This matters to users, because relatively few of the locations where a person might want to place or receive a call have Wi-Fi service. AT&T, in responding to an FCC inquiry, was blunt about why it (and Apple) block VoIP from 3G: VoIP is a much cheaper substitute for minutes of voice service. Its use thus cuts into carrier revenues, including the revenues needed to recover the subsidy that lets Apple price the iPhone at far below its actual cost. Read more here.

But now AT&T has abruptly reversed course.

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Net Neutrality, a long-simmering issue, has exploded into the foreground of public debate as the future of broadband takes shape.  (If you have any doubt about that, check out our posts here, here, here and here, among others.)  And with the announcement that the FCC will be looking, in the very near future, to codify both existing and new Net Neutrality principles, we can expect it to stay in the foreground for some time to come.

If you’re looking for expert, in-depth, analysis of the Net Neutrality debate, FHH member Paul Feldman will be presenting a one-hour webinar on “Net Neutrality – What is it? Where is it going?” on Thursday, October 8, at 1:00 p.m. (ET). 

As an established telecommunications lawyer, Paul has been following the development of Net Neutrality closely for years.  He has written multiple analyses on the topic, including blogs here and here.  In his webinar he will be reviewing the debate over the substance of Net Neutrality proposals, and the FCC’s response – in its 2005 Internet Policy Statement and its 2008 Comcast/BitTorrent Order – to the evolving broadband landscape.  He will look at the Comcast conduct (some might say “misconduct”) that attracted the Commission’s regulatory attention last year, and the changes Comcast made to its network management practices as a result of that attention.  Paul will also address the Net Neutrality obligations which NTIA and RUS are tying to BTOP/BIP broadband stimulus funding.  Lastly, he will examine the new “Fifth and Sixth Principles” recently proposed by FCC Chairman Julius Genachowski to supplement the Commission’s Four Principles of Net Neutrality.

Clearly, the concept of Net Neutrality – however it is ultimately defined – will have an overwhelming impact on all aspects of the broadband industry.  Webinar attendees will come away with answers to important questions, including:

• What practices have been focus of Net Neutrality discussions and regulations? 
• What issues may trigger Net Neutrality concerns in the immediate future?

The webinar is being produced by Team Lightbulb.  A registration fee of $99 per computer will be charged.  For registration, go to https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=166037&sessionid=1&key=0B2AB783D63843E31A695E8145B8BFC9&sourcepage=register or call Mr. Sean Sullivan at 703-596-4133.

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Those who think network neutrality is the answer might be asking the wrong question

The recent announcement by the FCC Chairman of impending rules on network neutrality caused a lot of stir in the press, including our own coverage here. On the whole, we think network neutrality is a good idea. But it may not achieve the Chairman's stated goal: to preserve the open character of the Internet that fostered so much creativity and innovation in its early days. Those times are slipping away. No set of FCC rules, however well intentioned, will bring them back.

We quickly forget how the Internet used to be. Early technologies of other kinds – 8-track tape players, manual typewriters, tail-finned cars – are easy to remember because we have still examples to look at. But the early Internet has vanished without a trace, save in the reminiscences of the one-time early adopters.

Ah, The Good Old Days

Before the Internet was the precursor ArpaNet, which linked a few dozen major universities and Government facilities. Mainly it was a way to transmit research data, with a pasted-on afterthought called “email” to help researchers coordinate their exchanges.

As students and employees left the ArpaNet sites, they worked out ways to stay linked to the system over ordinary phone lines. Some set up connections their friends and colleagues could dial into, thus becoming the first Internet service providers (ISPs). Using the Internet in those days took technical know-how. Conveniences like URLs and clickable links had yet to be invented. There were few graphics, mostly just text. Access was by typing into command lines. Needed functions like “finger” and “Archie” and “Telnet” were complex and hard to use. Also we walked five miles to school in the snow.

Then, in 1991, came the World Wide Web.

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With Chairman Genachowski's regime now firmly in place, the Broadband Planning Team headed by Blair Levin is moving at a furious pace to gather the information needed to develop a broadband strategy for the United States.   To its credit, the Levin team appears to be taking the task seriously as a real blueprint for action: not just another report to be sent up to Capitol Hill to gather dust on a shelf, but rather a master plan that will guide this country's transition into the new broadband age. To that end, the Commission has been holding workshops, issuing Notices of Inquiry, and generally calling for all the information and ideas it can get its hands on from all segments of the industry. All of this is being done on an expedited basis unusual for FCC proceedings which underscores both the importance of the issues being considered and the early 2010 timetable for having a finished product.   Everything seems to be open for discussion, including some of the most sacred cows in the regulatory pasture.

As we have previously reported, comments on the Notice of Inquiry on Innovation and Investment in Wireless Communications are due no later than September 30. A companion notice was issued this week in light of the comments already received in the larger National Broadband Plan NOI.  Those comments suggested very forcefully that the spectrum needed to deliver high quality 4G broadband is just not available.  Since, like beachfront property, they’re not making any more spectrum, the Commission needs to come up with a way to free up spectrum from Federal sources, re-farm spectrum currently allocated to non-broadband uses, or require more effective use of existing spectrum by incumbent licensees. Most of these alternatives send a shiver down the spine of incumbents, but folks looking to get their hands on spectrum can take hope.

Interested parties can and should file comments in response to the September 23 companion notice no later than October 23, 2009 in this latest Public Notice since it has far-reaching implications for many industry players. Reply comments may also be filed until November 13.

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[Blogmeister’s Note: CommLawBlog.com welcomes guest blogger Catherine McCullough, principal of Meadowbrook Strategic Government Relations, a D.C. lobbying firm. We are pleased that Catherine has agreed to share with our readers some insight into communications-related issues pending before Congress.]

Does your business gather data about your audience – especially online? If you are thinking of engaging in behavioral advertising – widely considered the future of the industry – you should know about two new pieces of legislation in Congress that would affect the way you gather, store, and utilize the consumer data that advertisers so desire. 

Yes, the long-anticipated online consumer privacy laws are coming.

Congress has repeatedly considered new consumer privacy bills for much of the last decade. But only since the 111^th Congress began have all political elements necessary for passage existed at the same time: Democratic control of both houses of Congress; a supportive White House; and a new Chairman of the Senate Commerce Committee who is not afraid to make his voice heard on consumer protection. 

And thanks to a new technology on the scene, there is an additional element essential to all political dramas: a bad guy. Public, meet your new enemy: Deep Packet Inspection.

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Genachowski announces plans to expand, codify Network Neutrality Principles

In a speech this morning, FCC Chairman Julius Genachowski announced his intention to initiate a proceeding looking to the adoption of new rules designed to preserve and enhance the “openness” of the Internet, in accordance with the principles of “network neutrality.” (You can read the speech here or watch it being delivered here.) While the Chairman’s support for a so-called “Fifth Principle”, prohibiting discrimination by Internet service providers, was widely anticipated, he also made the surprising announcement of a “Sixth Principle” requiring broadband Internet service providers to be transparent about their network management practices.   A Notice of Proposed Rulemaking, to be issued in the near future, will certainly precipitate a hotly contested battle over the nature of “discrimination” and “reasonable network management.” 

Fifth and Sixth Principles? What are the first Four? Back in a different Internet era (2005), the FCC took a tentative first step in addressing the issues of Network Neutrality with its Internet Policy Statement (“IPS”). That laid out four “principles” designed to “preserve and promote the open and interconnected nature of the public Internet”. Specifically, the FCC stated that consumers are entitled to:

• access the lawful Internet content of their choice;
• run applications and use services of their choice, subject to the needs of law enforcement;
•  connect their choice of legal devices that do not harm the network; and 
• competition among network providers, application and service providers, and content providers.

Two elements of the IPS helped bring us to today’s announcement.

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Way back when we reported on a settlement between certain public radio entities and SoundExchange regarding the payment of royalties and filing of certain information regarding songs played over the Internet for the years 2006-2010,  the best we could tell you was "if you're eligible, you'll no longer be dealing with SoundExchange".

We've got a little more information now on who these stations will be dealing with:  the winner is "NPR Public Interactive"!

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We wrote a couple weeks ago about a patent infringement lawsuit filed against several major radio broadcasters for their unauthorized use of software that allows them to replace over-the-air advertisements with webcast-specific ads. 

Here's an interesting take on the same case by Jerry Del Colliano in the "Inside Music Media" blog.  Mr. Del Colliano makes no bones about it:  "This is trouble -- big trouble", because the radio companies are certain to get tied up in expensive and time consuming litigation.  There's no easy resolution to the case and the radio stations are pretty much obliged to fight because they have no real alternative to using the replacement software.

He repeatedly disclaims that he's not a lawyer.  We are, but thankfully haven't heard from any clients -- or other broadcasters -- about this or similar litigation.  However, if you're a broadcaster, it's clear that you still need to be following this case and might want to consult a lawyer for more information.

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Aldav, LLC claims big radio companies infringed patented content-substitution methods

Radio stations that stream their content onto the Internet will want to keep an eye on a patent lawsuit filed in the United States District Court for the Eastern District of Texas. Several major radio companies have been accused of patent infringement by engaging in “content replacement” – that is, they substituted Internet-friendly content in place of more locally-oriented content that went out over the air. While the complaint provides no details, it suggests that the local content which was removed consisted, at least in part, of commercials. 

The suit, filed April 16, pits Plaintiff Aldav, LLC against a list of defendants comprising a virtual who’s who of Big Name National Radio Operators: Clear Channel, CBS Radio, Citadel, Cox Radio, Cumulus, Entercom, Gap Broadcasting, Radio One, Regent, Saga, Univision and the Aloha Station Trust (which is operating some Clear Channel stations).

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Pesky strings from Dillon’s Rule may complicate formation of public/private partnerships

As interest in snagging a piece of the broadband stimulus builds to fever pitch, it may be a good idea to sound a cautionary note with respect to one obscure, but potentially important, quirk in U.S. law that could mess up a lot of plans. (We have previously reported – here, here, and here – both on the American Recovery and Reinvestment Act of 2009, a/k/a the Stimulus Package, and on the various administrative efforts being made by the FCC, NTIA and RUS to flesh out the skeletal details provided by Congress in the Act itself.) 

I’m talking about Dillon’s Rule. Never heard of it? Not surprising. Despite its importance, it’s easy to overlook, unless you happen to have an interest in the jurisprudence of state and local governments. But overlook it at your peril. Dillon’s Rule could effectively bar, or at least seriously complicate, efforts by private entities to successfully dip into the deep pool of stimulus funds through the device of public/private partnerships (a device recommended by a number of supposed gurus).

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Just a quick update on some recent stories we've had on CommLawBlog.  There's a common thread running through all three.  A free CommLawBlog subscription to the first person who can find it...

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20-minute ex parte meetings may be scheduled from March 20 – April 3

As we have previously reported, the FCC has no direct role in doling out the $6.8 billion available for broadband stimulus under the American Recovery and Reinvestment Act (what we know as the Stimulus Act). However, the FCC is charged with consulting with the Department of Commerce’s NTIA and the Department of Agriculture’s RUS in setting some of the basic criteria for deciding who gets the funds.  Among the most important issues facing the money-meisters in the next month are: coming up with basic definitions for “unserved” and “underserved” areas and “broadband” (how fast a speed must you provide to qualify and should different criteria apply to wired vs. wireless systems); what constitutes “non-discrimination” in the provision of broadband; and what network interconnection obligations (including net neutrality) should apply to program recipients. These are questions that the FCC has struggled with for years, but it and its friends at NTIA and RUS must now come up with answers in a matter of weeks. 

The FCC is therefore accepting written comments until April 13 on these issues – lightning speed for any administrative agency. It is also scheduling ex parte meetings with the staff limited to 20 minutes from March 30 to April 3. (Imagine a sort of administrative speed dating with a bell ringing every 20 minutes and parties running from one meeting room to the next.)    Although the FCC’s role is consultative, we do expect the FCC ‘s recommendations to carry some heavy weight in the final outcome of these definitions – particularly since current FCC Commissioner Adelstein has recently been nominated to become head honcho at RUS – so interested parties may want to weigh in. Read all about it here.

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Senate bill calls for “inventory of airwaves” to identify spectrum for more broadband, advanced communications use

With several trillion dollars’ worth of bills stacking up on the kitchen table, the Senate is thinking about searching for quarters under the sofa cushions.

When times get tough around the household, what’s a tried and true way of generating some quick cash? A yard sale, of course. So in these dire economic times, some Senators have proposed – in S. 649, a bill introduced on March 19 – that Congress get ready for a Federal spectrum yard sale by making a list of all the spectrum controlled by NTIA and the FCC.   (The Senators in question are former presidential wannabe John Kerry and co-sponsors Olympia Snowe, Roger Wicker and Bill Nelson.) 

After all, the public picked up $20 billion in pin money from the 700 MHz auction. Maybe lightning can strike twice.

In fairness to the bill’s sponsors, their goal supposedly is to assure that we will all be able to find “additional spectrum” to “meet the growing demands and needs of consumers and businesses alike.”   The bill’s sponsors seem particularly interested in opening up space for more broadband and advanced communications services. But in her statement in the Congressional Record, Snowe correctly observed that “there is no new spectrum to allocate, only redistribute”, which would seem to put the kibosh on the notion of finding “additional” spectrum. So it appears that the sponsors contemplate that spectrum already in use is going to be changing hands – a process which has in the recent past tended to result in payments to the guv’mint.

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There's been a lot of talk about the agreements reached by SoundExchange, Inc. with the National Association of Broadcasters (NAB) and with the Corporation for Public Broadcasting (CPB) that provide substitute royalty rates and playlist reporting requirements for eligible webcasters who elect to participate in these deals. 

The most common refrains we hear are: "What does this mean for me?” and, from the more practical-minded, “What do I have to do?"  These are by no means dumb questions, since the new agreements – and especially the SoundExchange/NAB deal – create multiple subcategories of webcasters, each with slightly different benefits and responsibilities. 

No worries. We here in the CommLawBlog bunker are prepared to walk you through the process, step-by-step. Literally.

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The joint NTIA/RUS “request for information and notice of public meetings” we described here yesterday has been published in the Federal Register on March 12. That publication establishes the deadline for written comments as April 13, 2009. Instructions for submission of comments are set out at the end of the Federal Register notice. A couple of tips: if your comments are longer than five pages, you’re supposed to include a one-page executive summary; if they’re 10 pages or more, you also need a table of contents. You can file electronically. In fact, NTIA/RUS would prefer you do so, especially if your comments are 10 pages or longer. One disincentive for paper filers: if you go the paper route, you also have to include a CD or DVD with an electronic version of your submission, properly identified on the label. Let us know if we can be of any help in preparing any submissions you might want to make.

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Lots of questions, not a lot of answers as agencies gear up broadband funding programs

As we previously observed, the newly-enacted-but-still-to-be-implemented Stimulus Package leaves a lot of questions unanswered. Having earmarked billions of dollars for expansion of the country’s broadband Internet facilities and services, Congress dumped into the laps of various agencies the chore of building the Federal systems – essentially, a bureaucratic ATM – necessary to dole out the Big Bucks. But Congress didn’t bother to include any helpful assembly instructions.  

On March 10, in their first joint public appearance to address the issues, the agencies in charge confirmed the existence of questions, but provided precious few answers – which is not surprising, given the inchoate and largely undefined responsibility which Congress handed to them.  The agencies are, of course, doing their diligent best to tackle that responsibility by raising all of these questions as early as possible. But the fact remains that at this point, the questions far outnumber the answers.

The agencies in question are the Department of Commerce’s National Telecommunications and Information Administration (NTIA), the Department of Agriculture’s Rural Utilities Service (RUS), and our pals at the FCC. The Stimulus Package assigns NTIA and RUS – in consultation with the FCC – the task of devising detailed regulations for the funding of proposals to construct and provide broadband service in “unserved”, “underserved” and “rural” areas. So far we’ve seen two steps taken in that process.

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M2Z Networks has lost another bid for spectrum to build a nationwide wireless broadband network, as the U.S. Court of Appeals has rejected M2Z’s petition for review of the FCC’s 2007 denial of M2Z’s bid.  The company, formed in part by ex-officials of the FCC’s Wireless Telecommunications Bureau, presented its founders’ former colleagues with a novel application for a 15-year license in the 2155-2175 MHz band.  The novelty lay in M2Z’s request for the spectrum at no cost – i.e., without the usual high-stakes auction.  In return for free spectrum, M2Z proposed to offer free service to the public, with a “premium” tier available to those who wanted better service.  To escape that pesky auction requirement, M2Z filed a separate petition arguing that the FCC had an obligation to further the public interest by adopting M2Z’s proposal.  Without the auction.

In 2007, after due deliberation, the FCC said no.

Having failed to convince the Commission of its approach to licensing spectrum, M2Z headed to court. The D.C. Circuit heard the case and, as is typical in such matters, gave deference to the FCC.  The Court found that, before rejecting M2Z’s requests,  the FCC had given all due consideration to M2Z’s claims about the public interest, M2Z’s application, and forbearance from the Commission’s licensing and auction requirements.  Once the Court had determined that the FCC’s decision making was not arbitrary and capricious, the Court concluded that siding with the FCC was “easy to do.”  The Court was willing to give M2Z some props for coming up with “creative” arguments, but that didn’t help M2Z in the end. The Court summed up the entire M2Z enterprise succinctly in its closing paragraph: “Although M2Z presents a number of creative arguments, none of them has serious legal merit.”

We would have been surprised at any other outcome.

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The National Association of Broadcasters ("NAB") and SoundExchange, the designated "receiving agent" that collects and distributes copyright royalties paid as part of the statutory license applicable to webcasting, have announced a settlement under the "Webcaster Settlement Act" which sets the royalty rates to be paid by broadcasters streaming music on the Internet during the years 2009-2010. 

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Should Internet service providers (ISPs) be allowed to give faster service to certain content, in exchange for a fee? That question started the debate over network neutrality. It has no clear answer, as yet, and other questions have sprung up in the meantime. But now we have the original question in reverse – with the money flowing in the opposite direction.

An online video service called “ESPN360,” a spinoff from the ESPN cable channels, sends more than 3,500 sporting events over the Internet each year. But not to everybody. ISPs have to sign up and pay for the content. Not all do. If your ISP subscribes (or if you get Internet service on a U.S. college campus or military base), you have access to the content; otherwise, not.

Traditional pay sites, from the Oxford English Dictionary to pornography vendors, sell directly to the end user, who typically exchanges a credit card number for password-protected access. Not everyone receives the service, but everyone has the option. Not so with ESPN360. The decision as to that content rests not with the individual subscriber, but with the subscriber’s ISP.

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Back on January 20, we noted here that the FCC had asked Comcast to explain its VoIP service. Comcast had earlier promised that its Internet service would not discriminate among types of content. Its later advertising said that network management efforts might slow other forms of VoIP – but not VoIP  provided by Comcast. The FCC demanded to know how Comcast could protect its own VoIP service without discriminating against other VoIP providers.

Comcast has now replied.

Comcast told the FCC that its VoIP “Comcast Digital Voice” (CDV) service does not run over its high-speed Internet service – or over the public Internet – and so is not subject to its promises concerning network management. Comcast notes that its CDV customers need not even subscribe to its high-speed Internet service. Because other providers’ VoIP does use the public Internet, Comcast says, those services can be affected by overall traffic slow-downs.

Comcasts’s letter, while saying how CDV does not work, discloses almost nothing about how it does work. That reticence may relate to the other issue raised in the FCC’s inquiry: whether CDV should be subject to telephone-style regulation. The more Comcast argues that CDV is not an Internet service, and instead runs over its own separate facilities, the more CDV looks like “telecommunications service,” a status that would trigger additional rules, and possibly payment obligations as well. Comcast insists that question is outside the scope of network management issues, and is properly under consideration in other FCC proceedings.

The Comcast letter is here.

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This is a last reminder that both commercial and noncommercial webcasters must file a $ 500 annual minimum royalty fee payment with SoundExchange, Inc. by January 31, 2009 for each channel being streamed.

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We haven't fully resolved the ongoing controversy surrounding the copyright royalties paid by webcasters in exchange for the right to perform sound recordings during the years 2006-2010, but it's already time for non-interactive webcasters (which includes radio stations simulcasting an over-the-air signal on the Internet) to worry about another increase in the rates for 2011 and beyond.  With the appeal of Copyright Royalty Board's ("CRB")  March 2007 ratesetting decision still pending in the United States Court of Appeals for the District of Columbia Circuit, the CRB is already starting up the next ratemaking proceeding.  Of course, this also comes as the CRB considers extending the requirement that webcasters must file reports containing certain information about all songs performed from two seven day periods per quarter to a comprehensive, year round, "census" filing. 

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Comcast just can’t get the hang of this network neutrality thing.

Last summer, the FCC chastised Comcast, a cable and Internet provider, for selectively blocking certain kinds of customer Internet traffic – specifically, services that threatened competition to its cable business. We reported on the incident here, and followed up here and here. Going forward, said the FCC, Comcast was free to manage traffic on its network, but not in ways that discriminate based on the customer's content.

Comcast responded with a reasonable plan. In essence, it gives a customer's data packets lower priority when the neighborhood system is danger of overloading, and that same customer has been running at near-capacity data rates for at least 15 minutes. The temporary priority shift gives other people's data a chance to get through. Comcast warned that a customer running voice-over-Internet (VoIP ) along with high-volume traffic runs the risk of “choppy” sounding calls when the voice packets get shunted aside.

The plan seems in line with the FCC's requirements. A non-story. But for one small detail.

The Comcast website tells customers they can preserve voice quality by subscribing to Comcast's own VoIP service, while using those other VoIP providers can result in degradation. This looks like the kind of discrimination Comcast promised to avoid. It caught the eye of the FCC, which wants Comcast to justify the disparate treatment. With a touch of sarcasm, the FCC also asks how Comcast’s own VoIP service affects network congestion differently from other Internet traffic.

Comcast made additional trouble for itself by describing its VoIP service as “facilities-based.”   The marketing intern who wrote the copy probably didn’t know it, but this is a code word. Along with other factors, it can trigger a requirement for very expensive payments to other carriers. (Just a reminder, people – show everything to your lawyers.) The FCC invites Comcast to rethink its explanation of how the service works.

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Attention all broadcasters: 

Are you a noncommercial broadcaster currently engaged in webcasting?

Are you one of the more than 450 public radio webcasters that is:

• A CPB supported station;
• An NPR member;
• A National Federation of Community Broadcasters Member; or
• Part of American Public Media, the Public Radio Exchange or Public Radio International? 

If the answer to both of these questions is "YES!", you'll want to read more about an exciting new offer available to you.

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When the Copyright Royalty Board announced a sharp increase in the royalty rates to be paid by webcasters for the years 2006 through 2010, many predicted the imminent demise of Internet radio.  That hasn't happened..yet.  But it's not for lack of trying by the recording industry and the CRB. Have you ever heard the term "kick 'em while they're down".  Well, the CRB appears to understand it, as it issued a Notice of Proposed Rulemaking on December 30 which could result in a six-fold increase in a major administrative responsibility of most webcasters. 

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Last year Google thrust itself into the network neutrality debate by promoting open-platform wireless handsets. Now it has reentered the fray from the other side.

“Network neutrality” has several competing definitions. Not surprisingly, parties to the argument tend to frame the question in ways that favor their own interests, with the result that people talk past each other.

Our own preferred view dates back to the origin of the controversy. The executives of two major Internet service companies announced they saw nothing wrong with giving some content providers faster service for a higher price. If Amazon.com, for example, were willing to pay the premium, its website would download faster than that of the local bookstore, and thus give customers a better experience, disadvantaging the local bookstore. Network neutrality, in our view, is the principle that says this is wrong – that Internet providers must treat all content providers equally.

Google once seemed to agree, at least in the wireless phone context. It urged the FCC to auction a block of spectrum in which customers could use any compliant handset and access any lawful service. (Elsewhere in the spectrum, cell-phone providers can and do limit handsets and services to those of their partners.) Google subsequently participated in developing the “Android” operating system that makes it easy for independent developers to offer new applications for mobile phones.

This week, though, Google made a controversial announcement. It proposed to locate its own servers on the premises of major broadband Internet providers, with the goal of speeding service to their subscribers.

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Well, to Sony BMG Entertainment group, the answer was recently "about $ 33.00".  That's the amount per child Sony paid in settling a civil action brough by the US government for violations of the Children's Online Privacy Protection Act (COPPA), a federal law enacted in 1998 and implemented by the FTC in 2000. 

While the financial portion of the settlement -- $ 1 million -- may not be much to Sony BMG Entertainment, it should serve as a warning to smaller companies with a kid-friendly web presence that they need to learn about and abide by COPPA.  Any broadcast television or radio station that dedicates a portion of its website to children's programming, a "Kid's Club" or "Birthday Club", etc., or otherwise directs content to or collects information from children under the age of 13 should definitely read further. 

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The window opens on December 3 for registering ".tel" domain sites. ".tel" is a new top level domain name that is intended to  identify repositories of corporate and personal contact information. As we become increasingly reliant on our Blackberries, iPhones, Palms, Treos and even plain old mobile phones, ".tel" domains are likely to become essential resources for accessing important information that once required a computer or even those old things known as "books".

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Once upon a time, boys and girls, there were no big Internet sites like Google and Ebay, and no big Internet service providers (ISPs) like Comcast and Verizon.  People accessed the Internet through thousands of small ISPs operating out of dorm rooms and coat closets.  The sites they reached were mostly small and home-grown.  Users formed networks serving all kinds of interesting and off-beat interests.  Pornography, the universal early adopter for every new communications technology, flourished as well.

The FCC had resolved back in 1976 not to regulate “enhanced services,” a decision that applied to the later-arriving Internet.  That was just as well, because the emerging Internet was so hopelessly decentralized that any effort at regulation would have been ludicrous.  Users operated with complete freedom, beyond the reach of any authorities that might have cared.

No more.  A small number of interests now run the facilities that most consumers need to access the Internet.  As control continues to centralize, regulation becomes more feasible.  But is it desirable?

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 The Prosecution of Jeremy Jaynes by the Counselor Russell McGuire

The Internet has long been described as the "Wild West" with regard to the application of law.  We disagree with this characterization in that many laws applying to traditional media are generally applicable to the Internet as well, but for the sake of a good analogy, we'll note that one of the most notorious "virtual" outlaws in recent years is one Jeremy Jaynes.  On September 12, 2008, Mr. Jaynes's conviction for violating Virginia's Anti-Spam law was overturned by that state's Supreme Court, thereby saving him from nine years in a very real jail. 

For nearly a decade, Mr. Jaynes rode through cyberspace leaving a trail of mayhem in his wake.  As prolific as he was evasive, he is believed to have sent hundreds of thousands of unsolicited Emails or "SPAM" a day from his home in Raleigh, North Carolina.  In three particularly active days in July 2003, he used falsified header information and sender domain names to transmit 12,197, 24,172, and 19,104 E-mails to unwilling recipients, thereby violating Virginia Code Section 18.2-152.3:1, in which the good people of Virginia have declared the sending of email from false domain names to be criminal offense – and a felony if more than 10,000 E-mails are sent in a single day.

When he was cornered and captured by the men with badges, compact discs found in Mr. Jaynes's home showed that he was in possession of more than 176 million E-mail addresses and more than 1.3 billion E-mail names (and you thought your E-mail accounts were becoming unmanageable).  Many of these were subscribers to America Online ("AOL").

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Comcast has both obeyed and appealed an FCC rule relating to its Internet access management.

A month ago, the FCC cracked down on Comcast for selectively interfering with the communications of customers using BitTorrent, a peer-to-peer (P2P) application.  Comcast said it was entitled to take action because BitTorrent users were hogging bandwidth.  The FCC disagreed.  Comcast singled out BitTorrent users, it said, regardless of the actual bandwidth usage, and even at times and places where the network had plenty of capacity.  Hinting at darker motives, the FCC noted that BitTorrent and other P2Ps make available high-quality video in direct competition to Comcast's cable service.

The FCC did not impose a fine on Comcast, but ordered it to stop discriminating based on users' content (Comcast said it already had), and to disclose any new network management practices it planned to use instead.

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It's been almost a year since we first brought you the story of a woman who decided to file a lawsuit against Universal Music Publishing Company alleging that their filing of a Notice and Takedown Request with YouTube to remove this video of her 13 month old son dancing to Prince's "Let's Go Crazy" constituted legal misappropriation in violation of her rights:  

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Today the FCC determined that Comcast deliberately interfered with its customers' Internet usage by selectively blocking peer-to-peer (P2P) applications, particularly BitTorrent.  "In essence," said the FCC, "Comcast opens its customers' mail because it wants to deliver mail not based on the address on the envelope but on the type of letter contained therein."  The FCC noted a possible anticompetitive motive -- BitTorrent and other P2P applications can let users watch high-quality video they might otherwise have to pay for on cable TV systems, such as Comcast's.

The FCC rejected Comcast's argument that its actions were necessary to manage traffic on the network, because Comcast:

• interfered with even low-volume P2P users;
• blocked traffic at times of the day when congestion was not a problem;
• targeted neighborhoods not experiencing congestion; and
• tolerated very high bandwidth customers who did not use a disfavored application.

Moreover, Comcast repeatedly lied about its practices, according to the FCC.  First, it denied any responsibility for its customers' connection problems, then admitted targeting P2P traffic -- but only during peak congestion, it said -- and finally admitted that it blocked P2P at all times of day and regardless of congestion levels.

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Concerned that the United States ranks a woeful number 15 among the world's nations in access to broadband internet, the FCC has aggressively ordered broadband providers to submit more detailed reports regarding the services they provide.   This bold and dramatic action will, of course, do nothing whatsoever to actually increase broadband access but will, perhaps, identify a few previously unreported service recipients so that the nation's numbers look better vis a vis the rest of the civilized world.

There has been much hand-wringing of late at the FCC and on Capitol Hill about the lack of broadband access in this country.  This pervasive angst is puzzling since the FCC's own reports show that 99% of all zip codes in the U.S. have some sort of broadband connection - a figure that actually rivals or exceeds the availability of telephones and indoor plumbing.    Nevertheless, the Commission's mandate is to make it look like it's doing something about a problem - even when it's not clear that a problem exists.  There are a limited number of weapons in an administrative agency's arsenal, and the easiest one to brandish is always making the industry file a report.  That is the weapon of choice here. 

Several years ago the FCC created Form 477 as a way of gathering some fairly basic information about broadband service and also mobile subscribership.   Now the Commission has decided that it must have more detailed data about broadband service - greater "granularity" is the favored buzz term these days - so the Form 477 is being revamped to require the following additional information:

• Fixed broadband providers must now report their actual numbers of broadband subscribers on a census tract by census tract basis instead of simply identifying zip codes where they had a subscriber.
• The type of customer must be identified as either residential (not having a  corporate, business or organizational address) or business.
• Mobile broadband providers must still report their numbers on a state-wide basis but must now tell the FCC which census tracts make up their service areas within the state.
• Within each census tract, fixed providers must break down their service categories into 8 tiers ranked by upload and download speeds of the broadband service.
• Mobile broadband providers must indicate the number of subscribers who have unfettered access to lawful Internet content.
• Interconnected VoIP providers must provide this information although they are not actually telecommunications carriers.  This is consistent with the FCC's recent practice of treating VoIP in virtually every respect as if it is telecommunications carriage while at the same time avoiding placing this service under full Title II common carrier regulation.
• The FCC feels that the burdens which this new reporting regimen will entail - and they are considerable -- are far outweighed by the increased understanding it will have of broadband penetration.  That's easy for them to say.

On the good side, the new report forms will probably not be approved by OMB for a few months, so the first report requiring the new information will be due in March, 2009.   But on the bad side, the FCC also sought comment on whether in the future it should  (a) collect more information so that broadband availability can be mapped on an address-by-address basis (can room-by-room mapping be far behind?), (b) require reports of actual delivered speed of internet connections rather than nominal speeds, (c) collect broadband pricing information and (d) take steps to preserve the privacy of people whose data is being gathered.  None of this bodes well for the streamlining of Form 477 in the years to come.  Interested parties may offer their comments on the latter issues in the next 60 days.

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There has been an uptick in activity on the issue of performance rights in the past few weeks, with the addition of co-sponsors of a key House resolution opposing imposition of a performance right for over-the-air radio and introduction of a similar resolution in the Senate leading to speculation that the issue will come to a head this summer and also having possible repercussions with regard to the royalty rates paid for performance of sound recordings over the Internet.

We have touched on the issue of performance rights in several past postings.  Efforts to overturn the sharp increase in royalty rates applicable to Internet webcasters were the subject of significant discussion during the Spring and Summer of 2007 after the Copyright Royalty Board issued a final decision on March 2 and then dismissed a Motion to Rehear its Decision on April 16.  A Motion to Stay the implementation of the new rates was denied by the United States Court of Appeals on July 11, resulting in implementation of the new rates four days later.

Angered by the prospect that they would pay three times the royalties in 2010 that had been paid in 2005, webcasters turned to Congress for help.  The Internet Radio Equality Act was introduced in the House and Senate  but neither gained much traction, largely because legislators were appeased by promises originating from SoundExchange, Inc., representing recording artists, that early discussions regarding a more tenable rate were proving fruitful. As is often the case, a month later, there was no resolution of the issue and Congress had begun to focus on other issues. 

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In a combined Order/NPRM released last week, the FCC resolved a number of petitions for reconsideration and other extraneous pleadings which had nibbled at the edges of the new Broadband Radio Service/Educational Broadband Service regulatory structure adopted in 2004 and 2006.  In the "Order" portion of the document, the Commission addressed a smorgasbord of outstanding issues including the following:

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You'll find legal services offered on Craigslist (we don't actually recommend hiring any of the lawyers that advertise there), but nothing found in these online classifieds may be as valuable to Internet content providers as a case the popular marketplace website itself won last week in federal court.  Those with a sharp eye honed on Section 230 of the Communications Decency Act, a statute we have previously discussed in this blog and in our Memo to Clients newsletter may want to hold off on celebrating just yet, as New Jersey prosecutors are considering legal action against a controversial site that has become all the rage on college campuses, the effect of which could undercut the entire rationale for Section 230. 

Our previous writings on Section 230 of the Communications Decency Act have reviewed how this statute continues to be interpreted very broadly by courts around the nation to offer protection to any "Internet content provider" against liability that would derive from content posted by a third party.  Rulings from several federal District and Appellate courts, as well major state Supreme Courts, make it clear that websites have broad power to modify, edit and even delete content without accepting responsibility for this third party content.    The law has most often been invoked as a defense in defamation cases, but it applies to any cause of action other than violations of federal criminal law and intellectual property violations (though we have discussed a separate legal protection against copyright infringement actions found in Section 512 of the Digital Millennium Copyright Act in the blog and MTC.

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Penguin Classics is getting into e-books starting with the launch of Pride & Prejudice formatted for Amazon's Kindle e-book reader. The Kindle has become a hot commodity over at Amazon, and with Sony re-entering the market e-books may finally be coming into their own after years of hype.  In fact, since the Kindle launched e-book sales have risen 24% (from $2.5 million to $3.1 million).

But what is intriguing about this development is the idea that booksellers will try to sell content that is in the public domain and widely available for free in a format that will work on the same device. Penguin Classics has been selling works that are in the public domain for years. The model has been to distinguish their offerings in print in much the same way they will online, by bundling in some extras to help give the book some historical context and meaning. And this model has been successful in the offline world. Whether this will work online remains to be seen (ahem, music industry)?

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The National Association of Broadcasters ("NAB") has been relatively quiet on the streaming front -- at least in terms of the Internet Radio Equality Act being the savior for radio broadcasters seeking to reduce the rates they pay for streaming in light of the March 2, 2007 decision of the Copyright Royalty Board ("CRB")to increase rates for the years 2006-2010.

The NAB stepped up though, as an intervenor in the appellate challenge to the new rates and joining Bonneville International and the National Religious Broadcasters Music License Committee on a brief filed with the United States Court of Appeals for the District of Columbia Circuit on March 10, 2008.

Webcasters should not consider this the equivalent of a virtual cavalry riding in to save the day, as oral arguments in the case have not even been scheduled.  But the brief makes several key arguments designed to effect meaningful permanent change in the ways the rates are calculated and implemented which would result in savings over the long term.  Key arguments include:

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We thought the following article would be of interest to our readers. The author offers a different perspective on the network neutrality debate. Below is a summary of the article by J. Gregory Sidak and Hal Singer of Criterion Economics, LLC, followed by a link to the article, which can be downloaded for free.

A Consumer-Welfare Approach to Network Neutrality Regulation of the Internet

"Network neutrality" is the shorthand for a proposed regime of economic regulation for the Internet. Because of the trend to deliver traditional telecommunications services, as well as new forms of content and applications, by Internet protocol (IP), a regime of network neutrality regulation would displace or subordinate a substantial portion of existing telecommunications regulation. If the United States adopts network neutrality regulation, other industrialized nations probably will soon follow.

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Can a network provider treat its customers differently, based on the content of their communications?

The question is not hypothetical.  Consider the following:

• Comcast, a major cable ISP, concedes that it limits customers' capacity when they attempt to access certain file-sharing programs.  These include a service used for movie distribution, a potential competitor to Comcast's cable TV business.
• Verizon, a wireless phone provider, hinders the transmission of political text messages based solely on their content; it reconsiders, but reserves the right to do the same again in the future.
• Two major ISPs announce they see nothing wrong with delivering the content of certain websites at faster speeds than others, in exchange for premium payments.
• Three major wireless carriers limit text messages that customers need for accessing a technology that provides a competing voice service.
• AT&T signals that it may begin inspecting its customers' Internet communications in search of copyright violations.
• Wireless carriers routinely limit the services subscribers can access over their handsets, allowing those acceptable to the carrier and blocking those that compete.

Can They Do That?

Back in the Era of Big, Black Telephones, each of the above actions would have been illegal.  The phone company was simply not allowed to base service decisions on who a subscriber talked to, or on what they said.

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Those of you outside the DC area (and perhaps those in the area that didn't read today's Business Section of the Washington Post) might be interested in an article that addresses a topic of concern to many website operators: the possibility of being sued for copyright infringement based on material that others have posted you your site.

While the specific article discusses a lawsuit relating to the unauthorized use of the Prince song "Let's Go Crazy" in a YouTube clip of a baby dancing to the song that was posted by the baby's mother, there are broader lessons to be learned.

Universal Music Publishing Group ("Universal") took advantage of a provision the Digital Millennium Copyright Act ("DMCA") to require YouTube to remove the 29 second clip from its website. Specifically, Universal invoked Section 512 of the DMCA, a provision that favors removal of allegedly infringing material posted by a third party by offering a safe harbor to any website that has a Designated Agent for receipt of a "takedown notice" of a possible infringement and timely complies with such a request. The twist in this instance is not that Universal sent a takedown notice to YouTube -- YouTube gets hundreds of these notices a day and just this week announced that it has created new filtering software to assist it in proactively identifying potentially infringing uploads -- but rather that the woman who originally posted the material has sued Universal for its attempts to bully her into submission.

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The FCC has asked for comment on a request that it require Internet service providers (ISPs) to provide "email address portability" so that a subscriber can change ISPs while keeping the same email address. Specifically, the petition asks the FCC to require the old ISP to forward incoming email to a new address of the subscriber's choosing.

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By Paul Feldman

The U.S. Court of Appeals for the D.C. Circuit today upheld a 2006 FCC Order requiring interconnected Voice-over-the-Internet ("VOIP") providers to contribute to the federal universal service fund ("USF"). The Court's action continues the momentum over the last few years to regulate core aspects of VOIP in a manner similar to traditional telecommunications carriers. Consistent with that momentum, yesterday the FCC announced an Order under which it imposed an obligation on interconnected VOIP providers to contribute to the Telecommunications Relay Service ("TRS"), and a notice of proposed rulemaking seeking comments on its tentative conclusion that providers of interconnected VOIP that allows the subscriber to "roam" to different locations must employ automatic location technology that meets the same accuracy standards as those imposed on wireless carriers, in connection with the provision of E911 emergency service.

All of this comes down to one indubitable truth: if it walks like a duck, if it quacks like a duck, then REGULATE it like a duck! Six years ago, when VOIP started to take off with the masses, and regulators started to look at the impact, the VOIP providers came in to regulatory proceedings trying to look like the smartest guys in town, claiming that VOIP should not be subject to those nasty "legacy" telephone regulations, because anyone with a brain could see that voice service was just an "application" and VOIP was something much bigger and radically different than traditional telephony. Well, Michael Powell bought that, hook-line-and-sinker, but in a few years the real truth came out: people get VOIP to make telephone calls - no more and no less. Yeah, with VOIP you can check your voice messages by e-mail, but so what! People get VOIP to make cheap calls to their niece in London. Period. The FCC finally caught on to this, and when they looked around, they saw that use of VOIP is rapidly replacing use of traditional telephone and greatly speeding up the impending crash of the current USF and intercarrier compensation regimes. Not wanting to preside over the next telecom crash, the FCC started to impose that nasty "legacy" telephone regulation on VOIPers.

The VOIP providers had high hopes six years ago that they could come into the market and provide voice services without any of the burden of "legacy" regulations imposed on their traditional carrier competitors. Those hopes appear to be long gone at this point, with only the question of access charges undecided. If the FCC imposes that requirement on VOIP operators (as it appears likely to do if it ever acts in the intercarrier compensation proceeding), then the VOIP operators will have to see if they can succeed in the marketplace without regulatory advantages over traditional carriers. They'll have to swim fast and compete for customer-fishes, just like the other ducks.

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As expected, Internet webcasters filed a motion with  the United States Court of Appeals for the District of Columbia that seeks a stay in the implementation of new Internet radio royalty rates that are due to go into effect on July 15, 2007 as a result of a "Final Determination of Rates and Terms" issued by the Copyright Royalty Board on March 2, 2007 (and revised slightly in an Order Denying Motions for Rehearing that was issued on April 16, 2007).  We have reported these changes on several occasions in both this blog and our Memorandum to Clients.  We have also discussed the prospects of the Internet Radio Equality Act, which was introduced in both the House and the Senate as a means of overturning this decision and restructuring the royalty rate process for Internet radio.

The motion was filled by all facets of the Internet radio industry, as large commercial webcasters, small webcasters and noncommercial webcasters joined in the filing.  The Court is expected to rule in coming days. Stay tuned.

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We have previously discussed (in the December 2006 Memorandum to Clients and the January 2007 FHH Telecom Law) the immunity from defamation and other types of lawsuits that is available to website operators under Section 230 of the Communications Decency Act of 1996.  That section states that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  It has been interpreted broadly by several state and federal courts over the past 10 years, to the point essentially only the original writer or poster of content on an Internet website can be held liable for those statements.   Any others who repost or simply host the site are immunize from virtually any lawsuit (criminal charges, such as those brought for obscenity and intellectual property lawsuits for copyright or trademark infringement can still be brought).   This immunity exist regardless of  whether the owner of the website has actively edited content or not.

A decision issued yesterday by the United States Court of Appeals for the Ninth Circuit presents an interesting wrinkle to Section 230 immunity.  The case, Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, involves a lawsuit brought under the Fair Housing Act.  Roommates.com, a website that allows interested parties to fill out questionnaires to find potential roommates in a certain locale. The site works much like a dating website in that it actively solicits information from users by asking questions and providing standard answers to be completed.  For instance, users are asked for their gender, sexual orientation, race and religion.  Though these are all intended for informational purpose, the Fair Housing Council alleged that even entering these considerations into the housing process constituted a violation of the Fair Housing Act by potentially denying housing to persons based on race, religion, gender and sexual orientation.

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