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

Proposals are intended to make FCC proceedings more efficient and transparent, and less prone to abuse.

Those of us charged with getting the FCC to do things – issue licenses, grant waivers, cancel fines, all of that – are vitally interested in the fine points of FCC procedures, because understanding them can spell the difference between success and failure.  Just as no one would sensibly sit down to a game of poker without knowing that three of a kind beats two pair, no competent practitioner would take on the FCC without knowing the somewhat more complex rules of that agency’s regulatory game. And, sometimes, part of the job lies in knowing how to navigate those rules most advantageously.

So we take notice when the FCC proposes to change its procedures, as it did in two recent Notices of Proposed Rulemaking (NPRMs).  By and large the amendments are meant to serve laudable goals:  to make FCC proceedings more efficient and transparent, and to forestall some of the more common forms of abuse.

One NPRM proposes internal housekeeping changes which would:

• allow the staff (in place of the full Commission) to dispose of frivolous or repetitive requests for reconsideration;
• allow the FCC to amend  an action (as well as to set it aside) within the first 30 days;
• expand the use of electronic filing and notification;
• close some of the 3,000+ dockets that have become inactive;
• split overly large dockets; and
• clarify the effective date of new rules.

In a separate NPRM, the FCC takes on the always-controversial subject of its ex parte rules.

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FCC adopts new Cuba policy, finally!

Our last report on Cuba ended with a cliffhanger: the Department of the Treasury's Office of Foreign Assets Control (OFAC) and Commerce's Bureau of Industry and Security (BIS) had eased their Cuba regulations with respect to telecommunications, but the FCC was clinging to its 16-year old, highly-restrictive policy. It turns out that the FCC was waiting on word from the State Department—and once that word rolled in, the Commission moved quickly. 

On January 12, 2010, FCC Chairman Genachowski received a letter from the State Department rescinding its 1993 policy letter and setting out new policy guidelines.  Sure enough, a scant nine days later, the Commission issued a Public Notice modifying its process for applications for service to Cuba. While the most burdensome restrictions from the old regime have been removed, applicants looking to serve Cuba should be aware of the following:

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With “Reboot.FCC.Gov”, FCC solicits public input to improve public interaction with agency

Depending on who you ask, 2010 may or may not be the start of a new decade. Depending on who answers, 2010 may or may not be the start of a new FCC. That’s because the FCC is relying on you (and you and you, the guy in the brown shoes reading this during his lunch break) to help decide on the direction in which the agency should be moving. They’ve labeled this process “Reboot.FCC.Gov” and, like all the kids are doing nowadays, they’ have not only set up a website at that domain, but also tied the whole thing together with the Blogging, and the Twittering and the Facebooking and the YouTubing (there’s a bunch of other social media connections as well, including, for some reason MySpace, in case the next big indie band wants to participate).

A more conventional format was used to launch the rebooting process on January 13: a press release (the website does contain a one minute “welcome” video from FCC Chairman Julius Genachowski).  As that release explains, the Commission is “soliciting public input on ways to improve citizen interaction with the FCC.” The Chairman elaborates on this, explaining that the goal is to “get input from all corners of the country on ways to improve usability, accessibility, and transparency across the agency.”

The project’s efforts focus on five key elements:

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It’s that time of year again – no, not tax time (well, not quite), but rather time to file annual Customer Proprietary Network Information (CPNI) certifications with the Commission. And just to make sure that the deadline is clearly highlighted on everybody’s “to do” list, the FCC has released an “Enforcement Advisory” reminding telecommunications carriers and interconnected VoIP providers that their CPNI certifications are due by March 1, 2010 (although they can be filed any time after January 1, 2010). 

CPNI is information relating to the quantity, type, destination, location, amount of use and configuration of service provided to telecom users. While it’s the kind of data that is collected routinely by carriers in the ordinary course of their business, it is nevertheless very private information – as the FCC has recognized in Subpart U of Part 64 of its rules. That subpart requires carriers and interconnected VoIP providers to establish and maintain systems designed to ensure that subscribers’ CPNI is adequately protected. 

And since the FCC is not in a position to inspect each and every company in order to confirm compliance with the rules, the Commission has dumped that particular monkey onto the backs of the companies themselves.  Each year telecommunications carriers must certify that they have established appropriate procedures and processes to protect CPNI. The certificate must include a description of how the procedures ensure that the responding company is or is not in compliance with the CPNI rules and must include a summary of all consumer complaints about unauthorized release of CPNI. It should also explain any actions taken against data brokers. And a detail which is often overlooked: the certification must be signed by a company officer who must affirmatively state that he/she has personal knowledge that the CPNI safeguards which have been established are adequate to ensure compliance.

Who has to file?

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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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Treasury and Commerce Departments relax Cuba rules for telecommunications providers, but FCC not yet on board

Mojitos, plantains and panatelas, here we come! Cuba has been re-opened for telecommunications transactions with U.S. companies . . . at least as far as two important agencies are concerned.

Back in April, President Obama directed the federal agencies that administer the longstanding U.S. embargo against Cuba to “reach out to the Cuban people” by liberalizing the rules governing telecommunications to and from Cuba. And while his directive seemed to suggest that things should change immediatamente, it took until July to get things largely teed up, and even then an unexplained last minute delay added two more months to the process. But in September, two of the federal agencies that have historically administered the U.S. embargo against Cuba – Treasury’s Office of Foreign Assets Control (OFAC) and Commerce’s Bureau of Industry and Security (BIS)—relaxed their regulations. As a result, U.S. companies may now: enter into transactions for telecommunications service to and from Cuba; build telecommunications facilities to Cuba; and export telecommunications-related goods to Cuba – all without the need to obtain specific approval in advance. And get this – the new rules authorize travel to Cuba that is incidental to these approved activities. Vamonos, amigos!!

Heads up, though. One communications-related agency has taken a more, er, languid approach to El Presidente’s directive.

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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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It looks like the Obama Administration’s effort to open the door for U.S. companies to provide telecom services in Cuba has taken a step forward, and then a step (or maybe just half a step) back. But either way, there appears to have been movement recently – enough to justify this reminder to keep on your toes if you’re thinking about moving into the Cuba market.

Last April the Administration announced its intent to lift many of the longstanding U.S. sanctions against Cuba.  On the telecom side, the Secretaries of State, Treasury and Commerce were directed to enable providers to: enter agreements to establish fiber-optic and satellite links between the U.S. and Cuba; enter roaming service agreements with Cuban telecom providers; provide and pay for telecom, satellite radio and television services for Cuban customers; and export certain donated communications devices.

The Office of Foreign Assets Control (OFAC) began crafting new regulations immediately to effectuate the President’s directive.  We spoke with an official in OFAC’s Licensing Division on July 17, 2009, and were told that those rules have been finalized and delivered to the White House. 

That’s the good news.

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The Commission may have only three sitting Commissioners, but that didn’t stop them from unanimously adopting new number portability provisions in a Report and Order and Further Notice of Proposed Rulemaking (R&O/FNPRM) released May 13, 2009.  In the R&O portion of the decision, the Commission reduced the porting interval for simple wireline and simple intermodal port requests. Under the new rules, all entities subject to local number portability rules must complete simple wireline-to-wireline and simple intermodal port requests within one business day. (“Intermodal ports” here include wireline-to-wireless ports, wireless-to-wireline ports, and ports involving interconnected Voice over Internet Protocol (VoIP) service.)

Previously, such simple wireline port requests had to be completed within four business days. However, the wireless industry has established a voluntary standard of two and one-half hours for wireless-to-wireless ports, and the Commission saw no good reason why wireline-to-wireline requests could not also be completed within one business day for most carriers. Furthermore, a shorter porting requirement would help consumers by shortening wait times and increasing the benefits of local number portability provisions.

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FCC invites comments on birders’ proposals regarding tower approvals

If you think you might be needing to build a tower in the next several years, listen up. The birding lobby has opened a new offensive in its long-running effort to force the FCC to give greater consideration to bird-related concerns when it authorizes tower construction.

Recently, the Commission invited comments on the following proposals advanced by the birders:

• Amend the Commission’s environmental regulations so that exclusions from those rules are available only for FCC actions that have no significant environmental effects individually or cumulatively;
• Prepare a programmatic environmental impact statement addressing the environmental consequences of the Antenna Structure Registration (ASR) program on migratory birds, their habitats, and the environment;
• Promulgate rules to clarify the roles, responsibilities and obligations of the Commission, applicants, and non-federal representatives in complying with the Endanger Species Act (ESA); and
• Consult with the U.S. Fish and Wildlife Service on the ASR program regarding all effects of towers and antenna structures on endangered and threatened species; and
• Complete the proposed rulemaking in the Migratory Birds Proceeding to adopt measures to reduce migratory bird deaths in compliance with the MBTA.

Oh, and did we mention that all of these proposals are supposed to be implemented on an expedited basis?

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Court chides FCC for delay on intercarrier compensation proceeding.

Swatting aside claims that the FCC had, again, violated the Regulatory Flexibility Act (RFA), the U.S. Court of Appeals for the D.C. Circuit has upheld the Commission’s Intermodal Number Portability order. That order was initially adopted by the agency in 2003, but then set aside by the Court in 2005 because of RFA problems. A couple of  years later, the Commission finally got around to addressing those RFA problems, and the Court has now approved that second effort.

But in so doing, the Court has signaled its impatience with the FCC’s slow-motion deliberations in the related intercarrier compensation (ICC) proceeding.

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If Emerson really had said that thing about mousetraps, he would have been right:  Build a better one and the world WILL beat a path to your door . . . at least once.

Even knowledgeable telecommunications attorneys are not immune from phone company traps. Neither am I, apparently.

In the course of planning a trip to Israel, I foolishly picked up the Verizon telephone and . . . cue the ominous music . . . dialed 011, then the Israeli country code (972), and the number I was calling. Five different times, over a few days, dealing with hotels and such. A total of 22 minutes.

The trip went very well, thank you for asking. I survived the major threat in the Middle East, which nowadays is the Israeli cab drivers. And returned home safe and sound to find my phone bill nestled in the mailbox.

With a line item for international calling of $112.20.

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First reaction to the Big Decision

[Blogmeister's note: Our crack team covered the oral argument in Fox last November, and will be providing additional coverage of the Court's decision released April 28.  The following is one commentator's view of the landscape.]

The Supreme Court has issued its long-awaited decision in FCC v. Fox Television Stations, Inc., the case involving the application of the FCC’s indecency policy to “fleeting expletives”. By a 5-4 vote, the Justices concluded that the FCC’s action was consistent with its statutory obligations under the Administrative Procedure Act. Accordingly, they reversed the contrary decision of the U.S. Court of Appeals for the Second Circuit and remanded the case back to the Second Circuit. Score one for the Commission.

While any decision favoring the Commission’s indecency policy in any way is troubling, the good news here is that the Supreme Court’s ruling changes very little on the indecency front. To the contrary, its primary effect in the indecency area is to set the stage for the next, and far more important, act in this long-running drama.

But the news is not all good. Lurking behind the high profile “celebrities talking dirty on TV” allure of the case is a major shift in a seemingly mundane legal doctrine, a shift that could affect FCC regulatory activity in all respects for years to come. So while many commentators may choose to dwell on the obvious “indecency” aspects of the ruling, the real importance of this decision lies elsewhere.

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A CommLawBlog scoop: Agency brainstorming on possible "consolidated licensing system"

Word on the street (actually, word around the FCC) is that the Commission is embarking on a quest for what some might view as the bureaucratic equivalent of the Impossible Dream: an Uber-consolidated on-line licensing system to unify the balkanized collection of existing systems currently in use. This would mean “hello” to a new “Consolidated Licensing System” and “see ya” to the Universal Licensing System (ULS), OET’s Experimental Licensing System, the International Bureau’s “MyIBFS”, and the Media Bureau’s (apparently mis-named, or at least prematurely named) “Consolidated Database System” (CDBS). At this point, it’s not clear whether any other systems – such as the FCC’s tower registration operation – would also be included.

On-line filing – whether it’s used for license applications, routine reporting, or other requests or notifications – is obviously a Good Idea. It streamlines processes, permits easy on-line access to filed materials, facilitates cross-checking and searching, pushes the initial inputting burden onto the applicant (rather than the FCC’s staff), saves paper, and generally makes life better. Oh sure, there have been the occasional complaints about the user-friendliness of, say, ULS (née 1998) and CDBS (née 2000). And yes, some users have carped about how you can’t simultaneously search the various databases for information about a particular entity, or a particular location, etc.

But maybe, just maybe, the FCC has heard those cries of despair and frustration.

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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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The sharp-eyed policy wonks here inside the Beltway spotted a line item in President Obama’s budget proposal called a “spectrum license user fee.” This tax – sorry, fee – would be assessed against users of spectrum blocks that are licensed but not auctioned. These include most AM, FM, and TV, most two-way mobile radio and fixed microwave, and all satellite, amateur radio, and several other categories. Unlicensed spectrum, such as that used for Wi-Fi and Bluetooth, would be exempt. Even so, the new fee is projected to bring in $200 million in 2010, increasing steadily to $550 million by 2019.

Outraged at this extra dip into the pockets of hard-working Americans? We don’t blame you. But don’t call your congressman quite yet. The chances of anybody ever actually paying this fee are small. The reasons have to do with the annual Washington ritual of budget politics.

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Editors' Note: Let’s be honest. The first day on a new job usually stinks. Everything’s new and different. Everybody’s trying to weasel up to your good side. Big and Important Stuff definitely needs to get done, but right out of the box it can be hard to tell the Big and Important Stuff from the Totally Unnecessary and Possibly Counterproductive Stuff.

As a public service, we here at CommLawBlog have put together a "To Do" List for Julius Genachowski when he arrives on the Eighth Floor of the FCC. (We know he hasn’t been confirmed yet, but who really believes that that’s going to be a problem?)  

But what do we know? The Chairman-Designate would probably benefit even more from suggestions from CommLawBlog readers. We down here in the CommLawBlog bunker merely have our fingers on the pulse of the Regulated Nation; you ARE the pulse of the Regulated Nation.

We’re sure Mr. Genachowski would welcome additional input from the blogosphere for his To Do list. Check out our initial thoughts below, then post your own using the comment box at the end of our list.

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More fines on the way as FCC ramps up CPNI enforcement

Look out below! The Commission has lowered the boom on telecommunications carriers who apparently didn’t file their Customer Proprietary Network Information (CPNI) certifications when they were supposed to last March. An “Omnibus Notice of Apparent Liability” (ONAL) was issued late on February 24 directed against some 600 carriers.   At $20,000 per violation, the FCC’s take could run upwards of $12,000,000.

As we reminded one and all a couple of weeks ago, in 2007 the Commission began requiring each carrier to submit (by March 1 of each year, starting in 2008) to the Commission a compliance certificate, signed by a company official, stating that he or she has personal knowledge that the company has established operating procedures that are adequate to ensure compliance with the CPNI rules. The seriousness of this requirement apparently didn’t sink in fully with a large number of carriers, all of whom seem simply to have ignored it. That’ll be $20,000, please – payable to Uncle Sam. (Of course, each carrier identified in the ONAL will have the opportunity to explain why it should not be liable for a forfeiture – but since they have all already had an opportunity to demonstrate that they did in fact comply with the certification rule, and since they all apparently came up short in that department, it’s difficult to be optimistic about their chances at avoiding a fine at this stage.)

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Commission compels carriers to conclusively tie down customer’s consent

The U.S. Court of Appeals for the D.C. Circuit has issued a decision upholding the Commission’s 2007 Order relating to the necessary mechanism for obtaining customer approval for release of customer proprietary network information (“CPNI”). That mechanism imposes greater burdens on carriers than had been the case prior to 2007.

Under the Communications Act, certain customer information – including the customer’s specific calling plans, special features, pricing and terms, and details about whom they call and when – is deemed “proprietary” and is supposed to be kept confidential.  Still, that information is useful for carriers’ marketing purposes: some carriers directly market new or different services to their customers based on CPNI, while others contract with joint venturers or outside third parties to use this information to market for them. 

Before using CPNI for marketing, carriers must have the customer’s approval. The big question in this case is how that approval is supposed to be obtained.

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The U.S. Court of Appeals for the D.C. Circuit has held that “retention marketing” practices used by Verizon violate Section 222(b) of the Communications Act. As a result, it may be more difficult for Verizon – and other incumbent carriers – to avoid losing customers in the competitive telephone market.

Telephone customers can move from one carrier to another, and they can take their telephone numbers with them. But when they do so, somebody’s got to tell the old phone company to release the customer’s number to the new phone company. That chore generally falls on the new phone company (in this particular case, the new company happened to be cable operators providing phone service), which sends the old company a local service request (LSR) to “port” the number.

Of course, when it receives an LSR, the old phone company learns that that customer is looking to defect to the competition. Attempting to make lemonade out of that particular lemon, Verizon took the opportunity to contact defecting customers (identified through incoming LSRs) and offered them incentives to stay with Verizon. This is a practice known as “retention marketing”.

But Section 222(b) of the Act prohibits a carrier from using for its own marketing efforts any proprietary information that it receives from another carrier "for purposes of providing any telecommunications service." The Big Question, then, was whether Verizon’s use of information from the LSRs ran afoul of that prohibition.

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The concept of “harmful interference” is central to FCC spectrum policy. The FCC has never said just what the term means. Oddly, though, that might be a good thing.

Nearly every band of the radio spectrum is shared among two or more categories of users. If we think of the spectrum as being spread out horizontally, the users of each band are stacked vertically. To see how this looks, click here.

Each band has a predetermined pecking order among its users: primary, secondary, and unlicensed. The relationships among all of these turn on harmful interference. Specifically:

• “Primary” users are protected against harmful interference from all other users.
• “Co-primary” users – services in the same band jointly designated as primary – may not cause harmful interference to each other.
• "Secondary” users may not cause harmful interference to primary users, and must accept harmful interference from primary users.
• Unlicensed users may not cause harmful interference to primary or secondary users, and must accept harmful interference from everybody.

The notion of harmful interference being key to the whole enterprise, we might expect to find a crisp and objective definition in the FCC rules. But when we look, we find something else. It comes in two parts:

In the case of a radio-navigation service (like GPS) or a safety service (police, fire, distress beacons, etc.), harmful interference is anything that “endangers” its functioning.

In the case of any other licensed service, harmful interference is whatever “seriously degrades, obstructs, or repeatedly interrupts” the service.

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On January 22, President Obama elevated Commissioner Michael Copps to the position of Acting Chairman of the Commission. Copps, who has been a Commissioner since 2001, will preside over the slimmed-down three-person Commission until a permanent Chairman takes over. Former Commissioner Tate left the agency in December  when her term ended, and former Chairman Martin bailed out as of Inauguration Day – leaving Acting Chairman Copps to rule the roost over remaining Commissioners Adelstein (D) and McDowell (R). No word yet on how long it may be before the Commission returns to full five-member strength (or who might be filling at least one of the two empty seats). Repeated media reports have indicated that President Obama intends to nominate Julius Genachowski – an Obama Harvard Law School chum and Chief Counsel to Former FCC Chairman Reed Hundt – to be permanent Chairman, but until the President makes a nomination and that nominee is confirmed by the Senate, Copps is The Man.

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If you’re a telecommunications carrier (and FYI – we’re not just talking about POTS and cellular here – think VoIP operators, satellite operators, international resellers and others as well), the FCC wants to be sure that you don’t forget that your annual CPNI certifications are due between January 1 and March 1.  The Commission has issued a public notice reminding everyone about those certifications, and also helpfully providing a suggested template to be used. CPNI – which stands for Customer Proprietary Network Information – is information relating to the quantity, type, destination, location, amount of use and configuration of service.

CPNI is inherently private information, and the FCC’s CPNI rules are designed to protect customers’ CPNI against unauthorized access and disclosure. (While the CPNI rules have been on the books since the late 1990s, the FCC’s interest in enforcing them increased dramatically in 2007 after media disclosures of “pretexting” practices used to obtain CPNI surreptitiously. For further background on CPNI, see the May and September, 2007 issues of FHH Telecom Law.)

One measure adopted by the Commission in 2007 is the annual certification requirement. Each year, telecommunications carriers must have an officer sign and file with the Commission a compliance certificate stating that he or she has personal knowledge that the company has established operating procedures that are adequate to ensure compliance with the rules. The carrier must provide a statement accompanying the certification explaining how its operating procedures ensure that it is or is not in compliance with the rules. Additionally, the carrier must include an explanation of any actions taken against data brokers and a summary of all customer complaints received in the past year concerning the unauthorized release of CPNI.

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On Saturday, September 6, the FCC released a decision granting forbearance from filing Automatic Reporting Management Information System (ARMIS) Report Nos. 43-05, 43-06, 43-07, and 43-08 to all carriers currently required to file those reports.  (Editorial note: Who knew the FCC ever did anything on Saturdays?)  These reports were originally designed to monitor what the FCC calls a "theoretical concern" that price-cap carriers might reduce service quality or network investment to increase short-term profits. The FCC has now concluded that the information is of only limited benefit to consumers, because the reports are filed by only some large wireline carriers and not by smaller wireline carriers or cable or wireless telephone service providers, so the reports paint an incomplete picture of the industry. It rejected complaints by states that they need the reports for state regulatory purposes, finding that it does not have the authority to maintain federal regulatory requirements solely to help state commissions undertake intrastate regulation.

To help consumers make "truly informed choices" about services available to them, the FCC believes that information should be obtained from all relevant service providers; so it has invited comment on whether it should initiate a new industry-wide data collection effort, with a short comment period of only 30 days after the proposal is published in the Federal Register. The FCC asks what kind of data it should collect, which carriers should be required to report, and what level of confidentiality should be afforded to information that is filed.

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On July 23, 2008, more than four years after the complaint was filed, the FCC denied a request by the Center for Communications Management Information, Econobill Corporation, and On Line Marketing Inc. that AT&T be ordered to post more detailed information on its website about the terms and conditions of special deals with large customers.  The complainants are consultants who want to know what deals AT&T might be willing to make based on vigorous negotiations.

The FCC observed that while Section 42.10 of the FCC's Rules does require AT&T to post information about its individually negotiated service offerings, "by design, the rule does not specify (i) a level of detail that must be disclosed, (ii) a particular time within which the information must be disclosed, or (iii) a format for disclosing information.   The rule simply states that carriers must disclose 'information concerning [their] current rates, terms and conditions ... in an easy to understand format and in a timely manner.'"  Most of the deals in question are made with large, sophisticated customers, and the FCC perceived no market failure that required the customers to be given an extra leg up in negotiations.  The FCC concluded that AT&T is in compliance by virtue of disclosure of "(i) the services covered; (ii) the length of the contract; (iii) the minimum revenue commitment, if any; (iv) the credits given, if any; (v) the waiver policy, if any; (vi) the discontinuance policy, if any; (vii) the range of applicable rates for each covered service; and (viii) the range of applicable discounts for covered services."

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In a ruling that was supremely satisfying to observers who watch the FCC avoid making decisions year after year, an exasperated DC Circuit Court of Appeals recently told the Commission enough is enough.   Core Communications, a CLEC, had been battling the FCC for years over the issue of whether the caps imposed by the Commission in 2000 on termination charges for ISP-bound traffic were lawful.  Twice before, the issue had gone to the same appeals court, and each time the court ruled that the FCC had not justified the lawfulness of the cap.  The court nevertheless left the cap rules in place on the assumption that the FCC would promptly articulate a lawful basis for the rules.  When the FCC failed to do so by 2004, Core filed a petition for a writ of mandamus with the court - an extraordinary and rarely successful method of compelling an administrative agency to do something.  The FCC promised at that time that it would resolve the matter soon and the court declined to grant the writ.  Three years later, when the FCC had still done nothing, Core renewed its mandamus petition and this time it struck pay dirt.

To justify a writ of mandamus, a petitioner must show that the agency has been guilty of "egregious delay."   The courts have traditionally construed this term liberally since they are reluctant to interfere with an agency's administration of its own agenda.  Here, however, the FCC's inaction was almost contemptuous since it had the effect of indefinitely leaving in place rules which the court had determined to be unjustified.  This was punching the court itself in the gut, and the court was not pleased.

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In a surprise to no one, the FCC has adopted the Joint Board's recommendation to cap high cost support to competing service providers in an effort to slow the rapid growth of funds needed to support these carriers.  Veteran USF observers will recall that almost a year ago, the Joint Board recommended this step, urging the FCC to act swiftly on the proposal.  But as we have seen, it takes monumental energy to change even slightly the $4 billion per year momentum of that subsidy program - or any subsidy program.   Briefly, the Commission decided (after getting the late support of Commissioner McDowell) that LECs could continue to receive massive high cost support subsidies (amounting to about three-fourths of the total funding) but competing carriers (primarily wireless operators who contribute most of the money to the fund) should be capped at the funding levels of this spring.  Because these are the newest recipients of USF funds, the FCC said, they are the ones causing the alarming growth in the funding requirements.   The FCC did grant ETC (eligible telecommunications carrier) status to dozens of new carriers in new geographic areas, but these ETCs will now have to divide the existing funding pie among themselves rather than simply getting a subsidy based on their subscriber numbers and the subsidy level of the LEC in their market, as in the past.  The capped funding level is measured on a state-by-state basis so that state PUCs do not have an incentive to grant ETC designations quickly in order to increase their state's carriers' percentage of the national pie.

The Commission did deviate slightly from the Board's recommendation as a sop to the new entrants.  First, it set the cap at March, 2008 levels rather than the 2006 level sought by the Board.   This establishes a somewhat bigger pie to be shared.  Second, the Commission excused CETCs from the cap if they file their own cost support data like incumbent LECs do.  This escape valve had been provided to ALLTEl and AT&T in previous ad hoc orders, so it was to be expected here.  Second, it excepted carriers serving tribal lands or Alaska Native regions from the cap, ostensibly because the services provided by CETCs are less redundant in those areas than elsewhere.

Because the FCC action rather dramatically favors wireline carriers over non-wireline carriers in a realm that is supposed to be technology-neutral and competitively balanced, reconsideration petitions and/or judicial appeals are a virtual certainty.   Though the FCC pledged itself to timely action on permanent reform of the USF process, would anyone care to bet that this temporary "interim" cap will not still be in place three years from now? 
 

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