Drone Update: While FAA Continues to Swat at Drones, an Appeal of its Policy Takes Off

FAA “looks into” commercial drone use while Texas group seeks D.C. Circuit review of FAA drone policies.

A couple of weeks ago we reported on the FAA’s efforts to discourage the use of drones a/k/a “Unmanned Aircraft Systems” (UAS) a/k/a model aircraft. We have a couple of updates on that front.

First, in the aftermath of the recent spate of tornadoes that ripped through the South, it’s been reported that the FAA is investigating a “storm chaser and videographer” who used a drone to document the effects of a tornado in Arkansas. The captured images were apparently used by a Little Rock TV station in its coverage of the storm damage. According to a report in the Arkansas Democrat-Gazette, the FAA “is looking into” the station’s use of the drone-acquired footage. (The report also indicates that other Arkansas stations are using drones, although whether the FAA is “looking into” their drone use is not clear.) Since post-storm damage assessment is a use for which drones are especially well-suited – a use which reduces the need for exposing additional personnel to potentially dangerous circumstances – the FAA’s vaguely menacing consideration of that use seems a bit churlish.

But if you really want churlish, check out our second update.

For several years, the Texas EquuSearch Mounted Search and Recovery Team (EquuSearch) has coordinated volunteer searchers in search-and-rescue missions on behalf of the families of missing persons. According to EquuSearch, they are a 501(c)(3) non-profit organization that relies on volunteers and does not charge families for the searches it performs. For nearly a decade EquuSearch has used camera-equipped model aircraft in its efforts with, apparently, considerable effectiveness.

Last February, an EquuSearch volunteer informally inquired of an FAA official whether the agency’s policies on the use of drones for search-and-rescue missions had changed. In an email, the FAA rep responded that unauthorized drone operations “violate part 91 (and some others) and hence are illegal.” Noting that the volunteer held a certificate of authorization (COA) from the FAA to operate only in a particular, prescribed area, the FAA cautioned that

if you are operating outside of the COA provisions, stop immediately. That is an illegal operation regardless if it is below 400ft AGL, [operating within visual line of sight] or doing volunteer [search and rescue].

Apparently no good deed goes unpunished (or at least unthreatened).

Understandably concerned, EquuSearch called that email to the attention of the FAA’s Chief Counsel in Washington and asked that the directive to “stop immediately” be rescinded within 30 days. Not surprisingly, the FAA didn’t bother to respond within that 30-day period, so EquuSearch has filed a Petition for Review with the U.S. Court of Appeals for the D.C. Circuit.

On the one hand, inviting the D.C. Circuit to the party may be a good thing: the FAA seems dead-set on attempting to enforce non-existent rules, so alerting the courts to this sooner rather than later may be helpful.

On the other hand, the facts underlying the EquuSearch case may not focus all the pertinent issues. Even if the Court opts to consider EquuSearch’s petition on the merits, it may not have to reach the legality of the “commercial/noncommercial” component of the FAA’s policy because, presumably, any supposed ban on commercial drones could not be validly applied to a noncommercial use such as EquuSearch’s.

There’s also the problem of the nature of the “order” that EquuSearch is trying to get reviewed. While the FAA rep’s email is clearly emphatic (“stop immediately”), it doesn’t look much like an official agency action. (F’rinstance, the email in question is signed off with “Best wishes”. When was the last time you saw an official order signed off like that?) Under the given circumstances, EquuSearch might have been better off asking the Court for an extraordinary writ (e.g., mandamus or prohibition) to put a stop to the FAA’s apparently extra-legal activities. While such a request could have relied on the FAA email (and other available materials reflecting the FAA’s recent anti-drone efforts), it would have been directed not just against the one email, but more broadly against the FAA’s overall approach.

Of course, if the Court does delve into this matter as a result of the EquuSearch petition, the end result may be the same. We shall see. Check back here for updates.

FCC Requests Ideas for New Net Neutrality Effort

Effort follows recent loss in court.

You have to feel sorry for the FCC, trying to write net neutrality rules despite a court order that pretty much rules out “neutrality.”

A month after the D.C. Circuit rejected the FCC’s approach to net neutrality, the FCC has announced it will not appeal that decision. While three of the commissioners remain determined to craft some type of net neutrality constraints, the FCC has put out a curious announcement that sheds no light on what, if any, alternatives it may have in mind to address a problem the court just made a lot more difficult.

The sad part, though, is that the FCC’s dilemma is entirely self-imposed.

Back in the dial-up days, the FCC distinguished between transporting Internet content and providing that content. It regulated the transport component of Internet service as common carriage, while leaving the provision and processing of content unregulated.

With the advent of broadband, the FCC made a key change. It decided to treat the transport and provision components together as a single service, and deregulated all of it. Those rulings relinquished its common carrier authority over the transport component, a step that led directly to the D.C. Circuit’s striking down the FCC’s net neutrality rules.

To be sure, the court agreed with the FCC that Section 706 of the Communications Act, while on its face merely telling the FCC to “encourage” broadband deployment, nonetheless provides “affirmative authority” to impose “rules governing broadband providers’ treatment of Internet traffic.” But the court balked at the non-discrimination provisions the FCC had written into its rules. Non-discrimination, said the court, is a hallmark of common carrier regulation. The FCC cannot impose such rules on companies it has specifically declared not to be common carriers.

The FCC said it will not appeal this ruling; instead it will try to craft new net neutrality rules that comport with the court’s decision. To do that, it will have to find language that imposes a non-discrimination requirement on Internet service providers (ISPs) while still avoiding the non-discrimination wording that characterizes common carrier rules. Since the potential discrimination by ISPs that concerns the FCC is almost the same behavior as is barred to common carriers, we don’t see how the FCC expects to pull off this linguistic feat.

The two Republicans on the five-member Commission are opposed to the rewrite attempt, preferring to leave the broadband ISPs unregulated.

The FCC has another option: it can “reclassify” the transport component broadband of ISP service as common carriage. The legal obstacles are probably surmountable, but the political barriers may be higher. Successive FCC chairmen have ruled out the possibility – although the current Chairman Wheeler recently backed off somewhat from this commitment, reminding us that the Commission still has the authority to reclassify Internet service if warranted. Yet that authority comes from Congress, where some have warned that they will step in to overrule the FCC if it tries to reclassify. We expect the anti-reclassification forces will have support from the telephone and cable companies who serve most of the country’s broadband Internet users and who prompted deregulation in the first place.

Having stared at this problem for several years, the FCC is surely familiar with its available options. It is thus noteworthy that the FCC declined to suggest a preferred course (through the issuance of a Notice of Proposed Rulemaking) or even to lay out the known options (through a Notice of Inquiry). Rather, it has essentially shrugged in bewildered puzzlement and opened up the call-in lines to anybody anywhere who might have some thoughts, any thoughts, on the matter. After briefly summarizing the history of net neutrality to date, the FCC announces:

[W]e establish a new docket in which to consider the court’s decision and what actions the Commission should take, consistent with our authority under section 706 and all other available sources of Commission authority, in light of the court’s decision.

We welcome comments from interested parties.

This total lack of direction might suggest that the FCC is adrift in a rudderless boat with no compass and only the D.C. Circuit’s decision as a very rough map. Or possibly the very smart people who work there have something up their sleeve they are not ready to disclose.

You can make the reclassification dispute unnecessary and help guide the FCC to safer waters by telling it how to write network neutrality rules that accord with the recent court decision. Read the public notice; then browse to this link and enter your suggestions in Proceeding Number 14-28. Comments submitted by March 21, 2014 will be especially helpful, says the FCC. Please be polite.

In the Wake of Verizon v. FCC: How the FCC Can Achieve Net Neutrality and Save the Internet

The FCC should do the right thing and fix its old mistake that led to the present situation.

[Blogmeister’s Note: This is an op-ed piece, emphasis on the “op”, or “opinion”, element. It reflects Mitchell’s personal assessment of net neutrality following the D.C. Circuit’s recent decision. The views expressed are the author’s; they do not represent the editorial views of CommLawBlog or Fletcher Heald & Hildreth. They do not necessarily represent the views of any of our clients, and they certainly differ from those of some of Mitchell’s colleagues. We welcome debate here, so readers who disagree with Mitchell’s take on the situation are encouraged to post comments to it.]

We all know the U.S. Court of Appeals for the D.C. Circuit has struck down the FCC’s key effort to craft “net neutrality” rules. See the court’s opinion here, and Paul Feldman’s explanatory piece here.

The invalidated rules would have required fixed broadband Internet service providers (ISPs) to treat content providers even-handedly. A cable TV company, in its role as Internet provider, could not intentionally slow Netflix while putting through its own video downloads at full speed. Nor could an ISP accept fees from a retail site in exchange for favoring that company’s traffic over that of rival retail sites.

Now, after the court’s action, such discriminatory activities are probably legal. 

Many conservatives, along with the FCC’s two Republican commissioners, are delighted. Many believe Internet companies should be subject to regulation only by the free market and not by the FCC.

But the free market requires a market. There is not much of one for ISP service.

Most consumers have little choice among broadband providers. Most neighborhoods have at most two options: telephone (or FIOS) and cable. The complications of switching from one to the other are huge and often prohibitive. Mobile 4G service is a poor substitute, due to data caps. Fixed wireless ISP service is limited mostly to rural areas. Satellite service is slow and expensive. Costs of entry for would-be new providers are high; no new competition is coming any time soon.

The service in many places is not even very good. The free market has given Americans some of the slowest and most expensive broadband anywhere in the developed world. The lack of alternatives keeps customers locked in. If an ISP throttles back a customer’s preferred content, there is not much the customer can do.

It is not just the customer who suffers. If Facebook and Amazon pay the ISPs large amounts of cash for priority access, then the next Facebook and the next Amazon start off at a huge disadvantage. The Internet remade society by giving anyone with a good idea an equal chance to reach the rest of us. The court decision now invites large, established companies to use their cash to shoulder aside new competition by muscling their way to a permanent position at the front of the line – and, of course, to pass on the extra costs to their captive customers.

The FCC sees the problem, but it has limited options. It can accept the court decision. It can appeal the decision, but without much chance of success; the court did a good job of buttressing its positions. It can try another set of net neutrality rules, but has no obvious path that avoids similar court challenges.

Or the FCC can do the right thing and fix its old mistake that led to the present situation.

To see how that works, we need a bit of history. Get comfortable.

Since the 1970s – long before the Internet – the FCC has distinguished between the transport of content and the provision of content. Today we call these functions “telecommunications service” and “information service,” respectively. For 30 years, the FCC regulated data transport as a common carrier service, in the same category as traditional voice telephone. Yet it completely forbore from regulating information service: hands off the content itself. The early Internet arose and thrived under these principles.

Importantly to the present discussion, the FCC’s Computer III regime, starting in the late 1980s, required large phone companies that provided dial-up ISP service – all of them did – to lease capacity on their lines and equipment to competing ISPs. The result: thousands of ISPs, large and small, working hard to please their customers and attract other ISPs’ customers. A dissatisfied user could switch ISPs in minutes, with just a phone call. In those days, an ISP that threatened to impair content would not stay in business for long.

Then broadband arrived, and with it, the FCC’s big mistake. A 2002 order declared all components of cable broadband Internet service – transport as well as content provision – to be an information service, and thus free from regulation. That meant a cable company ISP did not have to accommodate other ISPs on its wires. Having gone that far, the FCC had little choice but to level the playing field by extending the same treatment to the telephone company ISPs. That is why, if you have broadband Internet service, your ISP is probably Comcast or Verizon, or their equivalents in your area. That is why, if you are unhappy with the service, you don’t have a lot of other ISP options.

The FCC made these rulings at the request of the cable and telephone companies. If we have to share our broadband facilities, the companies said, we won’t have the incentive to build them, so the nation will have to go without broadband. Some other countries see Internet access as a vital public resource, like highways and airports, and fund it accordingly. But not the United States. The FCC took the cable and telephone companies at their word, and gave them what amounts to an unregulated duopoly. Now the court has said the companies can exploit their privileged position.

The fix is simple, in principle, although hard to pull off. Long-time readers – both of you – may have seen this proposal before. Now the court decision has made it urgent.

First – this is the hard part – the FCC has to reverse the 2002 and 2005 decisions. It must declare that broadband data transport (but not content) is once again a common carrier service. This is “reclassification,” in Washington-speak. The broadband ISPs would object, to put it mildly. Those in Congress who favor a free market in principle, even where there is none in practice, would likewise object. So, probably, would the two Republican commissioners. If it can take the political heat, though, the FCC is legally free to change its mind. It can especially do so here, where broadband transport arguably falls into the definition of a common carrier telecommunications service. True, the Supreme Court upheld the FCC decision that made cable transport an information service. But it really just upheld the FCC’s discretion to make the call, so a contrary decision would likely receive the same green light.

But wait: how would regulating transport address the problem of net neutrality, which relates solely to content?

The FCC would exercise its newly reclaimed right to regulate broadband data transport in only one narrow respect: it would impose Computer III type rules as to broadband. Comcast, Verizon et al. would have to lease capacity on their wires to competing ISPs. They could charge lease rates that fairly reflect the costs of building out and maintaining the facilities, plus a reasonable profit. But they would no longer be the sole ISPs in the neighborhoods they serve.

Then, suddenly, there really would be a functioning market for ISP service. A customer who did not like having particular content impaired – or could not get through on the phone, or had any other complaint about the service – could easily switch to a different ISP, without having to change the physical connection to his home. The facilities-based providers, like Comcast and Verizon, would be steered by competition, rather than regulation. Those that did not offer unimpaired access to content would lose business to other ISPs.

The result would be real net neutrality, without any rules to require it.

As a side benefit, consumers could sign up with specialized ISPs that provide only family-friendly content, or offer support for older people, or shut off at 11 p.m. on school nights – pretty much anything having enough demand. Yet all decisions on content would ultimately rest with the customer, not with one or two ISPs.

Will the FCC actually do this? Probably not. Reclassification is such a political third rail that successive FCC chairmen have assured Congress it is off the table. But the court has now closed off every other realistic route toward net neutrality. The FCC can either straighten up and take on a hostile Congress, or it can stand back and watch the Internet devolve into the profit-making tool of a few powerful companies. This blogger just doesn’t see a third alternative.

Net Neutrality 2014: D.C. Circuit Tosses Most of the FCC's "Open Internet" Rules

Court affirms FCC’s authority to engage in some Internet regulation, but FCC faces complex choices on next moves.

 In the war over how, if at all, the Internet will be regulated, a major battle has been decided. Both sides can claim victory to some degree, but no knockout punch was landed: the war wages on. 

The U.S. Court of Appeals for the District of Columbia has struck down the core “anti-blocking” and “anti-discrimination” elements of the FCC’s Open Internet rules. At the same time, the Court agreed with a crucial aspect of the FCC’s strategy: the Court held that the FCC does have the authority to regulate Internet traffic management under Section 706 of the Communications Act. While that affords the Commission at least a ray of hope going forward, how the FCC might utilize that authority remains to be seen.

The FCC now has some choices to make as it contemplates its next step. In the meantime, broadband Internet Service Providers (ISPs) will be able to experiment with new traffic management techniques and business models.

In late 2010 the FCC adopted its “Open Internet” rules. The Commission was concerned that Internet service providers (ISPs) could, in the position of “gatekeepers” controlling access to the Internet, unfairly bar some Internet content providers (edge providers) or at least disadvantage some edge providers relative to others. Accordingly, to assure a level Internet-access playing field, the FCC stepped in, adopting three primary measures:

  • A prohibition against blocking of content, applications, services, or non-harmful devices, applied to both fixed and mobile ISPs (the “Anti-Blocking Rule”);
  • A prohibition against “unreasonable discrimination” among lawful network traffic, applied to fixed ISPs only (the “Anti-Discrimination Rule”); and
  • Mandatory requirements for ISPs to disclose transmission performance and  traffic management practices to end users, applicable to both fixed and mobile providers (the ”Transparency Rule”).

“Fixed” ISPs here include telephone, cable, and fiber wireline providers, and also satellite and wireless ISP service to particular premises.

ISPs would still be permitted to undertake “reasonable management” of traffic on their networks to remedy congestion or prevent spamming. However, the FCC made clear that anti-competitive behavior would likely be deemed unreasonable under any circumstances. Such behavior could involve, for instance, offering to let an edge provider pay the ISP to prioritize delivery of its content to end users, or hindering services that compete with some other part of the ISP’s business.

For a more detailed discussion of what the FCC did in 2010, read our post here.

The Commission asserted that Section 706 of the Communications Act (47 U.S.C. §1302) authorizes it to regulate along these lines. Unfortunately for the FCC, its previous claim that Section 706 gave it that authority had run aground in the same court.

In 2008, reacting to attempts by Comcast to limit consumer use of peer-to-peer transmissions, the Commission declared such activities contrary to federal policy. The FCC said Section 706 gave it the authority to take that step. In its 2010 decision in Comcast Corp. v. FCC, however, the D.C. Circuit disagreed, holding that the FCC failed to demonstrate that it had the statutory authority to regulate Internet network management practices.

Several months later, in response to the Comcast decision, the FCC issued its Open Internet rules, relying on a revised rationale regarding its statutory authority under Section 706 of the Communications Act. That FCC action was the subject of the Court’s most recent decision. 

As it had in its 2008 Comcast ruling, the FCC relied heavily on Section 706 as the jurisdictional basis for its Open Internet rules. Section 706(a) generally urges the FCC to “encourage” the deployment of “advanced telecommunications capability” (i.e., broadband capability) by using various regulatory or de-regulatory measures to promote competition or remove barriers to infrastructure investment. Section 706(b) requires the FCC to conduct inquiries concerning the availability of advanced telecommunications; if it finds that service is not being deployed in a timely manner, it must “take immediate action” to accelerate deployment by removing barriers to infrastructure investment and promoting competition in the telecommunications market.

In the Open Internet Order, the FCC found that broadband Internet was not being deployed in a sufficiently timely manner, and that enactment of Open Internet rules would promote competition and accelerate deployment through a “virtuous circle of innovation in which new uses of the network—including new content, applications, services, and devices—lead to increased end-user demand for broadband, which drives network improvements, which in turn lead to further innovative network uses.” 

Challenging the Open Internet rules, Verizon argued that Section 706 was merely a statement of policy, not a substantive grant of authority to enact rules. Indeed, the FCC had asserted that same position back in 1998, a fact that came back to haunt it in the Comcast case: observing that the Commission had not even questioned, let alone overruled, its 1998 interpretation of Section 706, the Comcast Court held that Section 706 as interpreted by the FCC did not give the agency the authority to regulate Comcast’s behavior.

Having lost the Comcast decision on the basis of its earlier reading of Section 706, the Commission took another look at the statute in its 2010 Order, and lo and behold, concluded that Section 706 in fact did grant substantive authority to the FCC! And this time around, under established case precedent directing courts to defer to an agency’s reasonable interpretation of an ambiguous statute, the Court concurred: the Commission could change its mind, turn its back on its 1998 interpretation of Section 706, and now find that that section does indeed constitute a grant of authority to impose some Internet regulation.

The Court warned, however, that that the FCC’s authority is limited. First, the Commission may regulate only the “wire” and “radio” aspects of Internet communications, not the content of Internet transmissions. In addition, any FCC regulation of the Internet must have the sole purpose of encouraging reasonable and timely deployment of “advanced telecommunications services” (i.e., broadband). Nevertheless, the Court found that the FCC’s “virtuous circle” theory supported the use of Section 706 authority to enact some sort of Internet traffic management rules.

So far, so good for the FCC, right?  

Not so fast.

While the new interpretation of Section 706 generally authorizes the FCC to enact some rules, it does not permit the Commission to enact rules that contravene other provisions of the Communications Act. Section 153(51) of the Act states that “providers of telecommunications services” may be treated as common carriers only to the extent that they are providing telecommunications services. But the Court found that the Anti-Blocking and Anti-Discrimination Rules treated Internet service like common carriage. This is a major problem for the FCC because a decade earlier the Commission changed the classification of broadband Internet service, labeling it an unregulated “information service” and not a common carrier telecommunications service. And if broadband Internet service is not a common carrier telecommunications service, the Act says that it cannot be subjected to common carrier regulation – including the Anti-Blocking and Anti-Discrimination Rules.

Whoops.

The FCC tried to argue that its Open Internet rules did not impose common carrier obligations, but the Court wasn’t buying it. Rather, the Court held that the Anti-Blocking and Anti-Discrimination Rules are barred by the Act. (Generously, the Court found that the Transparency Rule could be “severed” from the other Open Internet rules and, because that rule does not regulate ISPs like common carriers, it can stand.)

So where does the FCC go from here?

Chairman Wheeler now has a chance to establish his own legacy on Net Neutrality. His comments on Net Neutrality have been ambiguous: he has expressed willingness to allow some level of pricing experimentation by ISPs, but in response to the recent court decision he stated that he is considering a court appeal of the Circuit’s order.  

Taking the Open Internet litigation to the next level – either by a petition for rehearing (whether to the three-judge panel or to the D.C. Circuit en banc) or by a petition for certiorari to the Supreme Court – presents risks. While the FCC might hope for a ruling that its Anti-Blocking and Anti-Discrimination Rules do not amount to common carrier regulations, such a result does not appear likely. And, by seeking review of the Circuit’s decision, the FCC would risk a reversal of the valuable holding that Section 706 gives the FCC some degree of substantive regulatory authority. (That is a non-frivolous risk: Judge Silberman, dissenting in part from the Circuit’s decision, opined that the FCC had not made a sufficient case for substantive Section 706 authority.)

From a practical perspective, the appeal process is not a quick one. An appeal would prolong the uncertain status of the Open Internet rules, contrary to the FCC’s years-long effort to resolve that status. 

A more attractive option for the FCC might be to try to craft new Open Internet rules.   The Circuit has now given the FCC some clues as to how that might be done. For example, a more robust opportunity for ISPs to engage in “reasonable network management” might reduce the common carrier like impact of the Anti-Discrimination Rule. The Anti-Blocking rule might be more difficult to preserve in any form. The Court did suggest that a rule requiring ISPs to provide a certain minimal level of service to all edge providers, while allowing individual bargaining to charge others for a higher level of service, might pass muster. That, however, would require elimination (or at least substantial modification) of the Anti-Discrimination Rule.

A simpler alternative for the FCC could be to re-classify broadband Internet service as common carriage. However, any such attempt would trigger aggressive opposition from ISPs, from many members of Congress, and from Commissioners Pai and O’Rielly, both of whom urged their colleagues to accept the Circuit’s decision and get out of the Net Neutrality business.   

In the meantime, what can we expect from ISPs?  

At least for now, the Anti-Discrimination and Anti-Blocking rules have been vacated by the Court and, in effect, no longer exist (except for Comcast, which committed to follow those rules though 2018 as a condition of approval of its merger with NBC). As a result, most ISPs are free to begin experimenting with “two-sided” business models in which ISPs might boldly begin offering paid prioritization to edge providers. (One possible model: AT&T Wireless’s recently announced plan by which edge providers can sponsor free data downloads to end users.) The market may well reveal whether such prioritizations have a pro- or anti-competitive effect, or both.  

But moderation would be a wise approach in any new traffic management or business models, and statements from the major ISPs reflect their understanding of that. Seemingly abusive or blatantly anti-competitive practices could trigger negative reactions from consumers, who have strong feelings about their Internet service. Similarly, such practices could trigger enforcement actions from the Department of Justice (perhaps invoking the anti-trust laws) or the Federal Trade Commission (acting to end unfair or deceptive trade practices) or state regulators. 

The Net Neutrality war continues, and we here at CommlawBlog will keep you informed of its progress.

D.C. Circuit Rejects Challenge to Sunsetting of Viewability Rule

Concurring opinion raises questions about constitutionality of must-carry rules

The D.C. Circuit has given the FCC and the cable industry a belated Christmas present. It has rejected a challenge mounted by a number of broadcasters (including the NAB) to the FCC’s 2012 revision of its “viewability” rule. And one member of the three-judge panel went considerably further, suggesting that the entire cable must-carry regime is on extremely shaky constitutional footing.

The viewability rule, adopted in 2007, applied to “hybrid” cable companies. (“Hybrid” cable operators are those that opted, after the 2009 DTV transition, to provide an analog tier of programming – consisting of local TV signals and, in some cases some cable channels – so that subscribers with analog receivers would not require additional equipment.) The rule provided that such operators could either (1) provide the digital signal of all must-carry stations in analog format (in addition to any digital version carried) to all analog cable subscribers, or (2) transition to an all-digital system and carry the signal in digital format only, provided that all subscribers have the necessary equipment to view the broadcast content. 

The rule was scheduled to sunset in June, 2012 and, after a rulemaking proceeding, the Commission decided to let that happen (although the Commission did tack on an additional six months). While hybrid cable operators remain subject to a general “viewability” requirement, since December, 2012 they have had significantly greater flexibility in meeting that requirement.

Concerned that the sunsetting of the original viewability rule could threaten their ability to reach a significant number of viewers, several broadcasters challenged the FCC’s decision.

To no avail.

The D.C. Circuit was completely unpersuaded. The majority opinion (by Judge Edwards) easily rejected the petitioners’ Chevron I claim since Congress did not expressly mandate the retention of the rule. He also had no great difficulty in concluding that the FCC’s action was not arbitrary or capricious or inadequately telegraphed in the NPRM.

The more interesting aspect of the court’s decision is Judge Kavanaugh’s concurring opinion. He’s totally on board with all of Edwards’s points, but he wrote separately to suggest that both the viewability rule – and, more broadly, the entire cable must-carry regime – raise serious First Amendment questions. 

The Supreme Court has historically recognized those questions but has resolved them in favor of broadcasters. Now, however – at least according to Kavanaugh – the march of technology has shifted the balance in favor of cable operators. Essentially, Kavanaugh observes that, thanks to the incredible increase in competing media sources, “cable operators ‘no longer have the bottleneck power over programming that concerned the Congress in 1992.’” His bottomline message: “cable regulations adopted in the era of Cheers and The Cosby Show are ill-suited to a marketplace populated by Homeland and House of Cards.”

Kavanaugh’s opinion is a cable operator’s dream and a broadcaster’s nightmare. It reflects at least one judge’s very firm embrace of the First Amendment argument that the cable industry has repeatedly advanced against must-carry. And he squarely argues that the strength of that argument has increased with time and technological development.

Dating back to the 1994 Turner Broadcasting case, the Supremes, although not unsympathetic to cable operators’ First Amendment claims, have concluded that the interests of preserving over-the-air broadcasting are sufficiently hefty to outweigh the incursion on cable operators’ rights. But in Kavanaugh’s view, application of the Supremes’ Turner analysis leads to “an entirely different result” when applied “to today’s highly competitive video programming distribution marketplace”.

Kavanaugh’s opinion appears to be a not-very-subtle invitation to the cable industry to make another First Amendment run against must-carry. Because of that, it’s probably unlikely that the broadcast parties who took this case to the Circuit will be eager to seek Supreme Court review, since that could tee up the First Amendment issue sooner rather than later. Presumably, though, the cable industry will eventually be able to get the issue before the Supremes, which could lead to some fireworks in the video distribution industry.

Net Neutrality 2013: The D.C. Circuit Hears the Arguments

Three-judge panel grills opposing counsel for two hours, seems to signal doubts about FCC’s Open Internet rules.

It’s been almost two years since net neutrality was the Big Issue here – and now it’s back! On September 9 the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments in Verizon’s appeal of the FCC’s effort, dating back to late 2010, to impose “open Internet” rules on broadband providers. The importance of the argument could be seen from the turn-out at the court: it was SRO in the D.C. Circuit’s main courtroom, forcing the marshals to herd the overflow into a separate courtroom where they piped in the audio of the argument.

As we have repeatedly cautioned, trying to guess the result in a case based on oral argument is an iffy proposition. Judges are adept at keeping their cards close to their robes. But still and all, it sure sounded to us like the Commission’s net neutrality effort – or at least much of it – is skating on very thin ice. In particular, at least two of the three judges on the panel (Judges David Tatel and Laurence Silberman) seemed especially “dubious” – to use a term that popped up during the argument – of the anti-discrimination component of the Open Internet rules. And whether the remaining anti-blocking provision could survive in the absence of its companion anti-discrimination provision was far from clear (although at one point Judge David Tatel seemed to suggest that there might be some way to preserve the former without the latter). Judge Silberman, on the other hand, seemed convinced that the anti-blocking provision is also a goner.  (The third judge -- Judge Judith Rogers -- asked significantly fewer questions than her confreres.)

With respect to Verizon’s argument concerning the FCC’s lack of clear statutory authority for its Net Neutrality rules, Judge Silberman jokingly suggested that the Commission’s authority derives from “emanations from a penumbra” of some statutory language – which seemed to some observers, at least, to indicate that he may be more than a little sympathetic to Verizon on this point as well.  Tatel, on the other hand, seemed at times to suggest that he could see some statutory basis for the FCC.

In our post about the recent Ninth Circuit argument about Aereokiller, we observed that, in that argument, at least, the Ninth Circuit wasn’t particularly chatty. That was not a problem in the net neutrality argument. Although each side was originally allotted a total of 20 minutes of argument time, the whole affair ended up taking two hours – much of it because of extensive probing by the judges. But don’t take our word for that – listen yourself. As it turns out, effective September 9, the D.C. Circuit is now posting recordings of oral arguments on its website! Here is a link to the argument in the Verizon net neutrality appeal. Grab some popcorn and a drink and prepare to be entertained for 120 minutes.

Conventionally the D.C. Circuit takes at least a couple of months to prepare its opinions following oral argument. Because of the complexities of the net neutrality case, it may take the court longer to crank out its decision. You never know. Check back here for updates.

Filing Deadline for 2013 Biennial Form 323 Extended Already!

Yikes, time is just screaming past us. Has it really been two years since the last biennial Ownership Report (FCC Form 323) was filed? Apparently so – and we know this because the FCC, apparently looking to get a jump on things, has already extended the deadline for the next biennial Form 323. In an order issued on its own motion (i.e., nobody even had to ask), the Media Bureau has announced that the 2013 biennial Ownership Reports will be due no later than December 2, 2013. (That’s a month later than the original deadline.)

The Commission provided a similar one-month extension the last time around, back in 2011.

These biennial reports must be filed by all commercial full-power AM, FM, TV, and LPTV stations (including Class A stations), as well as any entities that happen to have attributable interests in any such stations. While the deadline for filing has moved, the “as of” date – that is, the date as of which the information in the report must be accurate – has not moved. So this year’s Ownership Reports must reflect the reporting entity’s information as of October 1, 2013.

The Commission still has taken no action in the rulemaking proceeding it kicked off last New Year’s Eve. You may recall that, in that Sixth Notice of Proposed Rulemaking, the Commission proposed ditching the “special use FRN” (SUFRN) that has been a feature of the biennial Form 323 since late 2009. (The SUFRN has an interesting history, which you can read about here (and in the earlier links you’ll find there). It’s a device that permits some reporting individuals to avoid having to cough up their Social Security Numbers in order to get an official FCC Registration Number (FRN) to include in the Ownership Report.) The Bureau’s order doesn’t mention SUFRNs, which is par for the course. But since the Commission has not adopted that proposal, it seems at this point that it’s a reasonable bet that the SUFRN will still be available for 2013 Form 323 filers. You can never be too sure, though, so it would probably be prudent to check back here periodically between now and then.

GAO Report: In Wake of Successful Hack of FCC Computer Systems, $10 Million Fix Ineffective

Gee, do we really want to entrust our social security numbers to the FCC?

Did you know that, in September, 2011, the FCC was the victim of “a security breach on its agency network”? 

Neither did we. 

The precise nature and extent of the breach hasn’t been made public (as far as we can tell), but it must have been impressive. Did you also know that, in reaction to that breach, within a couple of months the FCC had wangled out of the Office of Management and Budget a cool $10 million to undertake an immediate “Enhanced Secured Network” (ESN) Project to improve its computer security against such cyber attacks? 

Neither did we.

And did you also know that the General Accountability Office (GAO), called in to assess the manner in which the FCC implemented its ESN Project, concluded that the FCC messed up? In particular, according to the GAO, the Commission “did not effectively implement or securely configure key security tools and devices to protect these users and its information against cyber attacks.” And did you know that, as a result, again according to the GAO, the Commission continues to face “an unnecessary risk that individuals could gain unauthorized access to its sensitive systems and information”? 

Neither did we.

This is all spelled out – circumspectly, to be sure, presumably so as not to reveal too much about the FCC’s vulnerabilities – in a GAO report sent to Congress on January 25, 2013. The report was not publicly announced until last week.

The fact that the FCC’s computer systems have been compromised is bad enough. The fact that the FCC, apparently acting in haste, cut a few too many corners in its effort to lock up the barn door after the horse had taken a hike is even more troublesome.

But what is especially galling – to this blogger, at least – is the fact that, while all that has been going on, the Commission has proposed to force a large universe of individuals to trust the FCC with their social security numbers. And in so doing, the Commission hasn’t bothered to mention that the computer systems on which those numbers would presumably be maintained have already been shown to be vulnerable to hackers.

As we reported last month, the Commission is considering the elimination of the Special Use FRN in connection with broadcast Ownership Reports (FCC Forms 323 and 323-E). If adopted, that elimination would mean that all attributable interest holders of all full-service broadcast stations (as well as LPTV and Class A TV stations) would have to cough up their social security numbers to the Commission in order to obtain an FCC Registration Number (FRN), which would have to be included in all Ownership Reports. Comments on that proposal are currently due to be filed on February 14.

The FCC’s seeming reticence relative to the fact that it suffered an apparently successful cyber attack 18 months ago, and that its efforts to fix the problem in the meantime have apparently been less than successful, is understandable, if regrettable (and also curiously contrary to this Commission’s professions of “transparency”).

But it seems extraordinarily inappropriate for the Commission, knowing of those vulnerabilities, to then propose that a huge number of folks must provide to the FCC the crown jewels of their identity, their social security numbers. In so doing, shouldn’t the Commission, at a bare minimum, have alerted us all to the fact that not only are their computers possibly vulnerable (we all know that that’s an unfortunate fact of modern-day life), but that their computers had already been successfully attacked? Oh yeah, and mightn’t it have been a good idea to spread the word that GAO had been called in to see whether the problem had been fixed? And once GAO concluded that, um, the problem hadn’t been fixed, don’t you think the FCC might have at least had some second thoughts about persisting in its proposed insistence on the submission of social security number-based FRNs?

Before you answer those questions, consider this. In 2009, when the FCC first proposed to require the submission of SSN-based FRNs for all attributable interest holders, a number of parties objected, pointing out (among other things) that such submission would increase the risk of identity theft. The Commission’s response? We quote it verbatim:

While identity theft is a serious matter, none of the comments identify a single instance of a security breach with respect to the Commission’s CORES system. Indeed, their claims are purely speculative. The FCC has a robust security architecture in place for CORES that exceeds Federal guidelines and recommendations and has deployed strict operational controls in compliance with NIST guidance. The servers are located in secured locations with strict access control. Logically, the databases are located behind several firewalls that protect the data from the Internet and the general FCC user population. All servers and communications are monitored both by automated tools and systems as well as operational procedures. The CORES application uses separate roles for various user classes, and administrative access is only permitted from limited set of known internal workstations. All transmission of non-public data is encrypted.

(You can find the entire FCC response on the OMB website. It’s the “Supplementary Document”, uploaded on 10/16/09 and titled “Response Letter to OMB on Comments Received”.)

So, according to the FCC, the notion that its oh-so-secure computer systems might be compromised was, at most, far-fetched speculation. 

Oops.

We now know that that speculation was not at all far-fetched. That being the case, the Commission may want to re-think its proposed abandonment of the Special Use FRN. And anyone who, in response to the proposal to deep-six the SUFRN, expresses concern about data security should be sure to cite to the GAO report. That way, the Commission can’t claim that such concerns are merely speculative.

Form 323 - Kissing the SUFRN Good-bye?

FCC proposal would abandon “special use FRNs” in Ownership Reports, require social security number-based FRNs instead . . . for noncommercial licensees, too!

If you’ve got an “attributable interest” in a broadcast licensee, you might want to make sure that you’ve got your social security number (SSN) handy. The FCC is trying – again – to insist that all attributable interest holders provide SSN-based FCC registration numbers (FRNs) when the time comes to file biennial Ownership Reports on FCC Forms 323 (for commercial licensees) and 323-E (for noncommercial licensees). 

In a Sixth Further Notice of Proposed Rulemaking (6th FNPRM) the Commission has proposed deep-sixing the “special use FRN” (SUFRN, as in “SUFRN succotash”) alternative that has been available since the July, 2010 filing of the biennial Form 323. The Commission has also proposed expanding the SSN-based FRN requirement to Form 323-E for noncoms, which would meant that folks on the controlling boards of NCE stations would have to get SSN-based FRNs. And the Commission has also renewed a proposal first bandied about in the Fifth Further Notice of Proposed Rulemaking (5th FNPRM) back in 2009. (In the nearly four years since the 5th FNPRM, that proposal – which would expand the FRN reporting requirement even more – apparently never made it to the Federal Register . . . until now!)

So long, SUFRN?

The history of the FCC’s efforts to require the reporting of SSN-based FRNs by all attributable interest holders in commercial licensees makes for fascinating reading. Unfortunately, the summary of those efforts as set out in the 6th FNPRM is not entirely accurate; it misses a lot of important details concerning the provenance of SUFRNs, a device made available for those not interested in providing their SSNs to the FCC. If you need to brush up on things, let us refer you to our fine collection of posts on the topic. (Note: when you click on the link, the posts – about a couple dozen – will appear in reverse chronological order, so be sure to scroll down to the May, 2009 entries before you start reading.) For a quick synopsis, check out this post, and for a good chuckle, check out this one.

In a nutshell, back in 2009 the FCC tried to insist that all attributable interest holders in commercial broadcast licensees would have to provide SSN-based FRNs. The universe of “attributable interest holders” is vast; it includes all general and many limited partnership interests, all members of LLC licensees, holders of five percent or more of a corporate licensee’s stock, and all officers and directors of a licensee. But wait, there’s more. That universe also includes individuals and entities who hold indirect interests in broadcast licensees, i.e., through intermediate holding companies. (Possibly helpful illustration: if Corporation A happens to own a 20 percent ownership interest in a corporate licensee, then all of Corporation A’s officers, directors and 25 percent or greater shareholders would be deemed to hold attributable interests in the licensee.)

Prior to 2009, a licensee had generally been responsible for, at most, its own FRN. But with the revised Form 323 introduced in 2009, that changed dramatically. Suddenly – and we do mean suddenly, since the Commission sprang the revised form on the broadcast industry in mid-August, 2009, without having made it available for public review beforehand – commercial broadcasters would have to obtain and report SSN-based FRNs not only for the licensees themselves, but also for all their attributable interest-holders. That would impose a substantial burden on many, possibly most, licensees. It also gave rise to legitimate privacy concerns. In this day and age of identity theft, we are all taught not to hand out our SSNs unnecessarily.

Not surprisingly, considerable opposition to the mandatory reporting of SSN-based FRNs arose, despite the fact that the Commission seemed bent on minimizing the opportunity for any public comment. Faced with serious resistance, the Commission initially (in December, 2009) announced that SUFRNs could be used by licensees to report interest holders for whom the licensee could not obtain SSN-based FRNs as of the deadline for filing the Ownership Report. But the licensee would still be obligated to obtain and report SSN-based FRNs for all its attributable interest holders.

Fletcher Heald, joined by a number of state broadcast associations, took that requirement to court. The day our petition was filed, the FCC announced that it was postponing the then-imminent Ownership Report deadline indefinitely. Coincidence? You make the call.

By May, 2010, the requirement was still with us, and the new filing deadline was fast approaching. Back to court we went. This time the court ordered the Commission to respond to our petition. Two days after that order came down, the FCC revised Form 323. Coincidence? You make the call. In so doing, the Commission didn’t bother to tell anybody other than the Office of Management and Budget, which rubber-stamped the change.  

The Commission then paraded into court, pointing to its revised form without mentioning to the court that the ink was still wet on the revised version. The court eventually denied our petition, but only based on the revised version of the form, which the court interpreted to say that no individual attributable interest holder would be required to submit an SSN-based FRN if he/she preferred not to. So even though our petition was technically “denied”, we had largely achieved the result we wanted.

The biennial Form 323 filings went in in 2010 and 2011 (yes, it really was “biennial”, since the 2010 report related back to 2009) without apparent problems. But now, with the 6th FNPRM, the Commission is proposing to eliminate the SUFRN option.

Why? It’s not entirely clear. The Commission speaks generally about the need to “facilitate long-term comparative studies” of broadcast “ownership”. It sees SSN-based FRNs as “essential to providing the kind of searchable and manipulable database needed to support accurate and reliable studies of ownership trends.” And now we learn that, apparently, the “fundamental objective” of the biennial Ownership Report is to “track trends in media ownership”.

As far as we know, the FCC’s interest in studying “ownership trends” is of extremely recent vintage, as is the notion that that activity is the “fundamental objective” of Ownership Reports. But even if we indulge the Commission on this point for the moment, serious questions remain about the proposal to toss the SUFRN option.

For example, the Commission seems to think that reliance on an SSN-based system will assure greater accuracy than any alternative. But that assumes that everyone obtaining an SSN-based FRN provides accurate input. That’s not necessarily a given: the potential for inadvertent slip-ups always exists, as does the possibility that folks who prefer not to provide their SSN might intentionally mis-enter it in the CORES system. How can the FCC police against that? Also, if you’re familiar with CORES, you know that it’s possible to get an FRN without entering an SSN at all. For example, you can simply indicate that you have applied for an SSN (the assumption being that you haven’t yet received it), and bingo, you can get yourself an official FRN without an underlying SSN. (In a footnote to the 6th FNPRM, the FCC itself acknowledges that the CORES FRN system can be circumvented and requires accurate input from users.)

So the FCC’s insistence on the virtues of an SSN-based approach to FRNs seems a bit over-stated.

So, too, does the Commission’s insistence on getting data from all attributable interest-holders. While rounding up that universe of respondents will for sure provide an incredibly comprehensive snapshot of essentially all participants in the broadcast industry, is that really necessary? What difference does it make if Joe and Loretta Six-Pack happen to own a five percent, or even ten percent, interest in their brother-in-law’s station down the block? Who cares if, strictly for purposes of convenience (e.g., for signing the occasional corporate document for regulatory purposes), a broadcast president/CEO has appointed one of her office staff to serve as “Assistant Secretary” of the licensee corporation? If the FCC’s goal is to chart and monitor the major veins and arteries of the broadcast industry, why bother scanning down to the capillary level, especially when that imposes a substantial burden on the scannees?

And let’s not forget the legitimate privacy concerns of everyone who would have to get an SSN-based FRN. One’s SSN is normally viewed as among the crown jewels of one’s array of personal identifying information. We are frequently encouraged not to provide our SSN unnecessarily.

The FCC initially began collecting SSNs only from those who “do business with” the Commission, as a mechanism to facilitate debt collection. While that might be a valid basis for SSN collection, does it have anything at all to do with Joe and Loretta Six-Pack or the Assistant Secretary who happens to hold a corporate officership simply for convenience purposes? The Commission can’t claim with a straight face that it might try to go after such bit players for regulatory obligations incurred by the licensee.

BTW, if you’re not sure how serious the FCC is about enforcing an SSN-based FRN requirement, check this out. According to the 6th FNPRM, if an attributable interest holder is unwilling to provide an SSN-based FRN for inclusion in an Ownership Report, the Commission will apparently expect the licensee to “report the recalcitrant attributable interest holder” so that the FCC can “use its enforcement authority to impose a forfeiture against such individuals”.   Translation (cue sinister music, lower lights menacingly): “We have our ways to get the information we want. Bwahahahaha.” Exactly how such individual forfeitures could be justified is unclear, since (as the FCC admits), its rules don’t currently require attributable interest holders to have FRNs at all. We’re guessing that that wouldn’t stand in the FCC’s way, though, at least until the matter got to court.

In summary, the FCC appears still to be wedded to the SSN-based FRN reporting requirement that it attempted to foist on the broadcast industry in 2009. That initial attempt was foiled, thanks primarily to the fact that the Commission ignored a number of obvious procedural niceties in its headlong rush to impose the requirement. But now, more than three years later, the Commission is taking a more deliberative approach presumably designed to avoid the problems it ran into the last time around. 

While we may all agree that the Commission’s proposal is flawed in a lot of ways, we must face the fact that, unless somebody comes up with an acceptable alternative, the FCC seems bound and determined to toss out the SUFRN option and to insist on SSN-based FRNs from all attributable interest-holders of each licensee. So now’s the time to put your thinking caps on. It’s hard to imagine that a suitable alternative can’t be devised, even if the FCC seems resistant to that notion. Here’s hoping that comments in response to the 6th FNPRM will provide such alternatives.

Non-coms in the FRN cross-hairs?

Also out for comment in the 6th FNPRM is a proposal that the SSN-based FRN reporting requirement be extended to attributable interest holders in noncommercial licensees. The NCE universe dodged this particular bullet back in 2009, although the issue was then teed up in a Fourth Further Notice of Proposed Rulemaking (4th FNPRM). The Commission is now soliciting more comments on it – even though, in response to the 4th FNPRM members of the public broadcasting community severely criticized it. 

Other proposals

Additionally, in the 6th FNPRM the Commission suggests that the biennial ownership reporting requirement be expanded to include entities and individuals whose interests are not otherwise attributable. If their non-attributability arises from either (a) the single majority shareholder exemption or (b) the exemption for interests held in “eligible entities” subject to a higher EDP threshold, then that non-attributabiltiy would go away under the FCC’s proposal.  (This proposal first saw the light of day back in 2009, but has not been actively pursued, until now.)

The Commission is also suggesting that the filing date for biennial Ownership Reports should be shifted back a month, to December 1 (although the “as of” date would remain October 1). The Commission probably thinks that giving broadcasters an extra 30 days to prepare their reports is doing them a favor, but hold on there. December 1 arrives immediately after the Thanksgiving holiday, and coincides with multiple other filing deadlines. Why not pick a date – July 1, for instance – that would not be similarly encumbered. Further, it’s not uncommon for broadcast transactions to be timed to close as of the December 31 of any given year. That being the case, ownership data accurate as of October 1 would often be inaccurate a mere 90 days later. For that reason a mid-year reporting deadline (again, July 1 springs to mind) might be preferable all around.

In any event, the 6th FNPRM has been published in the Federal Register, as a result of which the deadlines for comments have been established. Comments on the various proposals are due to be filed by February 14, 2013 (Happy Valentine’s Day!), and reply comments are due by March 1.

Court Upholds FCC Role as Data Roamin' Umpire

But the opinion may indirectly threaten survival of the FCC’s “network neutrality” rule

The FCC can require mobile data providers to offer roaming arrangements, says the U.S. Court of Appeals for the D.C. Circuit. But in so ruling (in a case titled Cellco Partnership v. FCC), the court may have threatened survival of the FCC’s network neutrality rules. We’ll come back to that.

“Roaming” arrangements make it possible to use your cell phone outside your own provider’s service area. We take it for granted that a cell phone will work anywhere in the country, and usually it does. If your own provider has a tower in the vicinity, it will take the call. Otherwise, one of the local cell companies will handle the call and send the bill to your provider, which (of course) will pass the bill on you.

As to voice calls, the FCC has required roaming capabilities since the dawn of the cell phone era. No one questions its authority over voice-call roaming. But the FCC’s jurisdiction over roaming for mobile data usage – such as email, Facebook, and web browsing on smartphones and tablets – has been a matter of debate, at least until this court ruling.

Why the difference? After all, voice calls are transmitted in digital form. The technologies for handling voice and data are very similar. Why would anyone think the regulatory schemes might be different?

The answer: common carriage.

“Common carriage” is a legal concept that’s been around for several centuries. It initially applied to services that involved physically transporting, or carrying, goods or people from one place to another; hence the concept of “carriage.” Think shipping or railroads or pipelines. A company designated as a “common carrier” had to make its transportation-related facilities available to any and all customers subject to standard rates and terms, which in turn were subject to considerable government regulation and oversight. This prevented the carrier from unfairly discriminating in favor of its friends and affiliates, and against its enemies.

In the 1930s, when telephone service was becoming essential to commerce, Congress required the FCC to regulate the phone companies as common carriers.  It was not a perfect match, since telephone companies don’t actually carry anything (or anybody) from Point A to Point B, but it was close enough. Those companies did, after all, cause communications to be delivered to remote destinations, so some kind of “carriage” was arguably at work; and besides, there was precedent in the common carrier regulation of telegraph companies. Consistent with traditional common carrier notions, Congress specified that telephone rates must be “just and reasonable”; it prohibited “unjust or unreasonable discrimination” among prospective customers; and so on. For the next 40 years, under Congress’s watchful eye, the FCC kept tight control over every aspect of phone service.

Fast forward several decades to the 1980s, to the time of the first cell phones. Those handled only voice calls, using analog technology similar in some ways to conventional landlines, and they connected through the same switches as landline calls. It seemed natural for the FCC to impose the same core common carrier obligations on cell providers – half of whom, at the outset, were the incumbent wireline phone companies. Requiring cell providers to make roaming arrangements came well within the FCC’s common carrier authority, and was not that different from the long-standing requirement that local landline and long-distance phone companies interconnect with each other.

In the meantime, those same landline companies had begun carrying data over conventional phone lines. The FCC, in a prescient 1976 order, continued to regulate the transmission of 1s and 0s in data calls as common carriage, but it left unregulated the processing of those 1s and 0s. In classic common carrier terms, a phone company in the act of simply transmitting, or carrying, a customer’s message from one point to another was behaving as a carrier. But when the company also involved itself with the content by engaging in some form of processing, then the company was acting outside its role as a common carrier and those activities were not to be subjected to the stringencies of common carrier regulation. So reasoned the FCC.

The dial-up Internet emerged a few years later into this preexisting environment. The result was a completely unregulated Internet running over fully regulated phone lines. The explosive growth of the Internet, during the dial-up years, is good evidence the FCC’s 1976 decision got it right.

But the FCC walked away from that decision soon after the advent of broadband Internet service, which initially reached consumers over both cable systems and phone lines. Cable systems had never been common carriers; the FCC ruled their provision of broadband Internet service did not change that status. To help even up the competition, it likewise ruled that a telephone company providing broadband Internet service was not functioning as a common carrier, even as to the transmission component.

Then smartphones arrived. Suddenly cell phone carriers were offering broadband Internet access along with voice service. The voice and Internet content came over the same handheld device, were covered by the same contract, and were paid for with the same monthly check. As far as consumers can tell, they are accessing a single, indivisible service that combines voice and data. 

But from the perspectives of the FCC and the cell phone carrier, that service consists of two separate and distinct elements, each subject to its own separate and distinct regulations. The voice component remains common carriage. The Internet-based services, by contrast, are not common carriage, and until recently, had not been subject to any significant regulation . . . not until last year, when the FCC, on a 3-2 vote, adopted a rule that requires mobile data providers to enter into roaming agreements on “commercially reasonable terms and conditions.” 

But wait – that sounds like common carrier talk, which mandates “just and reasonable” conduct. Verizon (under its corporate name, “Cellco Partnership”) hastened to court, seeking to have the roaming obligation for mobile data overturned.   Verizon argued that the FCC has no authority to treat mobile data providers as common carriers – a point the FCC conceded. And since the new regulation of mobile data looks for all the world like common carrier regulation, Verizon argued, that regulation could not survive.

The court disagreed.

While acknowledging that the FCC cannot treat mobile data providers as common carriers, the court observed that the FCC has additional and very broad powers, beyond its authority over common carriers – namely, to regulate the use of radio. Mobile data services, by definition, use radio spectrum. So the FCC can regulate mobile data providers, even if they are not also common carriers. And the court accepted the FCC’s claims that its data roaming rules fall short of common carrier regulation. The court pointed out, for example, that common carriers are held to “just and reasonable” conduct, while mobile data providers are subject only to “commercially reasonable” obligations. Sure, those terms have a similar ring, but according to the FCC, the latter gives mobile data providers “more freedom” than the former affords to common carriers.

Verizon objected, arguing that the FCC’s claims of greater permissiveness are just so much bureaucratic mumbo-jumbo (or, in the words of Helgi Walker, Verizon’s counsel, “smoke and mirrors” – well played, Ms. Walker!).  According to Verizon, regardless of how much lipstick the FCC might apply to the pig, the net result is the same: the FCC is treating mobile data providers as common carriers, which it cannot do.

This argument gave the court some difficulty; it agreed the roaming rule “plainly bears some marks of common carriage.” But in the court’s view, non-common carriers may be subject to some regulations characteristic of common carriers without thereby actually becoming common carriers. There is a “gray area,” said the court, in which similar regulatory obligations may be imposed on both common carriers and non-common carriers alike. Within that gray area, the FCC’s position – that, despite common carrier-like characteristics, the data roaming rule does not itself constitute common carriage regulation – was entitled to deference.

This may not be the last word, though. Verizon opted to mount a “facial” challenge to the rule; that is, it attacked the rule “on its face” rather than as specifically applied to Verizon. The court deliberately left the door wide open for Verizon to come back in the event that the FCC, in implementing the rule, treats Verizon as a common carrier. And the court wagged its judicial finger at the FCC, cautioning the agency to make sure the supposed non-common carrier aspects “carved out in the rule’s text remain[ ] carved out in fact.”

In other words, the FCC must implement the roaming rule without crossing the line into common carrier regulation. But thanks to this opinion, the precise location of that line is harder to find than ever.

Postscript: The day after the court’s opinion was released, the same court suspended briefing in a different case, one challenging the FCC’s network neutrality rules. The court did not say why. Very possibly, though, it will ask the lawyers to rethink their arguments in the net neutrality case in light of the Verizon decision. If the net neutrality rules amount to common carrier regulation, then the Verizon case may be a fatal blow. The FCC’s authority over radio is no help to the agency in defending the net neutrality rules, as those rules apply with full force only to non-mobile providers. It remains to be seen whether the FCC can demonstrate some basis, other than radio or common carriage, for asserting jurisdiction adequate to satisfy the court.

Another Day, Another Online Public File Demonstration

 After fits and starts – and an 80-minute delay – FCC’s second online demonstration of its new electronic public file system for TV stations finally got off the ground late yesterday afternoon. And for those of you who gave up when the Commission couldn’t get the audio to work for more than an hour, take heart – they’ve scheduled yet another demo for today – AUGUST 1 – at 12 Noon (ET).  (The link is to the FCC's "events" webpage.  As of 9:00 a.m. today that page had not yet been updated to include a sign-in option for today's meeting.)

If you haven’t yet taken a look at the system the FCC has come up with, these demonstrations give you a very useful glimpse. Additionally, as of yesterday (July 31), the upload site is live for preview/test purposes – although the usefulness of visiting it today (i.e., the day before the online public file rule takes effect) may be limited if you haven’t had at least the basic introduction the demos provide.

The good news is that the system isn’t CDBS. To the contrary, the interface that the uploading station sees appears to be cleanly and logically laid out, with conventional buttons and options that – if they work – should make uploading reasonably simple. CommLawBlog gives a big thumbs up to the design.  Kudos to Greg Elin, who reportedly headed up the design team and who was the principal presenter during the demonstration. (I did, however, have occasion to observe that the depiction of the station’s service area on the sample screen the FCC showed us looked disturbingly like a drawing of a breast. Good thing that image isn’t going to be broadcast . . .)

As to the way the system will function in the real world, we here at CommLawBlog are cautiously optimistic. It looks like it should work.

But without having had the opportunity to test drive it at all, we’re not yet prepared to take a position. And there’s reason to suspect that the FCC may not have been completely thorough and thoughtful in all respects.

Bear in mind, the 80-minute delay in the start of yesterday’s session was caused by the apparent inability of the FCC – that would be (Irony Alert!) the Federal Communications Commission – to get its phone bridge to work. That alone doesn’t inspire confidence. And, according to a message typed on the online video feed early during the delay period, that inability in turn arose because more than 700 people were logged onto the phone bridge. 

Um, what did the FCC expect? Its new public file system is going to be a necessary part of the lives of thousands of TV stations starting tomorrow, and yesterday afternoon’s demonstration was for most of those stations the first time that they would have a chance to check out the system. (Yes, I know that there was a demonstration on July 17 – but the online feed of that show reportedly didn’t provide adequate access. And yes, I know that there was a second demonstration on Monday morning, July 30, at 9:00 – but since that demo wasn’t announced until late on the preceding Friday afternoon, the Commission couldn’t reasonably have expected a huge turnout. That left yesterday’s show, so the FCC could and should have expected a throng.)

Additionally, it was apparent during the demonstration that the system is still a work-in-progress in a number of respects. Some functions aren’t yet working, some aren’t working with pre-Version 7 versions of Internet Explorer, etc. While this is to be expected in any complex system like this one, you’d think that, before the Commission forces thousands of broadcast stations to use the system, the Commission would have tried to work out more of the bugs.

And one more cause for hesitation: while the Commission folks indicated that help would be available online and by phone once the system kicks in, it looks like their expectation is that most users will familiarize themselves with the system by reading through an extensive – and apparently to-be-regularly-updated – FAQ page. For sure, FAQ’s are a well-established feature of the Internet environment, but it’s not clear that, as a federal administrative agency imposing affirmative obligations on thousands of regulatees, the FCC can appropriately rely on something as informal as an FAQ page to instruct those regulatees how to meet those obligations.

So the preliminary bottom line is: the system looks very sharp (“neato” was one oddly anachronistic descriptive reportedly submitted by an attendee of yesterday’s demo) and may prove user-friendly. Certainly it appears to have been designed in large measure with the uploading station in mind. That’s a great comfort (particularly for those of us who have wrestled with CDBS for years).

But this is a lot like buying a car. The new model always looks great in the ads and great in the showroom. It probably also feels great to drive when you take it for a test spin under the watchful eye of the dealer in the passenger seat. But the real questions don’t usually pop up until you’ve brought it home and driven it in all kinds of conditions -- and your 16-year-old student driver and your 85-year-old parent have also tried to drive it (because, bear in mind, most licensees will likely be relying on station staff to handle most, if not all, uploading to the system).

So rather than give the FCC’s new system any final thumbs up (or thumbs down), let’s reserve judgment until we’ve all had a chance to use it in everyday, real-world situations. 

For those of you who have not yet sat in on one of the FCC’s demonstrations, we strongly recommend that you take the time to do so at Noon (ET) today, August 1.

Online TV Public File Demonstration Yields New Information; Not-Yet-Effective Rule Already Waived

With the August 2 effective date of the online TV public file rule just a couple of days away, more information about the FCC’s system is bubbling to the surface.

As we reported on Friday, this morning (Monday, July 30) the FCC presented another demonstration of its online TV public file system.  Peter Tannenwald, who attended the July 17 demonstration at the Commission, sat in on this one, too.  Good thing he did, since today’s show provided more details about the operation of the public file system than had previously been made generally available.  Below you’ll find a list of some of the more salient take-home points Peter took home.

Also, even though the revised public file rule still hasn’t technically taken effect, the FCC has already waived the political posting requirement (probably the most time-consuming part) for one station. Read on for details about that development.

Helpful stuff to know (from the FCC’s 7/30/12 online presentation, as gleaned by Dr. Tannenwald):

To access the system, you’ll need to start with the FCC Registration Number (FRN) for the licensee of the station whose file is being uploaded.  (That point was made in the July 17 session, too.)  Each licensee may use only one FRN to access the upload system, although a company with different licensee subsidiaries may have a separate FRN for each sub. To permit multi-station owners to control access to their various stations’ separate account for uploading purposes, such owners will be able to assign different passwords to their different stations’ accounts. (That way personnel at Station WAAA can be prevented from inadvertently uploading information to commonly-owned-but-separately-operated Station WZZZ’s public file.) The FCC will assign the initial password, but anyone with the master FRN password for that licensee may then go online and change public file passwords for upload access.  [Blogmeister’s Update: Since this item was originally posted, we have been informally advised that the FCC’s system will automatically assign a separate upload access password for each station. If the licensee wishes to change that password, it can do so – but the system itself will create the new password. Ideally, the Commission will formalize all of this at some point.]

The public file system allows stations to use Dropbox and other similar non-FCC online cloud storage systems to gather documents before uploading them to the FCC’s system. If you want to use Dropbox, you will have to (a) create a separate Dropbox folder and then (b) download an app that allows exchange of documents between the FCC and that one Dropbox folder.  But watch your step – the drag and drop function from your computer or Dropbox onto the FCC’s website works well with many browsers but apparently has some problems (which the FCC is working to fix) with the most popular browser, Internet Explorer, especially versions 7 and older.

To upload materials to a station’s online file, stations will use the URL http://stationaccess.fcc.gov.  (We just tried and it’s not an active site as of July 30, 2012.)  To review a station’s online public file, members of the public will go to http://public-inspection-file.stations.fcc.gov.  (Also not yet active, as far as we can tell.)

Most of us are used to converting documents to .PDF format for submission to the FCC – mainly because the CDBS electronic filing system accepts only .PDFs and the ECFS system for filing rulemaking comments converts incoming documents to .PDF. The public file upload process, however, is different. Documents headed for the online public file must be uploaded in their native format, whatever it may be (e.g., MS-Word, Excel, WordPerfect).  FCC will take care of converting to word-searchable .PDF format.  If the document to be uploaded was initially created in .PDF, it may be uploaded that way – but it should be in searchable .PDFform. (Cautionary note: many .PDF writer programs do not create searchable .PDFs as a default. Check you’re your IT folks if you have any questions on this front.)

The station profile on the FCC’s website now includes the main studio address.  Remember that a main studio must as a general rule be staffed by at least two employees (one of them management-level) during the normal 40-hour business week. With the main studio address posted on the Internet, FCC inspectors (and others) will have no problem locating the studio for inspection purposes.

The Commission is advising that stations should probably keep back-ups of the documents they upload, just in case.  But stations do not have to maintain copies of uploaded materials at the station for the public to inspect – once the materials have been uploaded to the FCC’s online system, the station’s obligation to make those materials available to the public has been satisfied.  But remember that an on-site public file is still required for letters/communications from the general public for all TV/Class A stations, old political file documents for all TV/Class A stations, and newly-created political file documents for all TV/Class A stations except for affiliates of the Top Four networks in the Top 50 markets. Stations may voluntarily upload political file documents to reduce their on-site paper obligations. However, letters/communications from the public should not be uploaded because of privacy concerns (including especially the provisions of the Children’s Online Privacy Protection Act (COPPA)).

The FCC is not requiring stations to provide a computer terminal to allow the public to go to the FCC’s website.  Staff at today’s session recommended that stations post the URL of the FCC’s public file website on their own station websites.  Whether or not that recommendation can turn into a formal requirement isn’t clear (since it may not have been specifically addressed in the rulemaking proceeding leading up to the adoption of the online system).  But it is clear that the FCC wouldn’t object if those URLs were to get included on stations’ websites.

Important final advisory: The online public file system is still on track to go live on Wednesday, August 1, the day before the online filing requirement becomes effective.

The Commission is planning to provide another demonstration of the system tomorrow, July 31 at 4:00 p.m.  Given the additional information which has come to light since the July 17 demonstration, we’d treat tomorrow’s demonstration as Must See.   This is not conventional webinar. A special platform is used to display a computer desktop that is manipulated by the FCC. Audio is available only by telephone. Access information is available at www.fcc.gov/events/demonstrations-online-public-inspection-file-interface.  The FCC warns that “[p]arties must join the call before the scheduled start time.” Last-minute registration and dial-in were possible today, but there were only 190 participants on the line (possibly because of the late notice provided by the Commission). We don’t know when or if the capacity of the FCC’s telephone bridge might be filled.

Media Bureau waives political file uploading requirement

Even before the new online public file requirement could take effect, it’s been waived!  In a Memorandum Opinion and Order, the Bureau released three days before the effective date, the Bureau has let Station WHAG-TV, Hagerstown, Maryland off the hook as far as uploading any new political file materials goes.

As diligent readers will recall, the online public file rule requires that Top Four networks affiliates in the Top 50 markets must begin uploading all newly-created political materials starting August 2.  WHAG-TV is an NBC affiliate in the Washington, D.C. DMA, which is Market No. 8.  So WHAG-TV was directly in the crosshairs of the rule.

Hold on there, said the station.  It’s not the primary NBC affiliate in the DC market.  That distinction goes to WRC-TV, the NBC O&O in Washington.  In fact, WHAG-TV’s assignment to the DC market is really a matter of “happenstance”.  That’s because, back when Arbitron designated TV markets, Hagerstown was its own market and, trust us, it wasn’t in the Top 50.  (Actually, it was Market 192.)  When Arbitron got out of the TV market designation business around 1996 and the FCC shifted to Nielsen-prepared DMA rankings, Hagerstown got lumped into the DC market and so, too, did WHAG-TV.

But even when that happened, WHAG-TV didn’t embrace its new DMA home.  In 1998 it argued successfully that it shouldn’t be classified as being in any of the Top 100 markets for regulatory fee purposes – and the Commission agreed, possibly on the basis of the Television and Cable Factbook 1997.  The Factbook indicated that the number of DMA television households served by WHAG was “equivalent [to] a remaining market station.”  (WHAG also helpfully observed that, where each of the TV stations licensed to Washington, D.C. proper serve over 2.3 million households, WHAG serves less than a quarter of that number in the DC DMA.)

The Bureau agreed that WHAG really does serve a smaller market and that holding it to the requirements for Big Market stations would run contrary to the fact that the FCC had decided to exempt small market stations from the initial political file upload chore.  Accordingly, waiver granted, and the folks at WHAG are doubtless breathing a bit easier.  (But the waiver applies only to the obligation to upload newly-created political file materials; the station will still be on the hook to upload other, non-political materials.)

Update: More Demonstrations of Online TV Public File System Announced

Late Friday afternoon notice announces early Monday morning demo (and another demo the following day)

Yesterday afternoon we reported that the U.S. Court of Appeals for the D.C. Circuit had denied the NAB’s request to stay the effective date of the revised online TV public file rule. That action clears the way for the rule to kick in on August 2, 2012. We predicted that the FCC would in short order be issuing a public notice alerting affected licensees of exactly how they’re supposed to comply once the effective date rolls around.

And sure enough, at about 3:30 p.m. on Friday, July 27, we received a notice from the Commission.  Yay! But wait – it’s not the notice we expected. Darn.

The Friday afternoon notice simply advises that the Commission is going to be conducting two online “screensharing” demonstrations of the public file system that it has developed. The demonstrations will “cover the material presented during the July 17, 2012 demonstration”, according to the notice. (The July 17 demonstration was conducted at the FCC’s headquarters; while it was supposedly also available to online viewers, several published reports indicated that online viewers encountered considerable difficulties when they tried to watch.)

In other words, this notice does not announce the official kick-off of the new rule, nor does it purport to give us all the precise chapter and verse for assuring compliance with the new rule. It’s a pretty good bet that such a notice is indeed in the works. We’ll keep our eye out for it and get word posted here as soon as it’s available.

Meanwhile, as to the upcoming demonstrations.

They’re scheduled for Monday, July 30 at 9:00 a.m. and Tuesday, July 31 at 4:00 p.m. (We’re guessing that the times are ET, but the notice doesn’t actually specify that.) The notice provides information for accessing the show – but be alert: the audio for the demos is by teleconference, and the notice emphatically instructs that “[p]arties must join the call before the scheduled start time.”

Our colleague Peter Tannenwald attended the July17 demonstration and reported favorably about the FCC’s system. Since it appears that that system is indeed going to be with us for a while, it’s a good idea to get as familiar as possible with it. The online demos are probably a good place to start. And while the new rule applies only to TV stations for now, the smart money figures that it’s just a matter of time before the FCC expands it to include radio stations as well. With that in mind, radio licensees might want to take advantage of this opportunity to see what is likely in store for them.

One final observation. The timing of the notice concerning the demonstrations is puzzling. Why issue this late on a Friday afternoon in order to announce a demonstration occurring at 9:00 a.m. the following Monday? We happened to receive the notice because we subscribe to a service that delivers FCC releases as they get issued. But we suspect that the vast majority of broadcasters don’t enjoy that luxury. And the late release of the notice assured that it would not be included in the Friday afternoon editions of most trade journals. So while it’s nice that the FCC is apparently trying to introduce us all to its spiffy new online filing system (even if that introduction is occurring just a couple of days before we’re all supposed to be using that system officially), the Commission might want to work on its scheduling skills a bit. 

Perhaps the Commission was counting on CommLawBlog to get the word out. In that case, mission accomplished.

Update: Court Denies NAB Request for Stay of Online TV Public File Rule

It looks like, barring some unanticipated last-minute development, the FCC’s online public file rule for TV stations will take effect on August 2, 2012The U.S. Court of Appeals for the D.C. Circuit has denied the NAB’s effort to get that effective date stayed.

The court’s order – totaling two sentences (not including a citation to a couple of case precedents) – is short and to the point. The NAB’s petition was denied because the NAB had not, in the court’s view, “satisfied the stringent requirements for a stay pending court review.”

With the court’s action, we can probably look forward to a public notice from the FCC very soon, describing the process for uploading materials to the online public file system the Commission has developed. Check back here for updates.

TV Public File Update: The NAB Replies

 Those of you who have been following the NAB’s efforts to get the U.S. Court of Appeals for the D.C. Circuit to stay the effectiveness of the TV online public file rule should be interested in the NAB’s reply. Our favorite NAB line, in response to the FCC’s claim that the revised public file rule increases competition: “Allowing some poker players to peek at their opponents’ hands does not make the poker game more competitive; it makes it unfair.”

This closes out the pleading cycle with respect to the NAB’s stay request and tees up the matter for resolution by the court. Since the effective date at issue (that would be August 2, 2012) is only about a week away, look for a quick decision by the court.

TV Public File Update: FCC Opposes NAB Stay Request, Gets Support from Six Intervenors

 Just in time to slip into the tote along with your sunscreen, towel and iPod, so you’ll have something to read at the beach over the weekend – here’s the FCC’s opposition to the NAB’s motion for stay of the online TV public file rule. We doubt you’ll find any unexpected plot twists here (particularly since the Media Bureau already told the NAB how the Bureau feels about the NAB’s arguments), but you never know. The NAB has until July 24 to reply to the Commission’s opposition, and then we all sit around waiting for the court to act.

And if you’re keeping a scorecard in the NAB’s appeal of the online TV public file rule, be sure to add the following names to the line-up on the FCC’s side: Benton Foundation, Campaign Legal Center, Common Cause, Free Press, New America Foundation and Office of Communication of the United Church of Christ, Inc. All six have been granted “intervenor” status by the D.C. Circuit. This means that they are now official parties to the case, and will be permitted to brief the issues, but only in a single, joint brief (unless they can convince the court that multiple intervenor briefs are warranted). Apparently eager to wield their brief-filing powers, the Intervenors have already warmed up by filing their own opposition to the NAB’s stay motion. Intervenors are also theoretically able to offer oral argument, although the likelihood that any intervenor will in fact get to present oral argument when the appeal finally gets to that point -- probably sometime early next year -- is probably very, very small.

The court’s order granting the intervention motions reminds anyone who might want to intervene on the NAB’s side that they have until August 2, 2012 to get their motions in. Failure to seek intervenor status by that deadline could leave you on the outside looking in when it comes time to file briefs.

Update: NAB Asks Court to Stay Effective Date of Revised TV Public File Rule

With August 2 effective date looming, NAB looks to court for relief.

Things continue to percolate on the TV public file front. Remember last week, when we predicted that the NAB would eventually be asking the U.S. Court of Appeals for the D.C. Circuit to stay the FCC’s seemingly irresistible juggernaut toward implementing the new public file rule as of August 2? Boo-yah!! That’s just what the NAB has done.

The FCC has not yet acted on the NAB’s stay request that the NAB filed with the FCC last week. But time’s a-wastin’, and last week’s filing with the Commission wasn’t going anywhere anyway. In fact, it was likely filed primarily so that the NAB could tell the court that the agency had been given its own opportunity to stay the case. That’s because the courts tend to be reluctant to weigh in on such things if the agency in question hasn’t been given first shot at addressing the issues.

Last week’s stay request, addressed to the Commission, served precisely that purpose. Having waited a decent interval and received no response from the FCC, the NAB was in a position to represent to the court (as it does on Page One of its stay motion) that the Commission had its chance.

Next up – the FCC’s opposition. As required by the court’s rules, before filing its stay request with the court, the NAB advised the FCC that that request was about to be filed and asked whether the FCC planned to oppose it. Answer (and here’s a surprise): The FCC will be filing an opposition.

Stays are notoriously difficult to obtain, either from the FCC or from the courts. A party seeking a stay must normally demonstrate, among other things, that it will suffer irreparable harm if the stay is not granted. That’s a rough showing to make. We suspect that that issue will be a focal point of back-and-forth arguments in the coming weeks.

Check back here for updates.

Form 323 - The Fun Begins Again

Media Bureau announces opening of 2011 Ownership Report season, but leaves out some information that many might find useful

The Media Bureau has reminded commercial broadcasters that their biennial Ownership Reports (Form 323) are due to be filed by December 1, 2011 – and that the opportunity to start filing them opens up October 1, 2011.

But the Bureau’s public notice doesn’t mention some information we kind of hoped they might, since we reminded them of it just a couple of weeks ago. Seeing as how the Commission seems less than clear about what it told the U.S. Court of Appeals for the D.C. Circuit just last year, let us help out here.

The question: Is it really true that anybody and everybody with any attributable interest in a reporting licensee must be identified, in the report, by a Social Security Number-based FCC Registration Number?

Short answer: No.

Longer answer: No, individuals with attributable interests may submit a non-SSN-based FRN – dubbed a “Special Use FRN” (we refer to it as a SUFRN) – under some circumstances. Just what those circumstances are remains a bit fuzzy, since the latest public notice fails to mention an important exchange between the Commission and the D.C. Circuit which shed considerable light on this very point.

First, a brief intro to the SUFRN.  The SUFRN option is not reflected in the instructions to Form 323 or in the form itself . . . BUT, if you get deep into completing the form, you get to the FRN question, which simply requires you to insert an FRN for each attributable interest holder. Immediately under the blank where you’re supposed to insert that FRN, the form reads: “If Respondent is unable to provide an FRN for an individual attributable interest holder reported in this listing, press above button”.

And sure enough, there’s a button labeled “Special Use FRN”. If you push that button, you get a pop-up message that instructs that you don’t need to use an SSN-based FRN. However, according to the pop-up message, eligibility to use a SUFRN arises only “if, after diligent and good faith efforts, Respondent is unable to obtain, and/or does not have permission to use, a Social Security Number in order to generate an FRN for any specific individual whose FRN must be reported on Form 323.”

The pop-up message thus limits use of an SUFRN to situations in which the respondent has made “diligent and good faith efforts” to obtain SSN-based FRNs but has been “unable to obtain, and/or does not have permission to use” such FRNs.

Omitted from the form, the pop-up message, and the FAQs found on the Bureau’s website dedicated to All Things Form 323 is the fact that respondents “are not required to provide SSN-based FRNs . . . if they object to the submission of their Social Security Numbers.” Nor does the Bureau acknowledge that “no individual attributable interest holder will be required to submit Social Security number to obtain an FRN” in order to respond to Form 323. 

But that’s precisely what the Commission and the D.C. Circuit worked out in June-July, 2010.

There’s a fair amount of backstory here. You can catch up with it by reading this series of posts chronicling L’Affaire Form 323 from 2009-2010. You can also read the Emergency Petition we filed with the Commission on September 14, 2011.   If you don’t feel like reading the entire history of the matter – entertaining though it may be – and would prefer to cut to the chase, here are direct links to the FCC’s pleading to the Court and the Court’s response.

The bottom line is that, with respect to use of SUFRNs, the Commission made a very specific representation to the Court and the Court expressly relied on that representation. According to the FCC, respondents “are not required to provide SSN-based FRNs . . . if they object to the submission of their Social Security Numbers.” And according to the Court, “no individual attributable interest holder will be required to submit Social Security number to obtain an FRN” in order to respond to Form 323.

We think that all Form 323 filers are entitled to know that. For some reason, the Commission seems unenthusiastic about that prospect.

As we read all this, inability to obtain an SSN-based FRN – which is what Form 323 suggests is a prerequisite to hitting the SUFRN button in the first place – appears to be immaterial. Ditto for making “diligent and good faith efforts” to get hold of SSN-based FRNs – a duty imposed by the pop-up message when you hit the “Special Use FRN” button. The Commission appears to have told the Court in no uncertain terms that no individual attributable interest holder has to file an SSN-based FRN is he/she objects to doing so. Period.  If the Commission disagrees with our interpretation, it might want to say so.

Another, less prominent, aspect of the SSN-based FRN question involves changes made to the form back in December, 2009, which have since been quietly tweaked. In December, 2009, the SUFRN pop-up message (as well as a public notice issued on December 4, 2009) insisted that reliance on a SUFRN for purposes of getting an Ownership Report on file by the then-operative deadline was only an interim measure. Respondents remained under an “ultimate duty to obtain a fully compliant FRN” for all folks identified in Form 323. According to the December 4, 2009 public notice, the Commission expected all filers relying on SUFRNs to “update their filed ownership reports with fully compliant FRNs when these are obtained.”

The language about some “ultimate duty” to update after the fact was deleted from the pop-up message by the Commission in March, 2010.  You may not have noticed that, since the deletion was effected without explanation or public notice from the Commission. The FCC did ask OMB for permission for the deletion, but in so doing merely characterized the change as “non-substantive”, without offering any rationale. Since the Commission didn’t bother to tell anybody about this change, much less explain it, there was no reason to believe that the concept of some continuing “ultimate duty” did not remain in place.

We mentioned this in our Emergency Petition, and the Commission appears to have taken our comments on this point to heart . . . sort of. On September 28, 2011 – that would be just a couple of weeks after we filed the Emergency Petition, and a mere three days before the form was to go “live” for the 2011 biennial filings – the Commission quietly asked OMB to authorize yet another tweak to the language in the pop-up message, and OMB obliged. Now, stuck on at the end of the pop-up message is the following sentence: “The guidance provided on Special Use FRNs in the Media Bureau’s December 4, 2009 Public Notice (DA 09-2539) has been superseded as discussed herein.”

“As discussed herein”? The problem is that there is no obvious discussion in the pop-up message (or on the FCC’s website) referring back to the December, 2009 public notice, so anyone reading that newly-added sentence wlll be hard-pressed to know what it’s supposed to mean. Our guess is that the Commission is backing away from the notion of some “ultimate duty” to follow-up with SSN-based FRNs for everybody, but the Commission sure hasn’t said that expressly. By contrast, the Commission was very explicit in imposing that duty back in December, 2009 – so if it wants now to countermand that earlier instruction, you’d think that the Commission could do so with similar clarity.

Unfortunately, the Commission appears still to be trying to shore up the multiple weaknesses in its Form 323 in a piecemeal, less-than-public way. The history of Form 323 since 2009 has not been a particularly happy one, and the most recent developments don’t suggest much improvement. With the filing window opening on October 1, the Commission has apparently not focused on problems with the form that were identified, and should have been fixed, more than a year ago. The last-minute addition of unilluminating language in the pop-up message does not suggest that the Commission has taken the time to think through the form carefully. Indeed, the manner in which that last-minute addition was submitted to OMB suggests less than careful and thoughtful preparation:

(This is a screen grab, taken from the OMB website, of a portion of the request for OMB approval submitted by the FCC on September 28, 2011.)

Maybe we’re missing something here, but a hand-written change to a form which is supposed to go “live” within a couple of days doesn’t suggest that the folks in charge of that form have the best handle on it. That’s too bad, since it’s a form that all commercial broadcasters are required to file. We had hoped that the efforts we made in 2009-2010 would have assisted the Commission to get its Form 323 act together by now. We may just have to keep trying.

Form 323 Deadline Extended to December 1, 2011

In apparent memory lapse, Commission fails to mention last-minute effective elimination of all-encompassing SSN-based FRN requirement

Has it really been two years already? 

The Commission has announced that the time has come for the next round of biennial Ownership Reports (Form 323) for commercial broadcasters. And get this, the initial public notice about the upcoming deadline for filing pushes that deadline back a month, to December 1, 2011.

Note that the last round of Form 323s was filed in July, 2010, which (contrary to the whole “biennial” aspect of things) isn’t really a full two years ago. But as long-time readers may recall, that initial round was originally scheduled for the fall of 2009, but got postponed several times. (You can read a collection of our posts about the FCC’s 2009-2010 Form 323 travails here.) 

Form 323 requires all commercial licensees to file reports by a uniform nationwide deadline, once every two years.  The next reports were to be due November 1, 2011, reflecting ownership data as of October 1, 2011.  Apparently responding to concerns that one month is not enough time to compile data and submit a report, the FCC has extended this year’s filing deadline to December 1, 2011.  This is a one-time extension and does not apply to reports due in 2013 and subsequent years (at least for now). 

The ownership information to be reported must still reflect the reporting entity’s relevant information as it stands of October 1, 2011.   Reports may be filed any time between October 1 and December 1; they must be filed electronically on Form 323, using the FCC’s electronic CDBS system.  A filing fee must be paid at the time of filing.

The Commission’s terse notice doesn’t get into the nitty-gritty specifics of Form 323, but merely refers interested readers to the form’s instructions and to the FAQ page about the form on the Commission’s website. Heads up for some clarifications, though, since neither the form itself nor the FAQ page addresses an important change that the Commission committed to back in late June, 2010.

The change involved the question of including separate FCC Registration Numbers (FRNs) for each individual and entity reflected in each report, whether or not that individual or entity was in fact the licensee or even in a position to wield anything akin to control of the licensee. 

We won’t bore you with the details of the back-and-forth we had with the Commission on that touchy point – you can read all about it in our previous blogs on the subject. All you – and apparently, the folks at the Commission – need to recall is that we here at FHH (on behalf of ourselves and a number of clients) asked the U.S. Court of Appeals for the D.C. Circuit to tell the FCC that the Commission could not lawfully impose the FRN requirement as that requirement had been described up to that point. The Commission fussed a bunch, delayed the filing deadline to give it a chance to tweak things, but eventually tried to stick to its FRN guns. We went back to the Court. The Court ordered the FCC to respond to our arguments.

A funny thing happened at that point. After it was ordered to respond but before it did so, the Commission revised the FRN language in Form 323. It then explained to the Court that the form, as revised, made it “clear” that “users are not required to provide SSN-based FRNs for the July 8 filing if they object to the submission of their Social Security Numbers”. (Note that that gloss on the revised form might not have been 100% consistent with the language of the revision, at least in the minds of some folks, but that’s the way the FCC explained it to the Court.) The Court, in turn, interpreted the FCC’s statement to say that “no individual attributable interest holder will be required to submit a Social Security number to obtain an FRN [i.e., FCC Registration Number] for the July 8, 2010, biennial filing deadline or for any imminent non-biennial filing of Form 323.” And, based on that interpretation, the Court denied our petition.

None of that history is reflected in the form’s instructions or on the FAQ page, at least as of today (August 23, 2011). But the fact of the matter is that, in its explanation to the Court, the Commission clearly indicated that nobody would be required to submit a Social Security Number-based FRN if he/she objects to such submissions, regardless of the basis for any such objection. To the extent that the form’s instructions and the FAQ may seem to say otherwise, those indications can and should be disregarded (unless, of course, the Commission is inclined to schlep down to the Court again to explain why what it told the Court in 2010 should no longer apply 2011).

Keep an eye out – particularly here on www.CommLawBlog.com – for any further wrinkles that might pop up on this front in coming months.

Remember that the filing requirement applies to full power TV, commercial radio, and all Class A and low power TV stations, but not TV or FM translators or low power FM stations.  Noncommercial educational AM, FM, and TV stations must file biennial reports, but they use FCC Form 323-E and must file on staggered dates corresponding to the state where they are licensed rather than the uniform nationwide date that applies to commercial stations.

Form 323: SSN Disclosure Requirement Largely Written Out Of Form In Last-Minute Revision

Court ruling on Fletcher Heald mandamus petition confirms elimination of need for new SSN-based FRNs to complete revised Ownership Report

Last week we reported that the U.S. Court of Appeals for the D.C. Circuit had denied our mandamus petition, and that the July 8 deadline for biennial Ownership Reports (FCC Form 323) would remain in effect. What with the last-minute nature of the Court’s order and the consequent need to wrap up a bunch of 323’s by the deadline (not to mention various other distracting obligations), we didn’t highlight perhaps the most important aspect of the order: the Court effectively confirmed that nobody needs to provide his/her Social Security Number (SSN) for a new FRN in order to file ANY Ownership Report – biennial or otherwise – until further notice.

According to the Court, the FCC has taken the position that “no individual attributable interest holder will be required to submit a Social Security number to obtain an FRN [i.e., FCC Registration Number] for the July 8, 2010, biennial filing deadline or for any imminent non-biennial filing of Form 323.” And since the Court’s denial of our mandamus petition was based on the FCC’s stated position, it appears extremely doubtful that the FCC will be moving off that position soon.

As a result, any person holding an attributable interest in a commercial broadcast licensee – i.e., any person who would have to be reported on Form 323 – who has not already submitted his/her SSN to the FCC in order to obtain an FRN need not do so. This is a significant development, and a significant retreat on the part of the Commission.

Here’s a step-by-step chronology of the rise and fall of the FRN requirement.

Behind closed doors

Back in May, 2009, the Commission announced that Form 323 would be revised. But at that time the Commission said absolutely nothing about requiring individual attributable interest holders to cough up their SSNs part of that process. Likewise, when the Media Bureau announced, in June, 2009, that it had revised the form, it didn’t mention any SSN requirement; to the contrary, the Bureau specifically said that the revised form did not give rise to any need for confidentiality and did not raise any privacy concerns. (Even though the Bureau solicited public comments on its revised form, it elected not to make the revised form available for review, which made it difficult – no, wait, make that impossible – to comment on the draft form.)

From behind a cloud of denial, the revised form appears

In August, the Bureau shipped its revised Form 323 over to the Office of Management and Budget (OMB) for its approval. In so doing, the Bureau – or maybe it was the Commission itself (it’s impossible to tell exactly who sent the item over to OMB) – again expressly claimed that its handiwork did not present anything to worry about from a confidentiality or privacy perspective. But OMB posted the revised form for all to see, finally. Lo and behold, the revised form required that every attributable interest holder listed in any Form 323 be identified by his/her own SSN-based FCC Registration Number (FRN). In other words, in order to complete the form, licensees would have to force their various attributable interest holder to obtain their own FRNs, and that in turn would require those interest holders to hand over their SSNs to the FCC.

Accompanying the form was a “supporting statement” which again asserted that the revised form did not involve privacy or confidentiality issues.

A number of broadcast-related parties pointed out to OMB that, au contraire, the SSN/FRN requirement did indeed implicate serious privacy/confidentiality considerations . . . and oh, by the way, the FCC had never given anybody the opportunity to comment on that requirement in the first place. A month later, a “revised supporting statement” was submitted – presumably by the Commission, although it was unsigned and otherwise unattributed – in which the obvious privacy/confidentiality concerns were finally acknowledged.

In a separate response to the various comments, an official in the FCC’s Office of Managing Director claimed that the SSN-based FRN requirement was a “vital mechanism for data quality assurance”. In essence, the Commission was moving full speed ahead with its revised form, FRN requirement and all.

The FCC blinks once, or maybe twice

Despite the problematic record underlying the revised form, OMB approved it in October, 2009, and the Bureau promptly announced that the new form would have to be filed by December 15. In November, Fletcher Heald asked the Commission to stay the implementation of the form, noting (among other things) that an impressive number of shortcomings in the development of the revised form precluded its implementation. The Commission ignored our pleading, but a week or two later postponed the filing deadline into January

In early December, the Commission made the revised form available for folks to fill in., at least for a while. But it also revealed a further change relating to the FRN requirement. Now parties could avoid disclosing SSN-based FRNs, but only after the licensee had made good faith, diligent efforts to obtain all necessary FRNs. If they had done so but still were unable to come up with the FRNs, respondents could use randomly-generated “special use FRNs” (SUFRN) as a temporary expedient – emphasis on the word “temporary”. According to the revised instructions, use of a SUFRN did not relieve the respondent of its “ultimate duty” to hunt down “fully compliant” FRNs for all concerned. And the SUFRN was not available for non-biennial Ownership Reports (such as those filed by assignees or transferees after the consummation of their acquisition of licenses).

So the SUFRN option in fact did nothing to eliminate the FRN obligation.

In late December, with the January deadline fast approaching, Fletcher Heald – joined by ten state broadcasting associations – asked the D.C. Circuit to intercede. Several hours after that request was filed, the FCC announced that it was indefinitely postponing the filing of the revised form, giving rise to cautious optimism that the FCC might be re-thinking the FRN requirement. (Apparently as a result of the indefinite postponement, three months later the Court denied Fletcher Heald’s December request.)

It’s baaaack.

In early April, it became clear that any optimism, cautious or otherwise, was unfounded. The Bureau announced that the revised Form 323 was back on the calendar. New due date: July 8. The announcement said nothing about the FRN question. But careful review of the FRN question on the form revealed new language. Gone was the admonition that respondents had some “ultimate duty” to chase down SSN-based FRNs for all their attributable interest holders. Instead, the form now provided that

[r]espondents who use a non-SSN based “Special Use FRN” will be deemed fully compliant with the Form 323 filing obligation for purposes of this initial filing and the lack of SSN-based FRNs in response to Question 3(a) will not subject Respondents to enforcement action.

The Commission did not provide any public notice announcing, much less explaining, this change.

The Court steps in

Fletcher Heald, along with several state associations and a number of broadcast licensees, headed back to court with a second mandamus petition. With the new deadline just weeks away, on June 14 the Court ordered the FCC to respond to our arguments by June 21 (later extended to June 23). 

Here’s where things got interesting.

On June 17, the FCC sent OMB yet another revision to the form, changing the instructions to the FRN question further:

Old language: An SUFRN could be used “[i]If, after using diligent and good-faith efforts, Respondent is unable to obtain a Social Security Number”.

New language: An SUFRN may be used “[i]f, after using diligent and good-faith efforts, Respondent is unable to obtain, and/or does not have permission to use, a Social Security Number in order to generate an FRN”. (emphasis added)

In other words, if a respondent had somebody’s SSN and could theoretically have signed that person up for his/her own FRN, the respondent was not obligated to do so if the individual had not given his/her permission. Obviously, the Commission was moving away from its original notion that all respondents had an unavailable “ultimate duty” to nail down SSN-based FRNs for all attributable interest holders.

Additionally, the new instruction made the SUFRN option available not only for the biennial Ownership Report, but also for all other non-biennial uses of the Form 323.

OMB approved that new language on June 21, and on June 23 the Commission relied on the newly-relaxed instructions in responding to FHH’s arguments. The Commission didn’t bother to issue any public notice announcing its revised instructions. More surprisingly, in its response to the Court the Commission also didn’t bother to alert the Court that the language on which the FCC was relying was brand-spanking new – and that that language had been concocted only after the Court had ordered the Commission to respond.

What the Commission did do in its response to the Court was to provide its own gloss on the revised instruction. According to the Commission’s response, that revision makes it “clear” that

users are not required to provide SSN-based FRNs for the July 8 filing if they object to the submission of their Social Security Numbers.

To some, that gloss might go somewhat beyond the precise language of the latest revised instruction. But that’s what the FCC told the Court.

The Court then interpreted the Commission’s gloss to mean that “no individual attributable interest holder will be required to submit a Social Security number to obtain an FRN [i.e., FCC Registration Number] for the July 8, 2010, biennial filing deadline or for any imminent non-biennial filing of Form 323.” And, based on that interpretation, the Court denied our second mandamus petition.

Call us crazy, but we’re prepared to declare a significant (although not yet total) victory here. Yes, the mandamus petition was “denied”, but only because the Commission backed off the FRN requirement. And since the Court clearly identified that retreat as the basis for the Court’s decision, any attempt by the Commission to re-impose its previous, unrelaxed standard would open the door for another mandamus action. In other words, a major flaw in the revised report has been corrected, at least temporarily, as a result of our efforts.

Unfortunately, the last-minute timing of the FCC’s response and the Court’s action kept these developments out of the public eye just as the July 8 deadline rolled around. As a result, it’s likely that a number of folks who might not otherwise have provided their SSNs did so under the misimpression that they had to. Next time, they might want to check out CommLawBlog first.

Epilog

Is the relaxation – or effective elimination – of the SSN-based FRN requirement permanent? Who knows? Since the FCC has never bothered to explain precisely why such FRNs are supposedly essential, it’s hard to say whether the FCC could justify such a requirement (although many strongly doubt it). And the longer the Commission relies on SUFRNs, the harder it will be to justify any claim that there is no adequate substitute for SSN-based FRNs. 

But the Commission clung tightly to the requirement in the face of strong arguments, and relented only when forced by the Court to try to explain its position. That suggests that we may not have seen the last of the SSN-based FRN requirement. We’ll keep our eyes out for further developments – check back here for updates.

And before signing off, let’s hear it for the folks who stood up with us at the D.C. Circuit in one or both of the mandamus petitions: The Alabama Broadcasters Association, the Alaska Broadcasters Association, the Arkansas Broadcasters Association, the Kentucky Broadcasters Association, the Louisiana Association of Broadcasters, the Mississippi Association of Broadcasters, the New Mexico Broadcasters Association, the Puerto Rico Radio Broadcasters Association, the South Carolina Broadcasters Association, the Tennessee Association of Broadcasters, Hubbard Broadcasting, Inc., Salem Communications Corp. and Spring Arbor University. We appreciate the support they provided and the confidence they showed in us.

Form 323: The Court Weighs In

We’ve received many calls over the last week or so asking whether the D.C. Circuit had issued any decision with respect to our mandamus petition about the revised Form 323. The answer has been “no” – until, that is, today, when the Court issued a very brief order, which you can read here, denying the petition.  As a result, Thursday's deadline remains in effect. 

Form 323: Point/Counterpoint

FCC opposes mandamus petition, petitioners reply.

Following our June 15 post reporting that the U.S. Court of Appeals had ordered the FCC to respond to our mandamus petition relative to the revised Form 323, we have received a number of requests for updates on that front. Here’s the scoop.

Apparently as a result of a glitch in the court’s electronic filing process, the FCC reportedly didn’t receive a copy of the court’s order on June 14, when it was issued. The Commission told the court that the Commission learned of the order only through the trade press on June 16. (And the trade press presumably found out about the order from our post.) The FCC asked for, and was granted, a two-day extension of its response time.

On the extended deadline (that would be June 23) the Commission filed its Opposition, which you can read here. Anyone who has followed the Form 323 festivities will find that it makes for most interesting reading.

The petitioners, led by Fletcher Heald, have filed a reply to the FCC’s Opposition. You can read our reply here.

The matter is now teed up for the court’s consideration. Given the tight time limits the court imposed on both the FCC and the petitioners with respect to this latest round of pleadings, we suspect that the court is aware that the July 8 deadline for filing biennial ownership reports on the revised Form 323 is fast approaching. Check back here for further developments.

Form 323 Update: FCC Has Some 'Splaining To Do

Court gives Commission seven days to respond to charges about irregularities in the way revised ownership report was developed.

With the July 8 deadline for filing commercial ownership reports fast approaching, we have a new development to report: the U.S. Court of Appeals for the D.C. Circuit has ordered the FCC to respond to claims that the revised Form 323 filing requirements – and particularly the requirement that all “attributable” principals provide their social security numbers (SSNs) – were not imposed lawfully. While it’s impossible to predict what the Court will ultimately do, the fact that it has asked the FCC for its side of the story suggests a level of judicial interest which should be of concern to the Commission.

The Court’s involvement was sought by Fletcher Heald, together with a number of state broadcast associations and broadcasters. In May they filed a petition for writ of mandamus asking the Court to step in to compel the Commission to comply with required procedures before forcing anybody and everybody with any “attributable” interest to cough up their SSNs to the agency.

We have been following the problematic history of the FCC’s efforts to revise its ownership report (Form 323) for commercial broadcasters for more than a year. Any readers new to the situation can catch up by taking a romp through our past Form 323 posts here.

A petition for mandamus is what the Court terms an “extraordinary” request in which the petitioner asks the Court to force the agency to comply with statutory requirements which the agency appears to be ignoring. Unlike the more conventional appellate process – which routinely contemplates that the FCC must make its case in a responsive brief before the Court will act one way or the other – the mandamus process does not guarantee any response from the FCC. To the contrary, the Court can, and often does, simply deny or dismiss a petition for mandamus with a two or three sentence order without bothering the Commission at all.

But the Court’s rules provide that a petition for mandamus will not be granted unless the agency is given an opportunity to respond. That’s one reason the Court’s order directing the FCC to respond to the FHH et al. petition is of more than passing interest. Throw in the fact that the Court’s order gives the FCC a mere seven days in which to respond, and that interest grows: such an abbreviated response deadline at least suggests that the Court may be looking to assemble a complete record and act on the petition in advance of the fast-approaching due date (currently July 8) for filing reports on the revised Form 323.

By our reckoning, the FCC’s response to the Court’s order will mark the first time that the Commission will have had to address, in a formal presentation, the unusual – and, in the view of a number of observers, unlawful – approach by which it has tried to force all “attributable” principals to give the FCC their SSNs. Anyone who has been following this story will want to check back here next week to see what the FCC has to say.

NBP Lift-Off!

FCC launches five – uh, make that six – NBP-related items in one day

If you thought the FCC might have been kidding around when it promised quick action on the National Broadband Plan (NBP) agenda items, the FCC is working hard to move you off that thought. In an impressive display of regulatory shock and awe, the FCC has put a substantial dent in its NBP to-do list by launching six separate proceedings covering five discrete subjects. The items include:

The six items top out at a total of just over 250 pages in all, so you might want to start reading now.  If you just want to get a quick sense of what each involves, you might want to check out the public notices which recap each: Universal Service Fund; Roaming Obligations; Survivability; Cyber Security Certification; and Set-top Boxes.

 Each of the six items invites comments and reply comments, but don’t get your calendars out yet. The comment deadlines won’t be set until the various notices are published in the Federal Register. And to make it even trickier to start planning your early summer get-away, the Commission appears to contemplate an oddly diverse set of deadlines. For example, comments and replies in response to the Set-top Box NOI will be due a scant 30 days and 45 days, respectively, after that notice makes it into the Federal Register.  By contrast, comments/replies in the Cyber Security Certification proceeding won’t be due until 60/120 days after publication. And in between you’ve got the Set-top Box NPRM and USF combo NOI/NPRM (60/90 days for each), and the Survivability NOI and Roaming NPRM (45/75 days for each).

With this barrage – or is it a salvo? – the Commission is clearly signaling its determination to move forward with the ambitious campaign mapped out in the NBP, despite the major questions which loom large in the wake of the FCC’s setback in the Comcast case.  And don’t get comfortable, because these are just the beginning.  The NBP envisions more than 60 proceedings in the months to come.  Stay tuned . . .

Can Network Neutrality Survive Comcast v. FCC? (Spoiler Alert: Maybe.)

A look at successes of the past gives the FCC a way to move forward.

(Author’s note: Last November I posted an item here improvidently titled “How to Solve the Network Neutrality Problem.” My solution was overturned, along with the FCC’s efforts at Internet regulation, by the recent court decision in Comcast v. FCC. Below is a revised path to the same goal that still works after Comcast.)

Network neutrality advocates are in despair following the Comcast decision. That case arose when cable company Comcast selectively hindered customers’ access to certain file-sharing services. The FCC told it to stop. Comcast already had stopped, but went to court anyway to protest the FCC’s butting in. The court ruled for Comcast, asserting the FCC lacks authority to regulate Internet service providers. Comcast is free to decide what content to favor, impede, or block entirely. Read our account here

Network neutrality – the principle that Internet providers should treat content even-handedly – seems to be dead, waiting only for someone to close its eyes and straighten its tie.   The more desperate among its advocates – including at least one FCC Commissioner – speak openly about the nuclear option: a step called “reclassification.”  This means the FCC would reclassify broadband Internet service as a common carrier “telecommunications service,” thereby exposing it to a wide panoply of regulation. As my colleague Paul Feldman notes, reclassification would generate opposition from several industry segments and possibly Congress, and would certainly lead to protracted court appeals. Also the legality of reclassification is in doubt. Many components of Internet service simply do not fit the definition of telecommunications service (see below), and so are not plausibly subject to regulation.

Reclassification is a sledge-hammer. We need a scalpel. Fortunately, one is available.

Ah, the old days . . .

But first, a nagging question. The Internet has been popular for two decades. Why are we are talking about network neutrality only now? The anti-NN forces note that the stunning growth of the Internet occurred without regulation. Why not just continue?

True, there was no Internet regulation in the dial-up days, but an even stronger force was at work: competition.  The phone companies all had departments functioning as Internet service providers (ISPs). The FCC’s Computer III rules required the bigger phone companies to open their networks to competing ISPs. That gave most people dozens of ISPs to choose from. None of the ISPs dared tamper with customers’ content, because the customers could easily go elsewhere.

Then broadband appeared, and quickly became essential as web pages grew more complex. Most consumers have either one or two sources for broadband: the cable company, over the same wires that carry cable TV; and the phone company, first via DSL and later, in some areas, through fiber-optic cables. 

The DSL channel was originally subject to the Computer III sharing rules, but the cable never was. The FCC asked whether it should open the cable to competing ISPs, in the manner of Computer III.

Follow this part closely. To apply Computer III, the FCC would have to find that cable broadband is, or includes, a “telecommunications service” – that is, the pure transport of information, for payment, offered to the public. Common sense tells us that sending Internet pages over the cable has to involve a telecommunications service, among other things. But the FCC is not always bound by common sense. According to its 2002 order, the telecommunications component is not separable from the other components, such as interactive choice of content. The FCC resolved to treat the combined, non-separable service as non-telecommunications. That means Computer III does not apply. A cable operator need not open its facilities to competitors, and can require its Internet customers to use its own ISP service. Cable subscribers are not entitled to competition among ISPs.

The Supreme Court’s Brand X case subsequently upheld the FCC. But it did not say the FCC’s decision was the only right one. Rather – and this is the kind of thing that makes non-lawyers glad they picked some other line of work – the court deferred to the FCC’s right to make the decision. The distinction matters because, ruling the way it did, the Court could easily have supported even the opposite outcome from the FCC.

In the meantime, phone companies answered the FCC’s 2002 cable ruling with outraged filings about a “level playing field.” They still had to put their ISP competitors on the broadband channel, while the cable companies enjoyed the exclusive use of their own cables. In 2005, just a few weeks after the Supreme Court handed down Brand X, the FCC ruled that phone-company broadband was, like cable broadband, a combined service to be regulated as non-telecommunications. No more Computer III; no more competing ISPs.

As a result, if you have broadband Internet service, it is very likely that your ISP is the cable company or the phone company. And, if both companies serve your location, odds are your provider has tried to lock you into a long-term deal with a stiff early termination fee. Unhappy with the service? Tough luck.

Still, some people don’t want the Government intruding into the market for Internet services. Others don’t want a near-monopoly provider deciding what content they should receive. After Comcast, is there any hope for the second camp?

A possible way out

Suppose the FCC were to revisit that 2002 cable decision, the one holding the telecommunications and non-telecommunications aspects of Internet service to be inseparable. Could the FCC now change its mind, and separate out the transport-for-pay component as a telecommunications service? Then, instead of applying the full weight of common carrier rules, it could impose just one: a requirement like that in Computer III, requiring the operator to allow competing ISP on the cable. That would bring back competition among ISPs, and create a major disincentive to tampering with content.

Until last year, this would not have been workable. An agency like the FCC could not change its position without an intervening change of circumstances, such as a major shift in the industry landscape. But last year’s Supreme Court case of Fox v. FCC changed the rules on changing the rules. 

After Fox, the FCC need show only that the new policy makes sense – not that it makes more sense than the old policy. Admittedly, abrupt reversals of established policy have historically been disfavored for many good reasons, and such reversals may – as Brother Feldman observes – still be subject to attack as unjustified. But Fox appears to given the agency considerably greater leeway to change its mind.

Had the FCC chosen to regulate the cable transport back in 2002, the cable companies would have gone to court, but they probably would have lost, under the reasoning in Brand X that defers to the FCC’s judgment. And if the FCC could have required ISP competition on the cable in 2002, then the Fox case strongly suggests they could do it today. 

The argument is even better for phone company broadband, which was subject to mandatory-competition rules until 2005. If anything, the case for requiring ISP competition is stronger now, in light of abuses by the providers, followed by the Comcast court’s closing off more direct remedies.

The process has one more step. The FCC can require ISP competition, as above, but not network neutrality, after Comcast. Either one – competition or neutrality – can protect consumers against content discrimination. So why not give the provider a choice? Undo the 2002 and 2005 broadband orders; regulate data transport as telecommunications; require providers to open their facilities to competitors – but waive that rule for providers that adopt network neutrality. Competition will flourish, or content will be available without discrimination. Either way, consumers come out ahead.

In The Wake Of Comcast: Quo Vadis?

FCC faces a range of options, none particularly attractive

As my colleague Mitchell Lazarus concisely analyzed here, the D.C. Circuit has vacated the FCC’s 2008 determination that Comcast’s network management practices violated the 2005 Internet Policy Statement. The Court held that the FCC’s attempt to enforce these particular “net neutrality” policies was invalid for lack of jurisdiction.

 Jurisdiction in this context means power or authority. An independent federal agency’s ability to take any action depends on the authority granted that agency by Congress. If Congress has authorized the agency to act, the agency may act; if Congress hasn’t authorized it, the agency may not act. Of course, things are seldom that cut and dried.  Sometimes Congress authorizes the agency to regulate in a general area but doesn’t mention anything about another, related, area.  (For example, prior to 1984 the Communications Act authorized the FCC to regulate broadcasting, but said nothing about regulating the cable TV industry.) The courts have agreed that, in such cases, the FCC may act in the not-specifically-mentioned area if such action is “reasonably ancillary” to the agency’s “statutorily mandated responsibilities”.

 In the Comcast case, the FCC claimed its regulation of Comcast’s practices was “reasonably ancillary” to a number of the Act’s provisions. But the D.C. Circuit concluded that none of the provisions cited by the FCC imposed any “statutorily mandated responsibility” to which the FCC’s regulation of Comcast might be deemed “reasonably ancillary”. And without that essential nexus, the FCC lacked the power, or jurisdiction, to do what it had done. As a result, the Court’s ruling also signaled that the FCC may lack the power to impose network neutrality principles.

 So where does the FCC go from here if it wants to promulgate net neutrality regulations? There appear to be four major options:

Appeal to the Supreme Court.  In its Comcast arguments, the FCC relied on the Supreme Court’s 2005 Brand X decision. That case involved the Commission’s determination that cable modem Internet access service is an “information service” subject to regulation under Title I of the Act, rather than a “telecommunications service” subject to Title II. In its Brand X

opinion, the Supreme Court observed that the FCC “remains free to impose special regulatory duties on [cable Internet access providers] under its Title I ancillary jurisdiction.” In Comcast, the FCC argued to the D.C. Circuit that that Supreme Court language established that the FCC could claim ancillary jurisdiction derived from Title I.

But the D.C. Circuit felt that the Commission was reading too much into that quotation. In the Circuit’s view, just because the Supreme Court said that the FCC had jurisdiction to impose some kind of regulation on ISPs under Title I doesn’t mean that the agency had jurisdiction to impose this particular regulation (i.e., “reasonable” traffic management); rather, the Circuit held, each claim for ancillary jurisdiction must be analyzed on its own merits.

Given that, the FCC could try to convince the Supreme Court to provide a broad interpretation of its Brand X language, broad enough to support the Commission’s claim of authority to regulate ISP traffic management. This would not be an easy case for the FCC. As the D.C. Circuit’s Comcast decision makes clear, the Supreme Court itself has, in a number of decisions, treated the concept of ancillary jurisdiction as narrow. Like the Circuit, the Supreme Court has held that each new assertion of such authority must be evaluated on its own terms.  So the prospects of a broad, result-changing opinion out of the Supreme Court are not good. Additionally, a trip to the Supreme Court would not be quick: it is unlikely that a decision would be released prior to June, 2011, even if the Supreme Court agreed to take the case (which it is not required to do – indeed, the Supreme Court routinely agrees to review only about 1% of the cases presented to it).

Go to Congress. Seemingly the most direct way to fix a lack of jurisdiction is to get Congress to eliminate that lack by enacting legislation specifically providing the Commission with the authority to do what it wants to do. While legislation is perhaps the most direct route, it is neither the quickest nor the surest. Bills designed to give the FCC such authority have been introduced over the last few years – but they have not progressed significantly. While it’s difficult (if not impossible) to pinpoint precisely why proposed legislation gets stalled, in this instance that may be attributable, at least  in part, to a preference by Congressional Democrats to give the FCC a chance to take a first shot at crafting net neutrality regulations. Another factor possibly staying Congress’s hand: a desire to wait and see what the D.C. Circuit would do in the Comcast case. But now that the D.C. Circuit has ruled against the FCC’s assertion of ancillary authority in this area, those two factors have been eliminated.  

While it may be possible to get legislation authorizing very narrow FCC regulation of Internet traffic management enacted before everyone’s attention turns to the November elections, that seems unlikely. Verizon has been calling for much broader legislation to re-write the Communications Act for the “Internet Age,” but that seems even less likely to occur before November, and Verizon’s proposal probably would not provide the FCC authority to adopt net neutrality rules. Indeed, it took years of work to get the last re-write of the Communications Act enacted in 1996.  

Re-classify the Transport Component of Internet Access to be a Title II Telecommunications Service.  The FCC has recognized for some time that their 2008 Comcast Order was in trouble (as anyone who attended the oral argument at the Circuit could have surmised).  Perhaps because of that, some Commissioners have been floating a possible alternative approach: re-classify at least some aspects of Internet access (including, e.g., the transport component) as a Title II telecommunications service. Since Title II unquestionably contains “statutorily mandated responsibilities” (more so than Title I), so the thinking goes, the Commission would be better able to establish that its regulation is “reasonably ancillary” to such responsibilities, thus avoiding the jurisdictional problem identified in the Comcast decision.

But this “re-classification” approach has its own problems. 

First, re-classification would require the reversal of multiple FCC decisions made between 2002 and 2006. Those decision classified cable modem, DSL, wireless broadband and broadband-over-powerline as “information services” rather than telecommunications services. To be sure, the FCC already has a pending “Open Internet” proceeding through which a record might be built in support of re-classification of Internet transport as a telecommunications service. But what would Net Neutrality advocates use to make the case that the Internet environment has changed so radically in the last couple of years: the growth of “edge” providers and third-party Internet applications? Another difficulty: the FCC’s reasoning back in 2002, upheld by the Supreme Court in Brand X, was that even accessing the world wide web required an integrated information service, not merely telecommunications transport. 

Further complicating matters is Congress. Would a majority of Congress be happy with the FCC taking things into its own hands, when many in Congress probably believe that re-classification (at least re-classification that involves increasing regulation on the re-classified service providers) is the responsibility of Congress, not the FCC.  

And, of course, re-classification would generate very strong resistance on all fronts from across many industry segments. Further lengthy court appeals would be certain. 

Build a Stronger Case for Title I Ancillary Authority.  In Comcast, the D.C. Circuit did not rule that it was impossible for the FCC to make the case for ancillary jurisdiction, just that the Commission had failed to do so here. The Court left open the alternative possibility that the FCC could assert jurisdiction over Internet traffic management if such regulation were in fact ancillary to the Commission’s responsibilities under Section 201 of the Communications Act (which requires that common carrier charges and practices must be just and reasonable). 

The potential for such an alternative arises from the fact that the Circuit declined to consider one line of argument presented by the Commission in support of its claim of ancillary jurisdiction. In its brief, the Commission argued that it could regulate Comcast’s practices because discriminatory practices that impact VoIP traffic affect the prices and practices of traditional telephone common carriers. But the FCC had not included that as a basis for its regulation back in its 2008 Comcast Order that was on review – and the Circuit (as well as most other courts) refuses to consider justifications for an agency action which are made only at the appeal stage, and not in the original action on review. So the ultimate strength of that particular argument has not yet been tested in court.

Accordingly, the FCC could use the pending Open Internet proceeding to build a record establishing a nexus to Section 201 responsibilities. However, the FCC’s Section 201 theories seem pretty far-fetched, and it is hard to conceive of other theories that could be stronger. And while the Court also left open the possibility that the FCC could try to show a nexus to its responsibilities to protect broadcast TV stations under Title III of the Communications Act, it is unclear if and how the FCC would take on that task.

Statements released by Democratic FCC Commissioners and legislators suggest that they are determined to move forward and find a way to enact net neutrality regulations. Of the alternatives set out above, re-classification of Internet transport as a Title II service currently seems to have the most momentum, but the Obama administration may choose to push one of the other alternatives, or perhaps to work on multiple paths at the same time.   Either way, we are sure to see the struggle over this issue continue.

Court Says No To FCC-Imposed Network Neutrality

FCC lacks authority from Congress to regulate provision of Internet services

Just three short weeks ago, the FCC took the Nation to the mountaintop and showed us the promised land of broadband – every man, woman, and child among us interconnected by high-speed Internet. Part of the dream foresees an Internet free of any provider’s control, giving everyone access to all of the content on the planet.

That last part – Commission-protected freedom from providers’ control – has now taken a serious hit from the U.S. Court of Appeals for the D.C. Circuit. The Court has concluded that the FCC lacks authority to require providers to treat Internet content even-handedly.

Comcast launched the case back in 2007, when it deliberately hindered its Internet customers’ access to certain file-sharing services (possibly, some critics thought, to protect its parent companies’ on-demand cable services from competition). Comcast stopped the practice after the story came out, and after its claims that it was “just controlling congestion” were shown to be untrue. The FCC subsequently imposed certain reporting and disclosure requirements on Comcast’s traffic management practices.  Comcast took the FCC to court, where we observed that the oral argument did not go well for the FCC.

The court has now ruled squarely for Comcast and against the FCC, holding that the powers granted to the FCC by Congress do not include the power to regulate Comcast’s provision of Internet service.

The FCC’s position was a little shaky from the start. It never had a rule prohibiting the Comcast action that caused all the trouble, just a loosely-worded policy statement. And nothing in the Communications Act, from which the FCC derives all of its authority, specifically authorizes control over Internet traffic. The FCC thus had to fall back on a claim of “ancillary authority,” based on a catch-all statutory provision that allows the FCC to do pretty much anything “as may be necessary in the execution of its functions.” 

But as the Court had previously held on a number of occasions, ancillary authority applies only if (1) some other statutory provision covers the subject matter, and (2) the challenged action is “reasonably ancillary” to the FCC’s exercising of its authority under (1). The FCC passed the first test, but not the second. The “other provisions” on which the FCC relied, said the Court, were either mere statements of congressional policy (which cannot support ancillary authority) or statutory provisions that miss the specific topics involved in Comcast’s behavior.

As a result, the FCC is legally barred from imposing or enforcing network neutrality.

The FCC still has a few options.  For example, it can ask the same court for a hearing en banc (Latin for “lots more judges”) or appeal to the Supreme Court. Or it can ask Congress for a law that gives it the authority it needs. There may be other alternatives as well, involving adjustments to the existing regulations for a better fit with the existing statutes, but their likelihood of success in court remains to be seen.

But right now, the view from the broadband mountaintop is a little murky. For the time being, at least, Internet providers are free to favor or block content as they choose. And no use complaining to the FCC.

Court Challenges FCC in Early Network Neutrality Test

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.

The judges seemed to feed “softballs” to the attorney for Comcast, while giving the FCC lawyer a much harder time. We noted three particularly telling moments:

  • The Chief Judge asking the FCC lawyer, “How would you prefer to lose – [on due process or on jurisdiction]?”
  • Another judge pointedly asking the FCC lawyer, “Are there any limits” to the FCC’s jurisdictional claim? The lawyer seemed unable to come up with an answer that both satisfied the court and squared with his own theory.
  • The Chief Judge remarking, “The impact of our decision [on the FCC’s pending network neutrality rules] will be perfectly clear,” in a context suggesting the court expects to undercut the FCC’s ability to adopt those rules.

But even if the FCC loses this case, it would be a mistake to suppose that marks the end of network neutrality. There are two points to remember.

First, the FCC believes it has a decent argument for jurisdiction based on the Supreme Court’s Brand X decision, which has language supporting the FCC’s authority to regulate at least some aspects of Internet service.  The Comcast court appeared uninterested in hearing about Brand X. But the FCC could ask the Supreme Court to rule in its favor under that precedent.

Second, a loss here on jurisdictional grounds will be an invitation to Congress to step in and give the FCC whatever authority it needs to impose network neutrality. Recent congressional proposals have been a lot tougher than the FCC’s proposed rules.

Either way, an FCC loss in this court will only set off the next stage of the dispute.

Court Review Of Revised Form 323 Is Sought As Bureau Suspends January 11 Deadline

FHH, State Associations head to court; Bureau indicates that revised form may impose “unanticipated” practical burdens on filers

Two days before Christmas, and all was neither calm nor bright for Form 323 at the FCC. On December 23 the agency’s troubled efforts to launch its revised Form 323 – the Ownership Report for commercial broadcasters – got more troubled on a couple of fronts. In the morning, FHH, together with ten state broadcaster associations, asked the U.S. Court of Appeals for the D.C. Circuit to stay the implementation of the form pending Court review of the new burdens that form imposes. And hours later, the Media Bureau issued an order postponing indefinitely the deadline for filing biennial (but not other, non-biennial) Ownership Reports on the new form in order to fix mechanical problems that have cropped up with the form. While the two events were not directly related to one another, they both shone a glaring and none too favorable light on the FCC’s six-month (and counting) campaign to impose, without notice or comment, new and intrusive reporting obligations on commercial broadcasters.

We have already chronicled the history of, and major league flaws underlying, that campaign in considerable detail. Need a refresher? Click here and start reading. When last we checked in on things a couple of weeks ago, the FCC had finally taken the wraps off its revised form six months after first announcing in the Federal Register that the new form had been designed. (The FCC has never explained its reluctance to let us all kick the tires on the new form before having to drive it off the lot.) While the Commission had initially mandated in May, 2009, that the revised form would have to be filed by all commercial broadcast licensees by November 1 (reflecting their ownership as of October 1), that date had slipped to December 15, and then to January 11 (with the October 1 “as of” date moving to November 1). 

Meanwhile, in November FHH had filed, with the Commission, a motion to stay the implementation of the new form, and then a separate “Petition for Reconsideration or Such Alternative Relief As May Be Appropriate”. 

With the January 11 deadline closing in fast and no sign at all that the FCC was giving any serious consideration to the issues which FHH’s pleadings raised, FHH headed to court, along with the broadcaster associations from Alabama, Alaska, Arkansas, Kentucky, Louisiana, Mississippi, New Mexico, Puerto Rico, South Carolina and Tennessee.

Normally you go to the Court of Appeals only after the agency has taken some action which the Court can then review. But in certain extraordinary circumstances, the Court is authorized to step in even absent agency action, to make sure that the Commission is doing what it’s required by Congress to do. The revised Form 323 requires the submission of social security number (SSN)-based FRNs for every individual having an attributable interest/position in connection with any commercial broadcast licensee. As we see it, the FCC’s efforts to steamroll that requirement into place have fallen demonstrably short of Congressionally-imposed criteria, even though affected broadcasters have no conventional way to secure judicial review before they are required to comply – a situation perfectly suited for the “extraordinary writ” process.

So away we went to Court, asking it to stay the implementation of the new form. Since, when we filed the petition, the deadline was still January 11, we asked the Court to treat this as an “emergency” situation, the goal being a ruling by January 4, i.e., a week ahead of the January 11 deadline.

Meanwhile, back at the FCC, representatives from a number of law firms had met with Bureau staffers on Friday, December 18, to demonstrate to the staff that the new Form 323 was, as a purely practical matter, a nightmare. The group served up multiple horror stories of cumbersome on-line processes, system timeouts and losses of “saved” data, all of which contributed to massive amounts of time spent completing the form. (How massive? The group told of cases, involving “moderately complex” ownership structures, where the completion of a single form took 500 to 800 hours. 800 hours? Wrap your mind around that. That’s the equivalent of 20 40-hour weeks – about five months – all dedicated 100% to the completion of a single form. Where’s the Paperwork Reduction Act when you really need it?)

Following the meeting, the group – ably led by Wiley Rein’s Kathleen Kirby, who deserves big props for leading the charge – followed up with a letter requesting an extension of the January 11 deadline as well as various mechanical modifications to the form to alleviate the problems that have been encountered. The letter focused exclusively on the mechanics of the form; it made no reference to the more fundamental legal questions that FHH had raised and the FCC had declined to address.

The Bureau, apparently convinced that their form does have glitches and hiccups, agreed in the Order released on the afternoon of December 23 to suspend the January 11 deadline for biennial Ownership Reports. The suspension is indefinite, and is intended to allow the staff to “investigate what changes can be made” to get the form to work more efficiently without compromising the “completeness, quality, usefulness and aggregability of the data.” The Order provides that, once the dents have been knocked out of the revised form, the FCC will announce a new deadline which will be at least 90 days from the date the New(er) and (More) Improved form is made available.

Note, though, that the form, flawed as it is, is still required to be completed and filed in non-biennial reporting circumstances. Those include consummation reports relative to assignments or transfers of control. (Check out Section 73.3615 if you have any doubts.) But if the form as it currently stands is problematic, why use it at all? That’s just one more question the Commission has declined to answer. 

Also, note that, when the biennial form is eventually filed, it will (according to the Bureau’s Order) still have to reflect ownership as of November 1, 2009. That means that, if the new form were to become available on, say, February 1 (that’s just an optimistic guess on our part), reports would be due 90 days later, i.e., by (let’s see, 30 days hath September . . .) May 3, the first business day in May. That’s six months after November 1. While many licensees may not have changed during that time, it’s reasonable to assume that a significant number will have changed – meaning that those changed licensees will be reporting outdated information likely relating to entities or individuals with which the reporting licensees have no connection at all. That is not a recipe for complete and accurate data collection.

Be that as it may, the deadline for filing biennial reports on the revised Form 323 has now been suspended indefinitely. 

But hold on – what does that suspension do to the Petition filed with the Court?  Well you might ask. With the January 11 deadline gone, the immediate threat to all commercial broadcasters was obviously removed. But the deadline suspension does nothing to cure the underlying unlawfulness of the new SSN-based FRN reporting requirement. And notwithstanding the suspension, non-biennial Ownership Reports must still be filed on the new form, with the unlawful SSN-based FRN requirement. And the FCC continues to show no inclination to address, much less resolve, the issues which FHH has raised about that unlawfulness.

In other words, the suspension does absolutely nothing to correct what we believe to be the more fundamental flaws in the new form. (Not surprisingly, in its Order the Bureau claimed that FHH’s motion for stay, filed with the Commission in November, was rendered moot by the Order. We disagree with that example of bureaucratic wishful thinking.)

Obviously, the Bureau’s Order was a late-breaking development that the Court should know about, so within a couple of hours of the release of the Bureau’s suspension Order, we were back in Court, supplementing our Petition. In our Supplement we advised the Court of the Bureau’s Order and acknowledged that, because of the deadline suspension, there is no longer any need for “emergency” relief, i.e., a ruling by January 4. BUT we emphasized that the form is still seriously flawed, that non-biennial filers are currently being harmed by those flaws despite the suspension, and that those flaws are still not susceptible to judicial review through conventional means. In other words, while we withdrew the request for “emergency” relief, we emphasized that prompt extraordinary intervention by the Court is still called for here. Accordingly, we renewed our request that the Court consider our Petition.

With the arrival of Christmas weekend, we can all expect at least a couple of days of peace and quiet on the Form 323 front. But we should not expect that to last long. Stay tuned.