Pai Directs USAC to Improve E-Rate Productivity Center

Federal Communications Commission (FCC or Commission) Chairman Ajit Pai sent a letter this week to Chris Henderson, CEO of the Universal Service Administrative Company (USAC) expressing concern about flaws in USAC’s administration of the E-Rate Productivity Center (EPC), the online application and account portal. In the letter, Chairman Pai noted his support for E-Rate as a program that is a key component of the Universal Service Fund but said that major problems exist in the process through which schools and libraries apply for E-Rate funding.

The EPC was established in response to a 2014 FCC directive to make the E-Rate process faster, simpler, and more efficient. In his letter, the Chairman stated that the EPC was supposed to be fully operational for the funding year 2016 filing window and that today it is still not adequately functional. According to Pai, “EPC implementation issues have created major headaches for applicants requesting E-Rate funding.” As an example, the Chairman cited the fact that USAC has been unable to meet a Commission directive to process funding requests by September 1 of the funding year, resulting in a number of applicants who are still awaiting decisions for funding year 2016. The Chairman also noted similar delays with other matters including issuance of commitment adjustments, revisions to funding commitment decision letters, and appeals resolutions.

Chairman Pai also took issue with the cost of the EPC project. He emphasized the fact that the project was originally supposed to cost $19 million, has already cost over $30 million and is projected to cost $60 million or more. Pai further criticized USAC for a lack of transparency with the FCC “about program issues that directly and materially affect applicants, such as system outages during critical application periods.”  In one instance, E-Rate stakeholders, and not USAC, informed the FCC about a problem with invoice deadline extensions using USAC’s Invoice Deadline Extension Tool and the Wireline Competition Bureau had to devise an impromptu solution.

In the letter, Pai seeks the following specific commitments from USAC going forward:

  • Guarantee to take all necessary steps to quickly resolve any issues with the EPC, with a focus on supporting and completing basic functionality for applicants to apply for and receive funds;
  • Be transparent with and accountable to the Commission by providing timely and accurate information; and
  • Work to proactively identify and implement alternative options to assist applicants when EPC fails, including manually processing items if needed (which should fall to SOLIX under its $38 million contract to process applicant funding applications).

USAC is directed to provide a response to this letter and outline its plan to address these matters by May 18, 2017.

Comment Deadlines Set for FCC’s Latest International Reporting Streamlining Rulemaking

World Global ConnectionsAs Kelley Drye reported in a post late last month, the Federal Communications Commission (FCC) is considering eliminating the FCC Rule 43.62(b) annual International Traffic and Revenue reporting obligation and streamlining the Rule 43.62(a) annual Circuit Capacity reporting requirements.  The FCC last overhauled these international reporting requirements a mere four years ago.  The FCC’s Notice of Proposed Rulemaking (NPRM) now solicits comments on a number of issues including, but not limited to, the effect on U.S. consumers and carriers of eliminating the annual International Traffic and Revenue report, the costs of complying with the two annual reporting requirements, and options for streamlining the annual Circuit Capacity reporting obligations.  Kelley Drye will be preparing an advisory delving deeper into the issues for which the FCC is seeking comment so be sure to check the Kelley Drye Communications practice group page for more details.

The NPRM was published this morning in the Federal Register, establishing the comment deadline at May 17, 2017 with reply comments due by June 1, 2017.  International telecommunications providers subject to the reporting requirements should review the NPRM and consider whether to participate in the comment cycle to ensure their views are heard.

Should you have any questions about this proceeding and what the proposed rules may mean for your business, feel free to contact a member of Kelley Drye’s Communications practice group.

FCC Announces the Results of the $19.8 Billion Broadcast Incentive Auction

On Thursday, April 13, 2017, the Federal Communications Commission (“FCC” or the “Commission”) announced the results of its broadcast incentive auction.  The FCC raised approximately $19.8 billion through the auction.  While the gross revenues were considerably less than the nearly $45 billion the Commission raised in 2015 from the Advanced Wireless Services 3 (“AWS-3”) auction, the spectrum incentive auction still had one of the highest grossing auction results in agency history.

The 50 winning bidders won a combined total of 70 MHz of licensed spectrum nationwide in the 600 MHz range.  The largest spenders were T-Mobile at $8 billion, Dish at $6.2 billion, and Comcast at $1.7 billion.  Notably, AT&T spent less than $1 billion, and Verizon did not bid at all.  Continue Reading

Wireline Competition Bureau Explains No Presumption of Intrastate or Interstate Jurisdiction for Private Lines; Carriers Must Conduct Good Faith Inquiry Into Nature of Traffic Carried

By an Order issued late last week, the Wireline Competition Bureau (Bureau) provided important insight regarding determining the jurisdictional classification of private line revenues.  In ruling on long-pending petitions for reconsideration of Universal Service Administrative Company (USAC) audit findings regarding the classification of private line revenues, the Bureau explained that the longstanding Ten Percent Rule does not establish any presumption that a private line is jurisdictionally either intrastate or interstate.  Instead, the Bureau clarified that it is the jurisdictional nature of the traffic carried over private lines, not the existence (or nonexistence) of a customer certification, that determines the appropriate jurisdictional classification.  Moreover, carriers must conduct a good faith inquiry into the nature of the traffic carried on the private line when determining the jurisdiction of those line revenues.  Carriers that provide private line services should be sure to review the Order to ensure their private line jurisdictional classification methods will withstand any Bureau or USAC scrutiny.

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D.C. Circuit Limits FCC Jurisdiction on Fax Advertisements

On March 31, 2017, the United States Court of Appeals for the District of Columbia issued a decision in Bais Yaakov of Spring Valley vs. FCC (No. 14-1234), holding that the FCC’s 2006 Solicited Fax Rule is unlawful to the extent that it requires opt-out notices on faxes sent with the recipient’s consent (i.e., “solicited” faxes).  The decision also vacated the FCC’s October 30, 2014 Fax Advertisement Waiver Order insofar as it attempted to enforce the rule and grant retroactive waivers to certain parties of the opt-out notice requirement.  This decision is a big win for defendants in a recent wave of class action cases based on a failure to include opt-out notices on solicited faxes.  These defendants – nearly 150 of whom had received retroactive waivers from the FCC – now will not face liability for faxes sent with the recipient’s permission.

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Client Advisory: Congress Repeals FCC 2016 Privacy Order via Congressional Review Act

On April 3, 2017, President Trump signed into law a Congressional joint resolution eliminating new broadband and voice privacy rules set forth in a November 2016 order (the 2016 Privacy Order) by the Federal Communications Commission (FCC) (the Joint Resolution).  Members of Congress largely voted along partisan lines. The House approved the Joint Resolution by a 215-205 vote and the Senate approved it by a 50-48 vote. Continue Reading

FCC Proposes Eliminating Annual International Traffic and Revenue Report and Streamlining Annual Circuit Capacity Report

At its March 23, 2017 Open Meeting, the Federal Communications Commission (FCC or Commission) voted unanimously to adopt a notice of proposed rulemaking (NPRM) seeking comment on a proposal to reduce certain reporting requirements for international telecommunications service providers (International Service Providers). In particular, the FCC proposes to eliminate, in its entirety, the annual International Traffic and Revenue Report, in which International Service Providers report details regarding their international telecommunications services. The NPRM also seeks comments on ways to streamline the annual Circuit Capacity Report in which International Service Providers report on satellite, terrestrial, and submarine cable system usage and capacity.

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Court Rules in FTC’s Favor on “Common Carrier” Status in Cramming Case

On an issue that takes on new-found importance after FTC v. AT&T Mobility, a federal court in Montana granted summary judgment in favor of the Federal Trade Commission (FTC) in a case alleging that the defendants violated the FTC Act by placing charges on consumer telephone bills for purportedly unwanted service add-ons, such as voicemail, electronic fax, and call forwarding (a practice referred to as “cramming”).  In its decision, the court rejected the defendants’ claim that the corporate entities involved in the case are “common carriers,” and therefore exempt from prosecution under the FTC Act.

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FCC Grants Honda Twenty Month Extension to Comply with Video Accessibility Rules

On March 16, 2017, the Federal Communications Commission’s Media Bureau (Bureau) released a Memorandum Opinion and Order (Order) addressing Honda Motor Co., Ltd’s (Honda) January 2017 petition for limited waiver of video accessibility rules for its in-vehicle rear entertainment systems. The Bureau granted Honda’s 20-month waiver request with the condition that Honda provide status update reports.

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3GPP Paves Way for Accelerated 5G Standards Development

During a plenary meeting held March 6-9 in Dubrovnik, Croatia, the 3rd Generation Partnership Project (3GPP) a standards-developing collaboration between groups of telecommunications associations approved an accelerated time frame for the completion of specifications which will facilitate standards-based 5G deployment to begin in 2019 instead of 2020.  Continue Reading