Portions of the FCC’s Recent Wireless License Renewal Order Take Effect Oct. 2nd, but Key Rule Sections Delayed Pending OMB Review

At the beginning of August, the Federal Communications Commission (“FCC”) took steps to reconcile a diversity of renewal requirements and permanent discontinuance conditions within its rules for many of the licensed radio services.  However, although the Second Report and Order (“Second R&O”) was published in the Federal Register September 1, the rules will take effect only in staggered fashion as set forth in the notice beginning on Monday, October 2, 2017, with significant portions set to take effect months later after further review or, per the FCC’s decision, years in the future.  In the interim, depending on the service and situation, existing rules governing renewals and discontinuance will continue to apply.  Licensees will certainly want to become familiar with the parts of the Second R&O pertinent to their rules service, whether the licenses were issued on a geographic or site-based basis.  Below, we breakdown the time frames in which the rules will take effect:

Overview

The Second R&O created a single uniform standard for license renewal for the wireless radio services (“WRS”) which includes “[a]ll radio services authorized in [FCC Rule] parts 13, 20, 22, 24, 26, 27, 30, 74, 80, 87, 90, 95, 96, 97 and 101.  So in a nutshell, with certain enumerated exemptions, this includes most commercial mobile radio services, private land mobile radio services, private and common carrier fixed microwave and millimeter wave services, and aviation services, among others.  The principal exclusions of the new renewal standards are for licenses that have no construction obligations, such as services licensed by rule.  The rules apply to WRS with both geographic and site-based licenses.

The new renewal standard laid out by the Commission has two flavors, one for providers of service to the public and another applying to licensees serving their own communications needs.  The general standard requires “each WRS licensee [to] demonstrate that over the course of its license term, the licensee either:  (1) provided and continues to provide service to the public, taking into account the periods of time the applicable service-specific rules give licensees to construct facilities and meet performance benchmarks, or (2) operated and continues to operate over the course of the license term to address the licensee’s private, internal communications needs, again taking into account the periods of time the applicable service-specific rules give licensees to construct facilities and meet performance benchmarks.”

In implementation of the broadly applicable renewal standard, the Second R&O adopted four safe harbors for renewal applicants for (1) site-based licenses; (2) geographically-licensed wireless providers; (3) geographically-licensed private systems; and (4) partitioned or disaggregated licenses without a performance requirement.  Each safe harbor requires three certifications, (a) one regarding the ongoing provision of service and/or operations tailored to the type of license, (b) a second that there has been no permanent discontinuance of operations during the term, and (c) the third that the licensee “has substantially complied with all applicable FCC rules, policies, and the Act.”

If each of these certifications under the applicable safe harbor cannot be made without qualification, the Commission will require a renewal applicant to submit and will consider a fact-based “renewal showing” to demonstrate how the licensee meets the general renewal standard.  The renewal showing must include a detailed description of the applicant’s provision of service to the public or to meet its private communications needs during the entire license period and must address several factors, including the level and quality of service/operations, service commencement, interruptions and outages, as well as several others.  The third certification under the safe harbors, the “substantial compliance” certification, will still be required or the circumstances making the applicant incapable of making the certification will have to be explained, and the applicant will have to make the case why renewal of its license should still occur.

The Commission will not require each party to a partitioning or disaggregation arrangement to certify that it will independently satisfy service-specific construction and performance requirements.  While parties in such situations are at liberty to do so, the Second R&O will also allow them to share in fulfilling such requirements for the licensee as a whole, which will go into effect prospectively.

In addition to the generally applicable renewal standard, the Second R&O adopted a new uniform standard for the WRS defining permanent discontinuance of service as a period of 180 or 365 consecutive days consecutive days for geographic licenses and site-based licenses, respectively, during which the licensee does not operate or provide service to at least one subscriber with which it is not affiliated.  The Commission provided further explanations about what would qualify as operation or providing service, for example, stating unequivocally that channel keeper operations such as test signals, tones, or color bars fail to satisfy.  When discontinuance happens, the license is constructively terminated, although there are provisions for requesting extensions, under which certain limited extensions are effectively automatic following timely requests.  (For services that already have applicable definitions of permanent discontinuance, the new discontinuance rule will begin to apply on the date a licensee must meet its first performance requirement benchmark.)

The Second R&O also eliminates legacy “comparative renewal” rules, and prohibits applicants from filing competing applications during the WRS renewal process.

Delayed Implementation of the General WRS Renewal Standard, Safe Harbors, and Renewal Showing Rules (Among Others)

Key aspects of the Second R&O will not go into effect on October 2, because the new rules require approval by the Office of Management and Budget (“OMB”) under the Paperwork Reduction Act (“PRA”).  Indeed, the effectiveness of what some might characterize as the heart of the Second R&O – new rule Sections 1.949, 1.950, and 1.953 – awaits completion of OMB review.  These delayed sections the new general license renewal standard, the safe harbors, the substantial compliance certification, and the renewal showing where the safe harbors are not available.  (For some license types, the delay is meaningless because much of the relevant rule sub-sections take affect only in 2018 or 2023, as described below.)  These new delayed rules also govern the new general and uniform standard applicable to discontinuance of service (and the resulting license termination) as well as geographic partitioning and spectrum disaggregation.

In the interim, before these rules take effect, existing the service-specific standards and rules will apply.  However, it is notable that the Second R&O calls for many of the existing renewal and discontinuance regulations to be removed from specific service rule parts, but the Commission apparently took care in those cases to delay the effectiveness of the rule deletions until the OMB review finished and Sections 1.949 or 1.953, as applicable, takes effect.

An OMB review of regulations involving record-keeping or reporting typically takes at least several months.  There will be a future Federal Register notice announcing the review is complete and which will set the effective day of these three new rule sections and the aforementioned service-specific rule deletions.

Partial Implementation Begins October 2:

Despite the fact that many core aspects of the Second R&O still await OMB approval, a few elements of the new rules will go into effect on October 2, principally the following:

  • Construction requirements for Certain Services: Modifications to the construction requirements (e.g. substantial service requirements) for Local Multipoint Distribution Service (“LMDS”), Multichannel Video Distribution and Data Service (“MVDDS”), 24 GHz service, and 218-219 MHz will go into effect October 2.  In modifying such obligations, the FCC implemented numerous service specific reforms such as eliminating a construction requirement compliance certification for LMDS partitioning and disaggregation applicants, modifying the components of a license renewal application for MVDDS, and adjusting service status reporting requirements for 218-219 MHz licensees.
  • Part 90 Renewal Provisions Revised:  The Second R&O simplified the renewal rules related to Part 90, private land mobile renewals, merely retaining the two requirements that applicants must demonstrate that they have provided “substantial” service during their past license term – “service that is sound, favorable, and substantially above a level of mediocre service that just might minimally warrant renewal” and that they have “substantially complied with applicable FCC rules, policies, and the Communications Act of 1934, as amended.”  This standard, requiring the substantial service showing, applies only until 2023.  The remainder of Rule 90.743 was removed.
  • Remaining Comparative Renewal Rules Eliminated: The amended procedural rules in the Second R&O pertaining to dismissals without prejudice, dismissals of mutually exclusive applications not granted, and dismissals for failure to prosecute or to respond to the Commission will take effect on October 2.  The primary effect of these modifications (to Rule Section 1.934) is the elimination of the remaining, service specific aspects of the FCC rules pertaining to comparative renewals, which the Second R&O termed an “outdated vestige of licensing rules predating our current reliance on auctions in many services.”  Accordingly, the Second R&O prohibited the filing of competing renewal applications for all WRS.

Rules Taking Effect in 2018, 2019, and 2023

Separate and apart from the delay caused by OMB review, the Second R&O delayed implementation of a number of the new renewal and discontinuance rules as applied to several services, as summarized below.

2018:

On October 1, 2018, the new renewal paradigm proposed for Section 1.949 will go into effect for the Common Carrier Fixed Point-to-Point Microwave Service.  For all other site-based licenses in the WRS covered by the Second R&O, the new renewal regulations (including the renewal standard, safe harbor, renewal showing, and substantial compliance certification) will go into effect upon the effective date in the Federal Register notice of OMB approval of new Section 1.949.

2019:

As an equitable measure, all WRS that do not currently have an explicit definition of permanent discontinuance in their rule parts, licensees will have until January 1, 2019 to come into compliance with the Second R&O’s new rules regarding permanent discontinuance.  (Those that do will be subject to the new rules on the date specified in the notice of OMB approval in the Federal Register.)  If a licensee in the services without a current definition of permanent discontinuance is not providing service or is not operational on January 1, 2019, the discontinuance period in the new rules – whether 180 or 365 days – will start to run on that date.

2023:

Geographic licenses with certain exceptions must comply with Section 1.949 (including the renewal standard, safe harbor, renewal showing, and substantial compliance certification) rather than their service specific rules only beginning on January 1, 2023.  However the new articulation of the renewal paradigm, including the safe harbors, will go into effect for covered geographic licenses in the 600 and 700 MHz Commercial Services, Advanced Wireless Services (AWS-3 (1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz) and AWS-4 (2000-2020 MHz and 2180-2200 MHz) only), and H Block Service after on the date specified in the notice of OMB approval of Section 1.949 in the Federal Register, in large part because they already are subject to the new uniform renewal standard pursuant to analogous service-specific rules (although the safe harbors may not have been available).

Certain rules concerning “substantial service” will apply through January 1, 2023.  For 218-219 MHz Service licenses and 24 GHz Service licenses, until January 1, 2023, the “substantial service” assessment, which must be made as a performance demonstration within ten years after license grant, will be made at renewal pursuant to the provisions and procedures contained in § 1.949.  Similarly, until January 1, 2023, all Part 90 licensees seeking renewal of their authorizations at the end of their license term must make a substantial service showing in their renewal applications.  (For other services, such as for LMDS, the revised rules simply make clear that the substantial service showing must be made within ten years of grant without specifically tying it to the renewal filing.)  This five-year transition comes out of the Commission’s objective in the Second R&O to clarify that the renewal showing is distinct from the substantial service/performance requirement demonstration.

It’s Official: The Old CPNI Rules Are Back in Effect

Today the Office of Federal Register published a final rule from the Federal Communications Commission (FCC or Commission) that formally voids the rule changes in the Commission’s 2016 Privacy Order—which Congress invalidated in a 2017 Congressional Review Act (CRA) joint resolution earlier this year—and reinstates the voice-centric customer proprietary network information (CPNI) rules “in effect immediately prior to the effect date” of the FCC’s 2016 Privacy Order.

As the Commission notes in the summary of today’s action, “because the CRA does not include direction regarding the removal . . . of the voided language from the Code of Federal Regulations, the FCC must publish this document to effect the removal of the voided” rule’s text.  The Commission further explains that the publication of the previous rules is not an exercise of rulemaking authority, but rather simply effectuates what Congress had already done, and therefore today’s action is neither subject to public comment nor to judicial review.  The FCC’s action is effective today and does not substantively modify the CPNI rules in effect immediately prior to the issuance of the 2016 Privacy Order.

In June, the FCC issued an Order that formally recognized the CRA’s disapproval of the 2016 Privacy Order and dismissed eleven petitions for reconsideration of the new privacy rules.  The June Order noted that the reinstated rules would not apply to broadband service, which would be subject only to the text of Section 222 of the Communications Act, as amended. The June Order was met with a strong partial dissent from Commissioner Clyburn, who challenged the Commission’s decision not to place the item on public comment or to provide consumers with privacy rules beyond the “bare text of section 222” and “decade-old rules for legacy voice.”

For providers, today’s action formalizes what we’ve known for some time: the old CPNI rules are back in effect for non-broadband telecommunications carriers and providers of interconnected VoIP, and the statutory text of Section 222 continues to apply to broadband providers until further action.

 

 

FCC Seeks to Create Uniformity in Formal Complaint Processes

This week, the Federal Communications Commission (“FCC” or “Commission”) released a Notice of Proposed Rulemaking (“NPRM”) to increase uniformity among several diverse sets of FCC complaint procedures.  Today, there are three different mechanisms for complaints handled by either the Market Disputes Resolution Division (“MDRD”) or the Telecommunications Consumers Division of the Enforcement Bureau regarding common carriers generally; pole attachments; and the accessibility for people with disabilities of advanced communications services (“ACS”) and equipment under the Communications Act of 1934 (the “Act”).  In the NPRM, the FCC considers harmonizing, consolidating, and streamlining the procedural rules that govern filing and resolving these formal complaints as well as introducing several new requirements.  Included among the proposed new requirements is that pre-complaint settlement discussions would have to occur at the executive level for section 208 and ACS accessibility complaints, as is currently the case in pole attachment complaints.

The changes proposed in the NPRM are procedural in nature and thus the FCC is not required under law to undergo a formal notice and comment proceeding before changing the rules. The FCC is, however, seeking comments to inform its decision. Comments will be due 30 days after publication of the NPRM in the Federal Register and reply comments will be due 45 days after publication. Publication has not yet occurred.

Under current Commission rules, there are established procedures that individuals or organizations must follow when filing formal complaints which vary based on context. The NPRM focuses on the following complaint mechanisms:

  1. Common carrier complaints – section 208 of the Act provides a process for resolution of any disputes involving common carriers;
  2. Pole Attachment Complaints – section 224 of the Act authorizes the FCC to hear and resolve complaints about rates, terms, and conditions for access to poles and other utility rights-of-way; and
  3. ACS Accessibility Complaints – under sections 255, 717, and 718 of the Act, the Commission can resolve complaints regarding the lack of accessibility to persons with disabilities of advanced communications services and equipment.

The FCC explicitly excludes the Open Internet complaint process from its proposals, noting that it is the subject of a separate NPRM.

In this NPRM, the Commission considers creation of a uniform set of procedural rules to govern all three formal complaint processes, although it appears some variation would remain. The section 208 (common carrier) complaint process serves as the baseline for most of the elements of the proposed more standardized approach.  The ability to file complaints under section 208 has been in place since 1997, and the ACS accessibility process largely mirrors the process under section 208.  Below is a summary of the changes being considered:

  • Filing Deadlines. The FCC proposes a thirty-day (30-day) deadline for answering any formal complaint. Currently, the section 208 and ACS accessibility rules include twenty-day (20-day) response deadlines, while the pole attachment rules have a thirty-day (30-day) deadline. Additionally, replies to answers would be due within ten (10) days after service instead of the current timelines of three (3) days for section 208 and ACS accessibility complaints or twenty (20) days for pole attachment complaints.
  • Information Designations. The section 208 and ACS accessibility processes currently require parties to identify in the complaint, answer, and reply individuals that have firsthand knowledge of the facts in their allegations. The FCC proposes to apply the same requirement to pole attachment complaints, which would more closely align all processes with a similar standard under Federal Rule of Civil Procedure 26.
  • Discovery Process. The section 208 and ACS accessibility rules outline the specific number of interrogatories a party can serve with a complaint and answer. However, the current pole attachment rules only state that the FCC may request “additional filings.” The FCC proposes a uniform approach wherein a complainant may file and serve up to ten (10) written interrogatories with its complaint; a defendant may serve up to ten (10) interrogatories with its answer; and a complainant may file up to five (5) additional interrogatories with its reply. Parties under the proposal would no longer need to request permission from the FCC to serve interrogatories, but they still will need to explain why the requested information is necessary to the resolution of the dispute. Parties also retain the right to object to any interrogatory.
  • Required Conclusions of Law. For the section 208 and ACS accessibility process, the complaint, answer, and reply currently must include proposed findings of fact and conclusions of law. The FCC proposes eliminating this requirement for all complaint processes.
  • Section 208(b)(1) Complaints. Section 208(b)(1) includes a five-month deadline within which the FCC must issue an order concluding any investigation of a complaint about “the lawfulness of a charge, classification, regulation, or practice.” The FCC has interpreted this provision to apply to tariffs filed with the FCC. In order to expedite complaint resolution, the FCC now proposes to require parties to a tariff complaint governed by section 208(b)(1) to engage in pre-complaint discussions with the FCC as currently occurs in most cases.
  • Settlement Discussions and Mediation. The FCC proposes to supplement the existing requirement for a certification of pre-complaint settlement efforts under the section 208 and ACS accessibility complaint processes with a stricter requirement for such settlement discussions to occur at the “executive-level.” (This requirement already exists in the pole attachment process.) Additionally, the FCC proposes to codify the availability of the MDRD’s current staff-supervised meditation services for parties that choose to negotiate a resolution of their dispute.
  • Initial Status Conference. Under the section 208 and ACS accessibility rules, FCC staff can now direct parties to a complaint to appear for a status conference after the answer is filed. The FCC proposes to allow staff the option to direct status conferences for pole attachment complaints as well.
  • Accelerated Docket. The FCC suggests consolidating all the Accelerated Docket provisions, which appear in multiple parts of the section 208 rules, into one new rule. The FCC would also streamline the rules to afford FCC staff more flexibility to tailor the accelerated docket based on the facts of a case. The proposal also calls for the option of an accelerated docket to be extended to pole attachment complaints. The rules do not, however, propose extending the treatment to disability access complaints under sections 255, 717, and 718, which was rejected in the past.
  • Shot Clock. The FCC also seeks comment on whether it should adopt shot clocks for each of the three complaint processes addressed by the NPRM.

This proceeding addresses a few matters regarding pole attachment complaints and the related regulations under Part 1 of the FCC’s Rules that were raised in the May 2017 wireline infrastructure proceeding (see our previous client advisory for more information).

Proposed Fourth Quarter 2017 Universal Service Fund Contribution Factor Jumps – Poised to Hit New High

On September 12, 2017, the Federal Communications Commission’s (Commission) Office of the Managing Director (OMD) released a Public Notice proposing a universal service fund (USF) contribution factor of 18.8% for fourth quarter 2017.  This proposed contribution factor would be the highest rate since the USF program’s inception and likely reflects the impact of the declining USF contribution base. Continue Reading

Communications Service Providers Asked to Adopt the FCC CSRIC Guidance on Signaling System 7 Vulnerability Reduction

Last week, the FCC’s Public Safety and Homeland Security Bureau released a Public Notice (“Notice”) urging communications service providers to review and assess how they can incorporate the recommendations from Communications Security, Reliability, and Interoperability Council (“CSRIC”) V, Working Group 10 March 2017 Report to abate security signaling system 7 (“SS7”) protocol vulnerabilities(the “SS7 Report”).  SS7 is a communications protocol used within telephone networks to aid call setup, routing, billing and other functions between fixed and mobile service providers.

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Louisville One-Touch Make-Ready Ordinance Survives AT&T’s Challenge in Federal District Court

On August 16, 2017, the U.S. District Court for the Western District of Kentucky granted summary judgment in favor of the Louisville Metro Council to uphold the city’s recently-enacted ordinance amendments providing for “one-touch make-ready” (“OTMR”) on poles in the City’s public rights-of-way.  The ordinance had been challenged by AT&T, which alleged that in enacting it, the Louisville Metro Council exceeded its authority under state and federal law.  The victory is a win for providers seeking faster access to poles when facing routine and other make-ready work because it obviates the need for a number of procedural steps that many see engendering delays and thwarting new attachers’ desire to build our or augment their networks promptly to provide customer services.  The decision is the first in the country to review an OTMR ordinance, although other challenges to OTMR ordinances are pending.

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UPDATE: August 2017 FCC Meeting Recap: FCC Announces Comment Deadlines for Proposed Changes to Broadband Data Collection

On August 24, 2017, the Federal Communications Commission (“FCC” or “Commission”) published in the Federal Register its Further Notice of Proposed Rulemaking (“FNPRM”) that explores ways to improve the value of data, collected on FCC Form 477, regarding the availability of mobile and fixed broadband and other communications services, and to identify and eliminate unnecessary or overly-burdensome filing requirements.  The FNPRM proposes numerous changes to data collection for mobile and fixed services as well as ancillary logistical issues related to the Form 477 – for a more detailed overview of these proposals, see our previous blog post.  Federal Register publication starts the clock on the comment cycle for the item.  Initial comments on the FNPRM will be due on September 25, 2017, and reply comments will be due on October 10, 2017.

August 2017 FCC Meeting Recap: FCC Proposes Changes to Broadband Data Collection

At its August Open Meeting, the Federal Communications Commission (“FCC” or “Commission”) voted unanimously in favor of a Further Notice of Proposed Rulemaking (“FNPRM”) that explores ways to improve the value of data, collected on FCC Form 477, regarding the availability of mobile and fixed broadband and other communications services, and to identify and eliminate unnecessary or overly-burdensome filing requirements.  The FNPRM proposes numerous changes to data collection for mobile and fixed services as well as ancillary logistical issues related to the Form 477.  Comments on the proposals set forth in the FNPRM will be due 30 days after the item is published in the Federal Register, and reply comments will be due 15 days after initial comments.  The FNPRM has not yet been published so the exact comment deadlines are not known at this time.

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August 2017 FCC Meeting Recap: FCC Commences Major Study of Spectrum Management Issues Involving “Mid-Band” Frequencies

At its August Open Meeting, the Federal Communications Commission (“Commission” or “FCC”) unanimously initiated a major inquiry proceeding into what it labels “mid-band spectrum,” namely the frequencies between 3.7 GHz and 24 GHz.   The proceeding has major potential spectrum management ramifications for the coming years as the record developed could serve as a catalyst for future allocation and rule proceedings in a number of bands.  Recall that in late 2014, the Commission launched its Spectrum Frontiers inquiry proceeding into spectrum above 24 GHz, which led to an order adopting rules for flexible licensed and unlicensed use of almost eleven (11) gigahertz of spectrum in July 2016, and a further notice which may lead to as much as another eighteen (18) gigahertz becoming available in the near future.

In adopting its Notice of Inquiry (“NOI”), the Commission cited the need to meet “future demand” and the desire to “evaluate spectrum bands in all ranges.”  According to the Commission, in extremely general terms given the more than six-fold increase in wavelength between the bottom and top of the so-called “mid-band” range and the many pre-existing allocations throughout the range, these bands have better propagation characteristics (at least in some regards) than higher frequencies and hold out the promise for greater channel bandwidths than lower frequencies. Continue Reading

August 2017 FCC Meeting Recap: Commission Sets Reverse Auction Procedures for CAF Phase II Auction

At its August Open Meeting, the Federal Communications Commission (FCC) approved a Public Notice (“Notice”) that addresses the procedures for its upcoming Connect America Fund (“CAF”) Phase II auction (“Auction” or “Auction 903”), scheduled to begin in 2018. Auction 903 will be a competitive reverse auction wherein service providers will compete for up to $1.98 billion in financial support as part of an ongoing effort by the FCC to revise the high cost universal service support program. The Notice seeks comment on the FCC’s proposed process for how an applicant can become qualified to participate in the Auction, how bidders will submit bids, and how bids will be processed to determine winners and assign support amounts. Comments are due by September 18, 2017 and reply comments are due by October 18, 2017.

The Auction is the second part of CAF Phase II. The initial part of CAF Phase II occurred in 2015, when ten price cap carriers accepted offers of support calculated by a cost model in exchange for the providers’ commitment to deploy and maintain voice and broadband service in high cost areas. Service providers that seek to participate in the Auction will bid on providing service to eligible high cost areas including those areas where incumbent price cap carriers declined the support calculated by the cost-model. In 2016, the FCC adopted the Phase II Auction Order, which established the rules for the Auction’s bidding process including the bidder performance obligations, application mechanism, bidder eligibility criteria, eligible areas, and post-auction obligations. More recently, in March 2017, the FCC adopted bidding weights for the different performance category tiers for Auction 903 (as previously discussed here). The Notice takes final steps towards executing the Auction by resolving specific details of the mechanics established in these earlier proceedings.

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