Split FCC Proposes Rural “Rate Floor” Reform

iStock_000006131068MediumOn May 18, 2017, at its May Open Meeting, the Federal Communications Commission (“FCC”) adopted a Notice of Proposed Rulemaking and Order on a two-one vote, seeking comment on whether it should reform the so-called rural “rate floor” on basic voice service or eliminate it entirely.  The rural rate floor rule requires carriers receiving Connect America Fund support to charge rural customers a minimum monthly rate or risk losing subsidies.  The FCC imposed a two-year freeze on the rural rate floor to provide it with sufficient time to consider the proposed reforms.  The rulemaking is yet another reversal of a policy supported by former FCC Chairman Wheeler, which current Chairman Pai dissented from as a Commissioner, and represents another step by the Pai FCC to roll back its predecessor’s actions.

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That Won’t Fly: The D.C. Circuit Strikes Down the FAA’s Registration Regime for Recreational Drones

Last week, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) struck down an FAA regulation that required the owners of small Unmanned Aircraft Systems (“UAS”) to register with the agency (the “Registration Rule”).

In 2012, Congress passed the FAA Modernization and Reform Act (“FMRA”), which prohibited the FAA from creating “any rule or regulation regarding a model aircraft.”  Under the FMRA, a model aircraft is a UAS that is:

  • capable of sustained flight in the atmosphere;
  • flown within visual line of sight of the UAS operator; and
  • flown for hobby or recreational purposes.

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Divided FCC Begins Proceeding to Revise Internet Oversight Policy, Reverse Many “Open Internet Order” Decisions

laptop  On May 18, 2017, at the Federal Communications Commission’s (“FCC” or “Commission”) May Open Meeting, the Commission adopted, on a two-one vote, a notice of proposed rulemaking (“NPRM”), titled “Restoring Internet Freedom,” that would negate and replace the Commission’s 2015 Open Internet Order, which the NPRM refers to as the “Title II Order.”  This action begins a process that re-ignites differences between the Republicans and lone Democrat on the Commission, and signals that the effort to repeal the rules will be bumpy.  Despite all the immediate public interest and controversy surrounding the proposal, however, the notice and comment process initiated looks to take at least four months before any rule changes can be adopted, and likely several months after that before they take effect.  There are also other legal avenues that could impact the network neutrality debates—the Supreme Court could review a previous D.C. Circuit decision to uphold the Title II Order, or Congress could intervene by writing an update to the Communications Act or FTC Act that would reconsider FCC jurisdiction over Internet access services.  Either action could moot the proceeding begun today.

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FCC Takes No Enforcement Action Despite Report Finding that Avoidable Failures Led to AT&T Mobility 911 Outage

911-emergency-service-777x437  On May 18, 2017, at the Federal Communication Commission’s (“FCC” or “Commission”) May Open Meeting, the Public Safety and Homeland Security Bureau (“Bureau”) presented its final report on its investigation into the VoLTE 911 outage experienced by AT&T Mobility (“AT&T”) on March 8, 2017 (“the Report”).  The Bureau offered a strong critique of AT&T, concluding that the outage could have been avoided had AT&T adopted network reliability best practices previously recommended by an FCC advisory committee.  Despite the criticism, however, neither the Bureau nor the Commissioners made any mention of possible enforcement action against AT&T for the outage — at least not at this time.

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Deadlines Set for Robocall NPRM

On Wednesday, May 17, 2017, the Federal Communications Commission (FCC or the Commission) published in the Federal Register a Notice of Proposed Rulemaking (NPRM) which aims to develop rules and solutions to reduce the number of illegal robocalls placed to consumers.  The NPRM was adopted at the Commission’s March open meeting.

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Sprint and Windstream Waste No Time Appealing Business Data Services Order

On May 8, 2017, merely ten days after the Federal Communications Commission (“FCC”) adopted its Report & Order (“BDS Order”) deregulating the market for Business Data Services (“BDS”), Sprint and Windstream petitioned the U.S. Court of Appeals for the District of Columbia (“D.C. Circuit”) to vacate the BDS Order.

In the BDS Order, as we described in an earlier blog post, the Commission eliminated price caps for significant portions of the BDS marketplace, created a competitive market test to retain price cap regulation for select services in non-competitive geographic areas, mandatorily detariffed competitive BDS, refrained from adopting specific rules to regulate the wholesale BDS market, and clarified that select competitive BDS offerings constitute private carriage offerings.

Sprint and Windstream allege that the BDS Order is arbitrary and capricious, procedurally inconsistent with the notice-and-comment requirements of the Administrative Procedure Act (“APA”), and in violation of the Communications Act and FCC rules.

Ordinarily, parties cannot challenge rulemaking orders that set forth rules of general applicability until such time as those rules are published in the Federal Register (which has not occurred with the BDS Order as of May 15, 2017).  This publication generally represents public notice of a rulemaking order.  However, Sprint and Windstream contend that the DBS Order also contained narrower adjudicatory determinations deciding matters particular to specifically–named companies, such as the conclusion that a specific business data service offered by Comcast may be treated as private carriage rather than common carriage, and the changes in scope of regulatory forbearance previously granted to certain business data services provided by Verizon affiliates.  According to Sprint and Windstream, the adjudicative elements of the BDS Order render the decision as a whole subject to the public notice rules subject to adjudicatory actions – upon release of the decision.  Thus, the petitioners contend that their challenge of the BDS Order prior to Federal Register publication is permissible and qualifies their petition for the judicial lottery procedure to determine the forum for review should additional parties seek review in other appellate venues.

As of this posting, no other parties have sought judicial relief from the BDS Order.  While it remains to be seen how the D.C. Circuit responds procedurally to Sprint’s and Windstream’s protective petition, it is clear that the BDS Order will face scrutiny by the courts.

The FCC Deregulates Most Business Data Services

fcc_equipEnding a decade-long examination of incumbent carrier special access and related services, the Federal Communications Commission (Commission or FCC), on April 28, 2017, released a Report & Order (the Order) setting forth a deregulatory framework for business data services (BDS).  The Commission found that, in most instances, BDS – “dedicated point-to-point transmission of data at certain guaranteed speeds and service levels using high-capacity connections” – exists in “a dynamic and increasingly competitive marketplace.”  The Order generally eliminates ex ante pricing regulation with the exception of end user channel termination services at DS1 and DS3 levels in counties that fail a competitive market test adopted in the Order, in the hope of stimulating growth and investment in new services.

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Ninth Circuit Grants FTC Request for Rehearing En Banc of AT&T Throttling Case, Setting Aside Earlier Opinion

On May 9, 2017, the U.S. Court of Appeals for the Ninth Circuit issued an order granting a Federal Trade Commission (FTC) request for rehearing en banc of the court’s earlier decision to dismiss an FTC case against AT&T Mobility over allegedly “unfair and deceptive” throttling practices in connection with wireless data services provided to AT&T’s customers with unlimited data plans.  In a brief order, Chief Judge Thomas noted that “[t]he three-judge panel disposition in this case shall not be cited as precedent by or to any court of the Ninth Circuit.”

The original Ninth Circuit decision was notable because it held that the “common carrier exemption” in section 5 of the FTC Act—which excludes common carriers from FTC jurisdiction—was “status based” rather than “activity based,” and as such AT&T was not subject to the FTC’s jurisdiction even for non-common-carrier activities.  The original decision had the effect of resetting the jurisdictional boundaries between the FTC and the Federal Communications Commission (FCC) and removing a wide swath of the telecommunications and technology ecosystem from the FTC’s jurisdictional reach.

In a statement, FCC Chairman Ajit Pai applauded today’s order, noting that it will make it “easier for the FTC to protect consumers’ online privacy” and “strengthens the case for the FCC to reverse its 2015 Title II Order,” which classified broadband Internet access service (BIAS) as a common carriage “telecommunications service” and established the FCC’s current open Internet rule framework.  The 2015 Title II Order is now the subject of a draft Notice of Proposed Rulemaking scheduled for a Commission vote at its May 18, 2017 open meeting.

Client Advisory: FCC Explores How to Speed Next Generation Wireline Broadband Deployment in New Proceeding

On April 20, 2017, the Federal Communications Commission (“Commission” or “FCC”) initiated three interrelated proceedings in new WC Docket No. 17-84 that aim to “better enable broadband providers to build, maintain, and upgrade their networks” and transition from legacy copper networks to next-generation networks and services. The docket consists of three interrelated parts: a Notice of Proposed Rulemaking (“NPRM”), Notice of Inquiry (“NOI”), and Request for Comment (“RFC”) (collectively, the “Wireline Infrastructure Proceeding”). The Commission hopes to promote “more affordable and available Internet access and other broadband services.”

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FCC Eases Restrictions on Broadband Deployment Support for Rate-of-Return Carriers; Faces Challenges to Connect America Fund Phase II Auction

As part of its continued focus on accelerating broadband deployment, the Federal Communications Commission (FCC) eased restrictions on its universal service support for deployments by rate-of-return carriers in rural and other high-cost areas.  In a unanimous Order on Reconsideration issued at its April meeting, the FCC found that the restrictions drove providers to exclude high-cost areas from planned deployments, “stranding” communities without broadband.  Rate-of-return carriers will be able to receive support for broadband deployments up to certain thresholds, so long as they cover any additional expenses themselves.  Rate-of-return carriers should factor in this potential support when assessing broadband deployment plans or expanding existing buildouts.  As for providing support in areas served by price cap incumbent carriers, the FCC faces challenges to its recent order on instituting the Connect America Fund (CAF) Phase II auction, under which it will provide support to deploy broadband in unserved areas where the price cap carriers did not elect receive support.  Comments on the CAF challenges are due on May 18, 2017, with replies due on May 29, 2017.

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