On February 4, 2019, the FCC announced a plan to create a new division housed in its Enforcement Bureau, dedicated to prosecuting fraud in the agency’s Universal Service Fund (“USF”) programs. Citing to recent USF-related proposed fines and voluntary settlements, the FCC asserted that the creation of a specialized Fraud Division was necessary to combat misuse of funds under the High Cost, E-Rate, Lifeline, and Rural Health Care programs that make up the USF. The FCC’s brief, two-page Order leaves many questions unanswered about the proposed Fraud Division’s ambit and the status of the “USF Strike Force” that preceded it. However, the Order signifies that the FCC plans to redouble its fraud enforcement efforts in 2019 following recent setbacks on the USF rulemaking front. As a result, eligible telecommunications carriers and other recipients of USF support should keep a close watch as the scope and function of the new Fraud Division starts to take shape.
On January 30, 2019, Geoffrey Starks was sworn in as the newest FCC Commissioner, restoring the agency to its full complement of five Commissioners for the first time since the summer. In announcing his swearing in, Commissioner Starks stated he intends to focus on strong FCC enforcement “protecting the most vulnerable and holding wrongdoers accountable.” He added that he will “serve the public interest by encouraging innovation, competition, and security, as well as advancing policies to increase the quality, availability, and affordability of our country’s communications services.” Commissioner Starks joins Commissioner Rosenworcel as one of the two Democratic Commissioners at the FCC. He fills the seat vacated by former Commissioner Mignon Clyburn, who left in June 2018 after nearly nine years at the FCC, including a stint as acting Chairwoman in 2013. Commissioner Starks will complete Ms. Clyburn’s five-year term, which expires at the end of June 2022. Although Commissioner Starks’ swearing in is not expected to result in any immediate FCC policy shifts, his addition provides a strong voice in favor of Open Internet regulation, Universal Service Fund reform, and enforcement.
In a move certain to inflame the ongoing trade dispute between the United States and China, Justice Department officials announced criminal charges against Chinese telecommunications equipment manufacturer Huawei, several of its affiliates, and its chief financial officer for alleged theft of trade secrets from U.S. telecommunications providers, bank fraud, obstruction of justice, and other violations. The two indictments issued on January 28, 2019, represent just the latest pushback against foreign telecommunications interests by U.S. officials, citing national security concerns and unfair trade practice claims. The FCC already proposed rule changes last year that would prohibit the use of Universal Service Fund support to purchase equipment or services from foreign companies deemed national security threats, primarily targeting companies from China and Russia. Congress also recently passed legislation prohibiting federal agencies and those working with them from using components provided by Huawei and other Chinese manufacturers. With the Trump Administration reportedly poised to issue an executive order effectively barring American companies from using Chinese-origin equipment in critical telecommunications networks, domestic service providers should keep a close eye on their supply chain security and potential liability when working with foreign entities. A criminal conviction on these charges could lead to broader restrictions on trade in U.S. export-controlled products with the company. Given the presence of encryption in telecom equipment, export controls on such products are relatively widespread
In this edition of Full Spectrum’s recurring series on FCC enforcement, Partner Steve Augustino and Associate Brad Currier highlight some of the major developments in FCC enforcement in 2018 and discuss potential next steps in the year ahead.
Part one of this episode focuses on the big picture in 2018 and the FCC’s use of non-monetary tools to encourage adoption of industry best practices. Part two features a deeper dive into FCC enforcement trends on revocation of authority and inability to pay claims, and takes a close look at the FCC’s expanded robocalling enforcement.
Just before suspending most operations due to the ongoing partial federal government shutdown, the FCC announced its tentative agenda for its next open meeting, scheduled for January 30, 2019. While the January agenda is brief compared to the jam-packed meetings that typified 2018, the FCC plans to adopt items to advance new anti-spoofing measures combating manipulated caller ID information and take further action to address the management and handling of 911 calls for the IP Captioned Telephone Service (“IP CTS”) that aids communication by those with hearing loss. Rounding out the notable meeting items, the FCC would adopt a mechanism to phase down legacy high-cost support for price cap carriers as well as competitive carriers previously subject to the “identical support rule” and transition such support to the winners of the recent Connect America Fund (“CAF”) Phase II auction.
You will find more details on the significant January meeting items after the break:
The FCC issued a Public Notice on December 26, 2018 seeking input on a petition from General Motors Holding LLC (“GM”) that requests partial waiver of the interoperability functionalities for accessible real-time text (“RTT”) technology, as defined by the FCC. GM intends to launch an autonomous vehicle (“AV”) ride-hailing service in the near future that will include real time voice communication capability that riders can use to communicate with customer support. GM will also use RTT for such communications and GM seeks to be exempted from certain required RTT interoperability features based on planned limitations of the communications.
Comments on the Public Notice are due by January 25, 2019; and reply comments are due by February 11, 2019.
At its December 12 Open Meeting, the FCC adopted its first Communications Marketplace Report, which combines several separate reports into one and is meant to provide a comprehensive overview of the mobile wireless, fixed broadband, audio, video, and satellite communications markets. Congress directed the Commission to complete such a report biennially with its passage of the RAY BAUM’S Act in March 2018. The Act also reauthorized the FCC for the first time in nearly three decades and directed the FCC to take on additional efforts to free up spectrum for commercial mobile and fixed wireless use. Significantly, while the Commission was previously required to include in the Mobile Wireless Competition Report an assessment of whether there is effective competition in the mobile wireless market, whether any carriers have a dominant share of the market, and whether additional carriers would enhance competition, these requirements were struck by the RAY BAUM’S Act when the wireless report was folded into the marketplace report. As a result, the marketplace report does not venture to analyze, or even mention, the proposed merger of Sprint and T-Mobile.
Click here for more on the report.
With speculation running rampant that Chairman Pai intends to bring a remand order from ACA International v. FCC in January 2019, the FCC took a related step to reduce misdirected calls. At the December Open Meeting, the FCC approved a Second Report and Order (“R&O”) to create a single, nationwide database for reporting number reassignments that will allow callers to verify whether a phone number was permanently disconnected before calling the number. The item is meant to reduce “wrong number” calls to mobile phones, i.e., where a caller has a legitimate reason for trying to reach a consumer but doesn’t realize that the number they have has been reassigned to someone else. The new rule would help eliminate a scenario where the new holder of the number receives an unwanted call and the prior holder never receives the call intended for them. The R&O is part of a broader effort by the FCC to address and stem the volume of unwanted phone calls in the United States.
At the Federal Communications Commission (“FCC”) December Open Meeting, commissioners voted to approve a Declaratory Ruling (“Ruling”) that classifies native forms of wireless messaging, short message service (“SMS”) and multimedia messaging service (“MMS”), as information services, and declares that such services are free from regulation as commercial mobile services. The FCC’s objective with the Ruling is to remove uncertainty for messaging service providers about applicable regulations and also enable wireless messaging providers to adopt more rigid efforts to block spam and spoofing messages. This action comes only a few months after Commissioner Mike O’Rielly publicly called for the FCC to finally act on the pending classification proceeding.
The FCC plans to take aim again at unwanted texts and robocalls at its next meeting scheduled for December 12, 2018. Unwanted robocalls and texting consistently top the list of complaints received by the FCC and that has driven much regulatory attention by the agency in recent years. Specifically, at its December meeting, the FCC intends to classify most text messaging as an “information service” to preserve service providers’ ability to block robotexts and other unsolicited messages. The FCC’s anticipated action comes after years of debate regarding the proper regulatory treatment for text messaging and could have far-reaching impacts by exempting such services from the standard “common carrier” rules applicable to most legacy telecommunications. The FCC also plans to order the creation of a reassigned numbers database that would allow robocallers and others to check in advance whether a particular number still belongs to a consumer that has agreed to receive prerecorded calls. Rounding out the major actions, the FCC released draft items that would: (1) set the stage for the next Spectrum Frontiers auction of high-band spectrum; (2) offer additional funding to rural broadband recipients of Connect America Fund money if they increase high-speed offerings; and (3) issue the FCC’s first consolidated Communications Marketplace Report, providing a comprehensive look at industry competition. The December items cover many priority Pai FCC topics and would affect service providers of all sizes while tackling longstanding consumer protection and broadband deployment issues. You will find more details on the significant December items after the jump: