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[Spencer Elg co-wrote this post]

The current and future definition of what qualifies as an automatic telephone dialing system (“ATDS” or “autodialer”) remains a hotly debated and evaluated issue for every company placing calls and texts, or designing dialer technology, as well as the litigants and jurists already mired in litigation under the Telephone Consumer Protection Act (“TCPA”). Last year, the D.C. Circuit struck down the FCC’s ATDS definition in ACA International v. FCC, Case No. 15-1211 (D.C. Cir. 2018). Courts since have diverged in approaches on interpreting the ATDS term.  See, e.g., prior discussions of Marks and Dominguez. All eyes thus remain fixed on the FCC for clarification.

In this post, we revisit the relevant details of the Court’s decision in ACA International, and prior statements of FCC Chairman Ajit Pai concerning the ATDS definition to assess how history may be a guide to how the FCC approaches this issue.


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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.
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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
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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

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.

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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.

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We attended the Audit Committee meeting at USAC’s quarterly business meeting this morning.  While much of the discussion concerned internal controls USAC has in place to oversee its functions, the business update portion of the meeting gave us a snapshot into contributor and beneficiary audit activity at USAC.  The presentation gave us some insight into a likely increased amount of activity over the next few months.

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After more than twenty years, VoIP’s unclassified status may be coming to an end. Last month, the Eighth Circuit Court of Appeals issued a decision in Charter Advanced Services LLC v. Lange in which it considered whether an interconnected VoIP service offered by Charter can be regulated like a telecommunications service by the Minnesota Public Utilities Commission (“MPUC”). The court recognized that the Federal Communications Commission (“FCC”) has repeatedly failed to resolve the issue of VoIP service regulatory classification. However, the Eight Circuit upheld the district court’s finding that Charter’s VoIP service is an information service that is federally preempted from state regulation based on its interpretation of the Telecommunications Act of 1996 (the “Act”) and FCC orders.

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In this edition of Full Spectrum’s recurring series on FCC enforcement, Partner Steve Augustino and Associate Brad Currier address the legal dangers facing entities that may be unfamiliar with telecommunications regulation. Steve and Brad focus on a multi-million dollar DOJ fraud prosecution involving the E-rate fund and a settlement of inadvertent transfers of FCC licenses