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Below is Kelley Drye’s preview of the items under consideration at the Federal Communication Commission’s (FCC’s) upcoming monthly Open Meeting, to be held on July 13, 2017.  Consistent with the trend since he took over the Commission, Chairman Ajit Pai continues to schedule a large number of items.  Indeed, for the sixth month in a row, the Commission has six or more items on its agenda.  This month, the agenda consists of eight items, two Notices of Proposed Rulemaking, two Notices of Inquiry, two Reports and Orders, and one Order on Reconsideration.

Each agenda item is summarized below.  Note: these brief summaries are based on draft items, which may differ from the final items released following the Open Meeting.  Please check with Kelley Drye after the meeting for more information on the items below.

Continue Reading What to Expect at the FCC’s July 2017 Open Meeting

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.

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

Last week, the Enforcement Bureau (“EB”) of the Federal Communications Commission (“FCC” or the “Commision”) reached a $ 100 million Consent Decree with Straight Path Communications Inc (“Straight Path” or “The Company”) for fraudulently violating FCC buildout and discontinuance rules with respect to their licenses in the 28 GHz and 39 GHz spectrum bands.  Under the terms of the settlement, Straight Path has one year to pay a massive fine or surrender all remaining licenses to the FCC.

The 28 and 39 GHz bands are bands which the Commission, in the July 2016 Spectrum Frontiers Order, made available for flexible mobile and fixed use, and they are seen by many as central to the development of next generation 5G wireless networks.

Background

In 2013 and 2014, in the course of renewing licenses in the 39 GHz band, Straight Path made “substantial service” filings with the FCC, in which it indicated that it had met buildout requirements associated with owning such licenses.

However, in November 2015, an anonymous report submitted to the FCC alleged that Straight Path had made fraudulent representations in its “substantial service” filings.  The report alleged that most of the systems which Straight Path had claimed to build were not actually present on the sites mentioned in the filings.

Straight Path subsequently authorized an independent investigation of the matter, which resulted in an admission that the investigation found that “a significant amount of the equipment that had been installed in connection with the substantial service showings [was] no longer present at the original locations.”

Alleged Violations

In the Consent Decree, EB discussed the following FCC regulations as central to its investigation

  • Substantial Service Showing Requirement: 28 GHz band Local Multipoint Distribution Service (LMDS) and 39 GHz band licensees must make a showing of “substantial service” to the FCC at the ten years after license grant.  Failure to do so will result in loss of license.
  • Discontinuance of Service: LMDS and 39 GHz band licenses are subject to automatic termination in certain circumstances such as where a licensee voluntarily removes facilities so as to render a station not operational for a period of 30 days or more or discontinues operations at a station for 12 continuous months or more.
  • Misrepresentation/Fraud: The FCC’s rules prohibit licensees from intentionally providing material factual information that is incorrect or intentionally omitting material information that is necessary to prevent any material factual statement that is made from being incorrect or misleading and require that licensees have a basis for believing that any material factual statement they make is correct and not misleading.

Terms of Consent Decree

As part of the Consent Decree, Straight Path was not required to admit violations of the Act or regulations per se.  In the Consent Decree, Straight Path’s only admissions were that the internal investigation demonstrated that  “a significant amount of the equipment that had been installed in connection with the substantial service showings [was] no longer present at the original locations,” that “[i]nterviews and contemporaneous documents consistently confirm that equipment was deployed at the original locations in connection with the substantial service applications, but the investigators concluded, based on the weight of the evidence, that the equipment was likely put in place for a short period of time at each location,” and that “the investigators did not find any evidence that the equipment used in connection with the substantial service applications is still present at the originally specified locations.”  Indeed, following the internal investigation, the Consent Decree notes that Straight Path “argued that the prior substantial service filings made for the 39 GHz licenses held by Straight Path Spectrum, LLC had satisfied the substantial service rules, that the Commission had accepted the filings, and that the 39 GHz licenses are not subject to the discontinuance rules.”

Nonetheless, under the terms of the consent decree, Straight Path agreed to pay a $ 15 million fine in four installments over the next nine months and to surrender 196 of its licenses in the 39 GHz band to the FCC.

Additionally, Straight Path has 12 months to either transfer or assign the remainder of its license portfolio to qualified entities.  In the course of selling such licenses to qualified entities, 20% of the proceeds from such sales will go to the US Treasury as an additional penalty.  If Straight Path fails to make the sales by the end of the 12 month period, the Company will either have to pay a civil penalty of $ 85 million, or surrender the remainder of the licenses in its portfolio to the FCC.

This Consent Decree reminds all licensees of the importance of ensuring that they comply with all conditions of their licenses.

stock_02012007_0098On March 12th, the FCC released its long-awaited 2015 Open Internet Order. In brief, the order reclassifies broadband Internet access service (BIAS) as a “telecommunications service” under Title II of the Communications Act, imposes three bright-line “Open Internet” rules, enhances the transparency rule, adopts a forward-looking reasonable conduct standard for service provider conduct, and forbears from applying a number of provisions of Title II. The rules apply equally to fixed and mobile BIAS providers, including resellers (e.g., MVNOs). The order is undoubtedly a landmark decision that changes dramatically, the FCC’s role with respect to consumer protection, the Internet, and the many business models that utilize the Internet in one way or another. Continue Reading Please Join Us on March 24 at 12 PM ET for a Free Webinar: What Your Company Needs to Know About the FCC’s Open Internet Order

On July 23rd, the FCC issued an important Enforcement Advisory about compliance with the Open Internet Transparency Rule, which sets forth the information broadband Internet access service providers must disclose.  If you provide fixed or mobile broadband Internet access service — which is defined as service to mass market retail customers, including small businesses and schools/libraries — you should make sure the information you are disclosing is complete, accurate, and up to date.  You can expect the FCC will be examining compliance closely and enforcing it rigorously.  If you are in violation, the Commission may impose penalties, including monetary penalties.

The Transparency Rule requires the public disclosure of network management practices, network performance characteristics, and terms and conditions of service.  These disclosures need to be “sufficient for consumers to make informed choices regarding use” of the broadband Internet access service as well as sufficient for content, application, service, and device providers to “develop, market, and maintain Internet offerings.”  In the Enforcement Advisory, the Commission emphasized that disclosures must be accurate.  In addition, a broadband Internet access service provider cannot make assertions about its service, including in its advertisements or public statements, that “are inconsistent with the provider’s disclosure statement, or are misleading or deceptive.”  A provider that makes such “inconsistent” assertions will not be absolved of a violation by citing an accurate disclosure in some other public location.

You can access the FCC’s Enforcement Advisory by clicking here.

If you have any questions regarding this client advisory, please contact Thomas Cohen,Chip Yorkgitis, or your usual Kelley Drye attorney in the Telecommunications Practice Group.

In a 6-3 decision today, the Supreme Court of the United States held that Aereo’s “watch” streaming service of television broadcasting channels violated the Copyright Act. The decision is a setback for the start-up, but a victory for television broadcasters, including ABC, CBS, NBC, and Fox, each of which sued the company for copyright infringement. The Court limited its decision to Aereo’s “watch” function which provides programming in almost real-time, as opposed to the site’s “record” function, which allows viewers to watch a program after it airs. The Court specifically noted that it was not addressing how “provisions of the Copyright Act will apply to technologies not before us.”

The case now returns to the lower court where a preliminary injunction will be imposed on Aereo’s “watch” service and other issues in the case will be considered. The case resulted in a significant split in the court. The majority, in finding that Aereo violated the “Transmit Clause” of the Copyright Act, viewed the company as a new-age cable provider and decided it should be treated as such. Under the licensing scheme created by the 1976 amendments to the Copyright Act, cable providers are required to compensate broadcast networks and copyright holders for their works. Aereo can continue to transmit over-the-air broadcast signals to subscribers in real-time, but the decision makes it clear that the company will have to pay broadcasters for the “right” to do so.

In contrast, the dissent, written by Justice Scalia, found that Aereo does not “perform.” The Justice took particular issue with the majority’s comparison of Aereo to a cable provider, stating that Aereo is not a “curator of content.” Moreover, he chastised the majority for providing “no criteria for determining when its cable-TV-lookalike rule applies.”

This round is a definitive win for broadcasters, and while start-ups may be somewhat shy in rolling out new technologies, this is not the end. Stay tuned for the next round of Aereo in the courts and for the next iteration of Aereo-like services to deploy new ways of providing access to broadcast television channels without paying retransmission consent fees.

Today, the FCC adopted a series of steps intended to solicit proposals from communications providers to conduct service-based experiments to explore the transition to all-Internet Protocol (“IP”) networks. Chairman Wheeler described today’s actions as “a big deal” and “an important moment.” He and the other Commissioners emphasized that the experiments would be completely voluntary, will focus on impact to consumer expectations, are not technology trials, and will not answer the controversial policy, legal, or regulatory issues raised by the transition to all-IP networks — such as whether the incumbent local exchange carrier interconnection and unbundling obligations under Section 251(c) of the Communications Act apply equally to all-IP networks. While Chairman Wheeler stated that the FCC will “need to protect the enduring value of competition,” the Commissioners’ comments at the open meeting confirmed that the FCC will tackle these issues in the future, in part with the data generated by the experiments announced today. While the order and other items have not yet been published, the FCC Staff outlined the key provisions of the order at the FCC open meeting, and the process by which the FCC will evaluate applications to conduct IP experiments (due February 20, 2014), including the value of the data the proposed experiments will generate and the ease by which consumers involved in the trials will be able to provide feedback.

The FCC will invite carriers and other providers to submit proposals to provide IP-based services in discrete geographic areas and for particular services. Following the proposals, the FCC will solicit comments from interested parties (due March 31, 2014) and confer with state regulators and tribal leaders, with a decision on which experiments will be accepted to be issued at the FCC’s May 15, 2014 meeting. Commissioner Rosenworcel likened the trials to a separate “sandbox” within a playground, where carriers and providers could test services and IP-based networks without interfering with the existing networks within a geographic region. The Commissioners and staff emphasized that the trials would focus on impact to consumer expectations and the FCC’s core values of public safety, universal service, consumer protection, and competition.

To better understand the transition to all-IP networks, the FCC also announced that it will be conducting a series of workshops in the spring to examine issues on rural broadband, numbering, broadband access to persons with disabilities, and public safety. For example, the FCC announced it will hold a workshop in April 2014 to examine how IP networks can be used to deliver next generation 911 services, taking into account the differences between TDM networks and fiber networks. The Chief of the Public Safety and Homeland Security Bureau, Admiral David Simpson, noted that his office is also focusing on the ability of all IP-networks to deliver continuity of communications during crises.

As a component of today’s actions separate from the experiments described above, the Commission announced it would conduct rural broadband trials funded by the Connect America Fund (“CAF”) that would be held in parallel, and would not interfere, with the allocation of Phase II CAF funds to price cap LECs in unserved areas. The Commissioners announced that all Americans must benefit from the transition. The rural trails would focus on connecting anchor community institutions to their neighboring communities. Non-binding expressions of interest for the rural experiments will be due on March 7, 2014. There will be a further notice from the FCC addressing budget matters and selection criteria, and additional actions leading to an order later in the year adopting the final framework for this component of today’s actions.

The actions taken today will also address telephone number assignment in all-IP environments, improvement of the TRS system – the FCC announced $3 million in research funding — and access for persons with disabilities in an all-IP world.

The text of the order, notice of proposed rulemaking, and a notice of inquiry in this matter adopted today are expected tomorrow or early next week.

 

Josh Guyan contributed to this post.

The FCC’s November 18, 2011 USF/ICC Transformation Order established the Connect America Fund (CAF) and provided for two phases of funding for expanding broadband coverage to unserved locations. The Commission allocated $300 million for CAF Phase I support that was offered to price cap local exchange carriers (LECs) to deploy broadband to locations unserved by fixed, terrestrial Internet access with speeds at a minimum of 768 kbps downstream and 200 kbps upstream. In July 2012 the price cap LECs accepted only $115 million of the $300 million allocated. On May 22, the FCC released an order offering the price cap LECs another $300 million for 2013, as well as the $185 million that was left on the table last year. Carrier elections are due within 75 days of the order, or by August 5, 2013. There are, however, a few key differences in this year’s proposal:

Continue Reading FCC Allocates Another $485 Million in Connect America Fund Phase I Support for Price Cap LECs