Federal Communications Commission

On Friday, May 31, 2019, the FCC released a much-anticipated notice of proposed rulemaking (“NPRM”) to consider the adoption of an overall budget cap on the Universal Service Fund (“USF”), separate from any individual budgets for each of the four USF programs. The NPRM is in response to years-long advocacy on the part of Commissioner O’Rielly to impose budgets on USF spending, and it comes over dissent of the two Democratic Commissioners. While Commissioner O’Rielly justified the proposal as responsible stewardship of public money and said it would not limit funding in the near future, Commissioners Rosenworcel and Starks criticized the proposal as undermining the goals of Universal Service and, at worst, creating a “universal service hunger games” among the support programs.

The release of the NPRM was our first look at the specifics of a proposal that broke a month ago. The NPRM does not propose a specific budget, primarily raises questions about how to proceed, and does not contain any proposed rules. Nevertheless, opponents of the proposal have been most vocal since word of the NPRM came out, and we expect those USF stakeholders to continue in opposition to the approach. Meanwhile, proposals to reform USF contributions remain stalled (and lacking any consensus), while the contribution factor hovers around 20% of assessable revenues.


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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 FCC’s Spectrum Frontiers proceeding, which is focused on making millimeter wave (“mmW”) spectrum available for flexible commercial mobile and fixed use, seems poised to move into a new phase even as the current phase is playing out. At its next meeting on December 12, 2018, the agency will vote on rule changes to facilitate a consolidated auction of spectrum in three spectrum ranges designated in 2016 and 2017 for flexible mobile and fixed use:  the so-called Upper 37 GHz Band (37.6-38.6 GHz), the 39 GHz Band (38.6-40.0 GHz), and the 47 GHz Band (47.2-48.2 GHz). The FCC reportedly anticipates completing the auctions by the end of 2019, following the present auction of 28 GHz Band licenses (in 27.50-28.35 GHz) and the immediately-following auction of 24 GHz Band spectrum (in 24.25-24.45 and 24.75-25.25 GHz). A draft order has been made available to the public.

Of particular interest, the recently released draft item would lay the groundwork for the FCC’s second incentive auction (after the “inaugural” broadcast incentive auction completed in March 2017). A 39 GHz incentive auction would be structured quite differently than the 600 MHz broadcast incentive auction and attempt to reduce encumbrances in the 39 GHz Band by offering existing licensees the option to relinquish their licenses in exchange for payment. The FCC leadership appears bullish that the three auctions will draw significant interest from major service providers looking to support next-generation applications, including 5G wireless connectivity and the Internet of Things. Naturally, the first-in-time 24 and 28 GHz auctions may give some sense in advance of that interest. Through November 26, 2018, after 18 rounds, the 28 GHz Band auction had generated under $200 million in bids, albeit that spectrum is encumbered in many of the largest markets and in slightly more than 50% of all counties nationwide, including the most populous. The 24 GHz Band auction may prove a much better test of the appetite for participants to pay high prices for so-called “high band” spectrum.


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At its November 15 Open Meeting, the FCC intends to vote on a Report and Order (“Order”) to make some important changes to the requirements for wireless service providers to report on the number of hearing aid compatible (“HAC”) handsets they offer. The dual aims of the rule changes are to ease the burden of the reporting obligations while improving consumer access to information about HAC wireless handsets. Specifically, the FCC proposes to drop the requirement for service providers to file annual forms with HAC device information, and instead disclose detailed information on their websites and make an annual certification of compliance with the rules. Websites updated with the new required information and the first certification of compliance will be due 30 days after notice of Office of Management and Budget (“OMB”) approval of the new rules is published in the Federal Register. If the Order is adopted at Thursday’s meeting, service providers should promptly begin working on website revisions and not wait for OMB approval.

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International service providers likely celebrated when the Federal Communications Commission (“Commission”) eliminated the annual International Traffic and Revenue reporting requirement last year but may have forgotten about the Commission’s plan to issue targeted data requests, when necessary, to obtain information previously available from the annual report. Well the time has come and the Commission now is collecting the basic data that will allow it to tailor its information requests in the future. As required by Commission rule 63.22, international facilities-based service providers must file with the Commission, by November 14, 2018, lists of U.S.-international routes on which the provider has direct termination arrangements with a foreign carrier in the destination country (Route List).

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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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Although FCC actions concerning commercial mobile radio and unlicensed spectrum grab the big headlines, the Commission is addressing the needs of other radio users, too. On October 23, 2018, the Commissioners will vote on plans to make available additional channels for, and remove or reduce other requirements applicable to, private land mobile radio (“PLMR”) operations in the 806-824 MHz and 851-869 MHz bands (the “the 800 MHz Band”) and, to a lesser extent, the 450-470 MHz band. These frequencies are relied upon by, among other entities, public safety agencies, state/local governments, commercial security operations, utilities, and manufacturers for internal radio communications. While the FCC has worked for years on re-banding and other measures designed to increase utilization of fallow spectrum, it is now intent on addressing a number of rule changes to makes these frequencies more readily accessible by a larger number of PLMR entities. Many PLMR rules have remained unchanged since the 1990s or earlier, and eligible entities for years have sought changes to current regulations to foster greater deployment of new equipment and services. The FCC’s draft item made available to the public earlier this month would address a number of these pending proposals.

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At its open meeting on September 26, 2018, the Federal Communications Commission (“FCC”) unanimously voted to adopt a Report and Order and Further Notice of Proposed Rulemaking to consolidate the agency’s rules governing three different types of mobile earth stations that operate in the Fixed Satellite Service (“FSS”) and communicate with geostationary satellites (“GSOs”). The consolidated rules will apply to all categories of Earth Stations in Motion (“ESIMs”). More importantly, the Commission extended the frequency bands on which ESIMs can operate on a primary basis into the conventional Ka-band. It also seeks comment in the FNPRM on expanding ESIMs operations into additional spectrum in the Ku-band and Ka-bands, potentially on a secondary or unprotected basis. However, the Commission left addressing ESIM operations with non-geostationary satellite orbit (“NGSO”) FSS systems for a separate NPRM.

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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