4406623_illustrationOn June 30th, the Federal Communications Commission’s (FCC’s or the Commission’s) Enforcement Bureau (EB) reached a projected $3.2 million consent decree to resolve an investigation into whether TracFone, the nation’s largest prepaid wireless carrier, violated Commission rules related to its cellphone unlocking capabilities.  The FCC has estimated an aggregate consumer benefit of close to $80 million from this settlement, based on the requirement to make handsets unlockable and the average trade-in value of handsets that TracFone will have to replace (i.e., an estimated $10 benefit for each of TracFone’s 8 million customers that could benefit from the settlement).  This consent decree is unusual in that it does not include language admitting liability, which the EB has pushed for in other cases.  There is no explanation provided and no clear reason why this case differs from others where an admission was part of the settlement.
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Yesterday, the FCC adopted a Second Report and Order, Order on Reconsideration, Second Further Notice of Proposed Rulemaking and Memorandum Opinion and Order to comprehensively restructure and modernize the Lifeline program.  While we do not yet have the order, the FCC issued a news release and the Chairman and Commissioners issued statements on the proceeding.  (Chairman, Commissioners Clyburn, Rosenworcel, Pai and O’Rielly).

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On October 24, the FCC, over the dissent of its two Republican commissioners, issued a Notice of Apparent Liability (NAL) proposing a fine of $10 million to Lifeline eligible telecommunications carriers (“ETCs”) TerraCom, Inc. and YourTel America, Inc. for violations of laws protecting “phone customers’ personal information.”

This is the agency’s first data security case and the largest privacy action in the Commission’s history.  See News Release.  Friday’s decision follows through on numerous public statements made by FCC Enforcement Bureau Chief Travis LeBlanc indicating that privacy and security is a high enforcement priority for the Commission and that the agency would begin to use a Communications Act provision barring unjust and unreasonable practices as a privacy and security enforcement tool.

According to the NAL, the Enforcement Bureau investigation found that both TerraCom and YourTel “collected names, addresses, Social Security numbers, driver’s licenses and other proprietary information” gathered through the Lifeline eligibility approval process “and stored them on unprotected Internet servers that anyone in the world could access with a search engine and basic manipulation.”  The NAL states that the TerraCom and YourTel violations exposed more than 300,000 customers’ personal information to unauthorized access as well as heightened risk of fraud and identity theft. 
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FCC Chairman Tom Wheeler issued a Public Notice on July 14, 2014, announcing the creation of a new “Strike Force” to respond to concerns of waste, fraud and abuse in the Universal Service Fund (USF). Chairman Wheeler reiterated that “the Commission is committed to aggressively rooting out waste, fraud and abuse.” Operating within the Enforcement

Yesterday, the FCC’s Wireline Competition Bureau (“Bureau”) released a Public Notice seeking comment by July 25, 2014, on Smith Bagley, Inc.’s (“SBI’s”) Petition for Partial Waiver (also attached) of the biennial audit requirement.  The final Audit Plan requires the auditor to randomly select one month during the audit period (2013) and up to three states

The Department of Justice (DOJ) announced today that three Associated Telecommunications Management Services LLC (ATMS) executives were indicted yesterday charging one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering for their alleged role in a scheme to submit false claims to the Universal Service

On March 19, 2014, Kelley Drye will host a free, half-day workshop, at the COMPTEL PLUS Spring 2014 Convention & EXPO in Las Vegas, NV.  The workshop is designed to help service providers identify new opportunities as changes in technology, the marketplace, and the regulatory environment continue to disrupt existing business plans. Entitled “The

With expenditures of nearly $9 billion annually, the FCC’s Universal Service Fund (USF) approximates the total revenue of the entire National Football League. It is no wonder that USF continues to dominate the Commission’s telecommunications agenda. In 2013, the Commission implemented most aspects of the new “Connect America Fund”, continued work on its 2012 Lifeline