Washington Monitor
Volume XVII, No. 23 December 15, 2009

RCA FILES COMMENTS ON REFORMING UNIVERSAL SERVICE AND INTERCARRIER COMPENSATION IN THE NATIONAL BROADBAND PLAN

On December 7, 2009, RCA filed comments in response to the FCC’s Public Notice seeking comment on reforming universal service and intercarrier compensation in the context of the Commission’s National Broadband Plan.  RCA stated that the growing shift toward reliance on broadband technologies to meet the Nation’s telecommunications needs, coupled with the fact that rural America is lagging behind as this shift continues, underscores the importance of the Commission’s development of universal service policies that can meet the challenge of deploying broadband in rural areas.  To that end, RCA stated that a key priority of the FCC’s National Broadband Plan and the Commission’s universal service policies should be to transition current funding mechanisms to a new funding program used to support the deployment and provision of broadband services.

RCA noted that portability of universal service funding should be a central component of the Commission’s plan for revamping existing funding mechanisms.  Portability of funding helps to ensure that consumers are in a position to choose the service provider that best meets their needs in as many rural areas of the country as possible.  RCA noted that it favors geographic disaggregation of support so that support more accurately targets those areas most in need of funding.  RCA also voiced opposition to the placement of a cap on broadband funding, in part because imposition of a cap would be tantamount to conceding that the Commission will fall short of accomplishing all of its defined broadband goals.

RCA stated that although support mechanisms should not pay for the construction of multiple overlapping broadband networks, concerns about multiple USF-supported competitors providing broadband in the same geographic area are overstated and do not withstand scrutiny.  The Commission’s goal should be to ensure that multiple carriers receive enough support so that, when they combine this support with their own funding, they are able to serve consumers in rural areas.  RCA stated that encouraging this competitive entry, while at the same time requiring the portability of universal service support, is the best way to increase the choices available to rural consumers while controlling fund growth.

RCA opposed the notion that carrier of last resort (COLR) obligations justify a preferential level of universal service support and encouraged the FCC to reject COLR claims as it explores competitively-neutral policy options to make broadband universally available because wireless ETCs effectively face the same type of service obligation.

RCA urged the Commission to adopt competitively neutral broadband high-cost funding oversight and accountability mechanisms, based on existing Commission rules and on rules adopted by numerous state public utility commissions.  Many states require ETCs to file annual reports providing detailed information about their use of USF funding.  RCA noted that these requirements have worked effectively, and, therefore, the Commission should refrain from adopting more burdensome regulatory schemes, such as dollar-for-dollar accounting, trend-line analyses, or the reporting of incremental spending.

RCA stated that in devising a low-income broadband program, the goal should be to empower consumers so that they can select broadband offerings that best serve their needs.  RCA noted that consumers should be permitted to purchase any compatible device that supports broadband access.  RCA also encouraged the Commission to update the existing Lifeline program to reflect the fact that many households are “cutting the cord,” choosing to rely on wireless service while ceasing to use wireline telephony.

See Comments of Rural Cellular Association, GN Docket Nos. 09-47, 09-51, 09-137 (filed Dec. 7, 2009).

HOUSE HOLDS LEGISLATIVE HEARING ON SPECTRUM BILLS

The House Committee on Energy and Commerce Subcommittee on Communications, Technology, and the Internet held a hearing December 15 on a pair of bills that would impact spectrum management practices.  H.R. 3125, the “Radio Spectrum Inventory Act,” was introduced by full Energy and Commerce Committee Chairman Henry Waxman (D-CA) and if enacted would require the FCC and the National Telecommunications and Information Administration (NTIA) to create an inventory of each radio spectrum band of frequencies from 225 megahertz to 10 gigahertz providing comprehensive information on each band and its use.  H.R. 3019, the “Spectrum Relocation Improvement Act of 2009,” was introduced by Representative Jay Inslee (D-WA) and would provide additional information on the reallocation of spectrum from Federal Government Uses to commercial uses and require the relocation to occur no later than 1 year after the funds for the relocation are transferred.

Both bills received broad support from members of the Committee as well as the panel of witnesses, prompting Rep. Inslee to note that this was the first time he had experienced a hearing without criticism for a bill in question.  Discussion during the hearing focused on how to address the continuing need for more spectrum, innovative ways to fully utilize the spectrum currently available, and the role of spectrum in the forthcoming FCC National Broadband Plan.

For more information on the hearing, and to read the written statements, please click here.

U.S. COURT OF APPEALS FOR THE D.C. CIRCUIT RULES SIDES WITH FCC IN CETC INTERIM CAP LITIGATION

On December 11, the U.S. Court of Appeals for the D.C Circuit released its decision in the CETC interim cap order litigation led by RCA.  The Court found in favor of the FCC -- an outcome that had been expected.

In its decision, the Court decided to give the Commission a heightened level of deference because of the "interim" nature of their decision and the alleged "emergency" that the Commission was claiming.  This heightened level of deference proved too much to overcome.

In response to the decision, RCA CEO and Executive Director Steven Berry stated:

RCA would not have brought this case unless we were certain that the FCC’s actions violated the Act and the Commission’s own universal service principles… RCA is encouraged that the new Commission is committed to universal service reform that is competitively neutral, as are draft bills circulating in Congress.  RCA will continue its advocacy to ensure that rural consumers receive access to high-quality and advanced services that they deserve. We look forward to working with lawmakers and the FCC to bring meaningful reform to USF and ease the burden to our customers.

RCA also pointed out that since the cap has been in place, the fund has continued to grow, providing evidence that wireless carriers are not driving fund growth.  To view RCA’s complete response to the decision, please click here.

See Rural Cellular Association, et al. v. FCC, No. 08-1284 (D.C. Cir.) (2009).

GAO RELEASES REPORT ON FCC OVERSIGHT OF WIRELESS PHONE SERVICE

As a response to then Chairman of the House Energy and Commerce Subcommittee on Telecommunications and the Internet Rep. Edward Markey (D-MA) request, the Government Accountability Office (GAO) released a report December 10, 2009, entitled, “FCC Needs to Improve Oversight of Wireless Phone Service.”  While the report found that 84% of customers are satisfied with their wireless service, 14% experiences problems with billing, contract terms, and customer service.  Expanded to the scale of 270 million US wireless phone users, the GAO noted that this “represents millions of consumers.”

In response to their findings, the GAO recommended that the FCC “improve its outreach to consumers about its complaint process, related performance goals and measures, and monitoring of complaints,” and develop guidance on federal and state oversight roles.

For a full copy of the report, please click here.

USF CONTRIBUTION FACTOR RISES TO 14.1%

On December 11, 2009, the FCC released a Public Notice announcing that the proposed universal service contribution factor for the first quarter of 2010 will rise to 14.1% -- representing a 1.8% increase from the fourth quarter of 2009.  The increased demand on the fund was due primarily to “true-ups” relating to prior periods.  In fact, some true-ups had nothing to do with the level of high-cost support.  For example, more than $70 million was added to the projected fund size because contributors had under-projected their revenues and therefore received credits on past contributions.  Stripped of these adjustments, the projection for high-cost support actually went down from the previous quarter.

The FCC calculates the quarterly contribution factor based on the ratio of total projected quarterly costs of the universal support mechanisms to contributors’ total projected collected end-user interstate and international telecommunications revenues, net of projected contributions.

If the Commission takes no action regarding the projections of demand and administrative expenses and the proposed contribution factor by December 25, they will be deemed approved by the FCC.

See Proposed First Quarter 2010 Universal Service Contribution Factor, Public Notice, CC Docket No. 96-45, DA 09-2588 (rel. Dec. 11, 2009).  To view the whole public notice, please click here.

ROCKEFELLER INTRODUCES BILL EXTENDING USF TO BROADBAND

Senate Commerce Committee Chairman Jay Rockefeller (D-WV) has introduced S. 2879, “The Broadband Opportunity and Affordability Act,” which would amend the Communications Act to extend the Universal Service Fund (USF) to provide support for broadband in low-income households.  The bill, cosponsored by Commerce Committee Ranking Member Kay Bailey Hutchison (R-TX), creates a two-year pilot program to expand the FCC’s Lifeline program to support the cost of broadband for eligible low-income households.  The bill also provides further broadband support for low-income consumers by asking the FCC to report to Congress on expanding the Link-Up program to assist with the costs of computer equipment, as the program currently does with the start-up costs of phone service for eligible consumers.

Draft legislation circulated by House Energy and Commerce Subcommittee on Communications, Technology, and the Internet Chairman Rick Boucher (D-VA) also contained language expanding the use of the USF to include broadband service.

RCA continues to meet with the appropriate policymakers as the push for broadband inclusion in the USF moves forward.

FCC RELEASES FURTHER NOTICE OF PROPOSED RULEMAKING ON QWEST II -- USF HIGH-COST SUPPORT TO NON-RURAL CARRIERS

On December 15, 2009, the FCC released a Further Notice of Proposed Rulemaking (FNPRM) responding to the decision of the the U.S. Court of Appeals for the 10th Circuit in Qwest Communications International, Inc. v. FCC ("Qwest II"), in which the 10th Circuit remanded the FCC's rules for providing high-cost universal service support to non-rural carriers.

In the FNPRM, the FCC states that under the American Recovery and Reinvestment Act of 2009, it must send a National Broadband Plan to Congress by February 17, 2010.  The FCC states that it "anticipate[s] that changes to universal service policies are likely to be recommended as part of that plan, and that the Commission will undertake comprehensive universal service reform when it implements those recommendations."  The FCC notes, however, that "[i]t will not be feasible for the Commission to consider, evaluate, and implement these universal service recommendations between February 17, 2010, and April 16, 2010, the date by which the Commission committed to respond to the Tenth Circuit's remand."  The FCC tentatively concludes, therefore, "that the Commission should not attempt wholesale reform of the non-rural high-cost mechanism at this time, but [] seek[s] comment on certain interim changes to address the court's concerns and changes in the marketplace."

The Commission tentatively concludes that while it considers comprehensive universal service reform, the current non-rural high-cost mechanism is an appropriate interim mechanism for determining high-cost support to non-rural carriers.  Therefore, the FCC concludes that it is "appropriate to maintain this mechanism on an interim basis until the Commission enacts comprehensive reform."

On the issue of cost models, the FCC notes that much progress has been made in developing computer cost models that estimate the cost of constructing a broadband network and that FCC staff has been working to develop an economic cost model to estimate the cost of providing broadband services for purposes of the National Broadband Plan.  To that end, the Commission states that it is considering developing an updated and more advanced model, as well as other means of determining high-cost support for the long term.

In the FNPRM, the FCC also seeks comment on a variety of questions, including:

• Whether the FCC should define "reasonably comparable" rural and urban rates in terms of rates for bundled local and long distance services?
• Whether the FCC should require carriers to certify that they offer bundled local and long distance services at reasonably comparable rural and urban rates?
• Whether there are interim adjustments that the FCC should make to the non-rural mechanism that could be implemented quickly, through an order issued no later than April 16, 2009?
• What principles the Commission should consider in designing the non-rural high-cost mechanism and in determining whether the level of support is "sufficient," as required by Section 254(e) of the Communications Act?

In concurring statements accompanying the FNPRM, Commissioners McDowell and Baker note their concern that the FNPRM does not go far enough to answer some of the 10th Circuit's fundamental questions regarding the non-rural high-cost mechanism.

Comments are due 30 days from publication of the FNPRM in the Federal Register.  Reply comments are due 15 days later.

See High-Cost Universal Service Support; Federal-State Joint Board on Universal Service, Further Notice of Proposed Rulemaking, WC Docket No. 05-337, CC Docket No. 96-45 (rel., Dec. 15, 2009).

RCA FILES REPLY COMMENTS JOINTLY WITH T-MOBILE AND RTG IN FCC PROCEEDING SEEKING TO REFRESH THE RECORD ON E911 LOCATION ACCURACY

On December 4, 2009, RCA joined T-Mobile USA, Inc. and the Rural Telecommunications Group, Inc. (collectively, the “Parties”) in filing reply comments with the FCC encouraging the Commission focus on ensuring that all 3G handsets manufactured or imported for sale in the U.S. are A-GPS capable rather than adopting a technically unachievable set of E911 location accuracy benchmarks.  By so doing, the Parties stated that regardless of how the handset market develops, the Commission will ensure that carriers will migrate to A-GPS capable handsets coincident with their migration to 3G.

The Parties noted that the Commission could also require carriers to ensure that A-GPS locations be delivered from an A-GPS-capable handset whether that handset is operating on a 2G or 3G portion of a carrier’s network.  The Parties stated that these two rules would be easier to enforce than all proposed alternatives, would improve location accuracy as fast as carriers sell 3G handsets, and would in no way preclude the development of other location solutions.

The Parties stated that the Commission should also address the specific impact of the existing and proposed rules on small, rural carriers.  The Parties noted that for some rural 2G carriers, it is technically and economically infeasible to meet the current requirements even on a network-wide basis, due to the lack of A-GPS-capable handsets for 2G, and thus the Commission
should permit those carriers lawfully to operate, provided that they have taken all economically reasonable steps to meet such standards.

Finally, the Parties stated that if Verizon Wireless’ proposed standards for handset-based carriers are to be applied to other carriers employing handset-based location accuracy solutions, they must be modified so as to be technically and economically feasible for all carriers, with a reasonable waiver process.  The Parties added that the location accuracy standards proposed by Verizon Wireless and public safety groups are simply not technically and economically feasible for Tier II and Tier III carriers, and may pose problems for other carriers.

See Reply Comments of T-Mobile USA, Inc., Rural Cellular Association and the Rural Telecommunications Group, Inc., PS Docket No. 07-114 (filed Dec. 4, 2009).

EARLY TERMINATION FEES RECEIVE GOVERNMENT SCRUTINY

In the wake of the Verizon announcement that early termination fees (ETFs) for advanced devices would increase from $175 to $300, the Senate introduced legislation addressing ETFs and the FCC Consumer and Governmental Affairs Bureau sent Verizon a questionnaire seeking a more complete understanding of their practices.

Senator Amy Klobuchar (D-MN) has introduced the “Cell Phone Early Termination Fee, Transparency, and Fairness Act,” S. 2825, which would require cell phone ETFs to be pro-rated over the term of a subscriber’s contract.  Under current practices, many RCA members already pro-rate such fees, which create broader affordability for many customers by providing discounts on advanced devices.

In addition to seeking information on ETF practices, the FCC letter also questioned the minimum data amount to trigger data access charges.  The Commission acted on consumer information that charges of $1.99 appeared on bills where consumers inadvertently accessed Verizon Wireless’s Mobile Web, and further asked if devices contained pre-programmed keys to instantly access the mobile web.

To view S. 2825, please click here.

To view the full letter from the FCC, please click here.

CLOCK STARTS FOR CARRIERS ON CMAS IMPLEMENTATION

On December 7, the FCC announced the adoption by the Federal Emergency Management Agency (FEMA) and the FCC of government gateway interface design specifications, thereby starting the clock for implementation of the Commercial Mobile Alert System (CMAS).

This action begins the 10-month period during which participating commercial mobile service providers will develop and test CMAS. The testing period will end no later than October 7, 2010.  The end of the development and testing period will trigger an 18 month implementation and deployment period, culminating in the availability of CMAS to the public.  The total allotted 28 month timetable period is to be completed no later than April 7, 2012.

Once the FCC announces that the Alert/Aggregator Gateway system is operational and capable of delivering emergency alerts to CMS providers, all non-participating CMS providers will be required, within 60 days of that announcement, to: (1) notify subscribers of the provider’s election not to participate; and (2) provide clear and conspicuous notice at the point of sale (internet, retail or telephone-based) of any devices with which its commercial mobile service is included, that the device will not transmit such alerts via the service provided.

Non-participating CMS providers can change their election and decide to participate in CMAS at any time. The carrier is required to provide the FCC with thirty days advance notice of its change of election.

See FCC’s Public Safety and Homeland Security Bureau Sets Timetable in Motion for Commercial Mobile Service Providers to Develop a System that Will Deliver Alerts to Mobile Devices, PS Docket No. 07-287, DA 09-2556 (rel., Dec. 7, 2009); see also FEMA and the FCC Announce Adoption of Standards for Wireless Carriers to Receive and Deliver Emergency Alerts Via Mobile Devices, FCC News Release (rel. Dec. 7, 2009).

LEGISLATION AUTHORIZING FCC COLLABORATIVE DISCUSSION INTRODUCED

Representative Bart Stupak (D-MI) has introduced H.R. 4167, the “Federal Communications Commission Collaboration Act.”  If enacted, the legislation would permit non-public, collaborative discussions between three or more FCC Commissioners.  Under current law, Commissioners must communicate on a one-on-one basis, or through staff or written means to discuss Commission business outside of an open meeting.

Under the proposed legislation, these collaborative discussions between three or more commissioners would be permitted only if all participants are FCC employees, with at least one Commissioner from each party present, and an attorney from the Office of the General Counsel of the Commission must also be present.

To view H.R. 4167, please click here.

HOUSE LOOKS AT PREPAID PHONE CARDS, WIRELESS SERVICES

In a hearing December 3, the House Committee and Commerce Committee Subcommittee on Commerce, Trade, and Consumer Protection held a hearing on “H.R. 3993, the Calling Card Consumer Protection Act.”  While the focus of the hearing remained on the legislation that would require calling card companies to disclose all relevant and applicable information relating to the sales and use of prepaid calling cards, prepaid wireless services were also debated.  As written, the legislation contains an exemption for prepaid wireless services.  This exemption was a topic of the testimony of witness Louis Greisman, Director, Division of Marketing Practices, Federal Trade Commission (FTC), who stated that the exemption for prepaid wireless services is problematic.  Greisman stressed that the exemption is a welcome sign to bad actors in the industry, and could present an incentive for mischief.

RCA continues to monitor this legislation and will work with policymakers as appropriate regarding the issue of prepaid wireless services and appropriate disclosure.

UPCOMING REGULATORY DEADLINES

• December 21, 2009 – Comments due on transition from circuit-switched network to all-IP network.  See Comment Sought on Transition from Circuit-Switched Network to All-IP Network, NBP #25, GN Docket Nos. 09-47, 09-51, 09-137, DA 09-2517 (rel., Dec. 1, 2009).
• December 21, 2009 – Comments due on spectrum needs for wireless broadband and availability of broadcast television spectrum.  See Data Sought on Uses of Spectrum, NBP #26, Public Notice, GN Docket Nos. 09-47, 09-51, 09-137, DA 09-2518 (rel., Dec. 2, 2009).
• January 7, 2010 – Comments due on NCTA Petition for Rulemaking to Reduce Universal Service High Cost Support to Carriers in Areas Where There is Extensive Unsubsidized Facilities-Based Voice Competition.  See Comment Sought on the National Cable & Telecommunications Association Petition for Rulemaking to Reduce Universal Service High Cost Support to Carriers in Areas Where There is Extensive Unsubsidized Facilities-Based Voice Competition, Public Notice, GN Docket No. 09-51, WC Docket No. 05-337, RM-11584, DA 09-2558 (rel., Dec. 8, 2009).
• January 14, 2010 – Comments due on FCC “Net Neutrality” Notice of Proposed Rulemaking proposing six enforceable “net neutrality regulations applicable to providers of broadband Internet access services.  See Preserving the Open Internet; Broadband Industry Practices, Notice of Proposed Rulemaking, GN Docket No. 09-191, WC Docket No. 07-52, FCC 09-93 (rel., Oct. 22, 2009).
• January 19, 2010 – Comments due on FCC Public Notice regarding an appropriate analytical framework for examining the various issues raised in the FCC’s January 2005 “Special Access” Notice of Proposed Rulemaking which launched a review of rules for setting the rates charged for interstate special access services by ILECs subject to price cap regulation.  See Parties Asked to Comment on Analytical Framework Necessary to Resolve Issues in the Special Access NPRM, FCC Public Notice, WC Docket Nos. 05-25, RM-10593, DA 09-2388 (rel., Nov. 5, 2009); see also 74 Fed. Reg. 63702.
• January 22, 2010 – Reply comments due on NCTA Petition for Rulemaking to Reduce Universal Service High Cost Support to Carriers in Areas Where There is Extensive Unsubsidized Facilities-Based Voice Competition.  See Comment Sought on the National Cable & Telecommunications Association Petition for Rulemaking to Reduce Universal Service High Cost Support to Carriers in Areas Where There is Extensive Unsubsidized Facilities-Based Voice Competition, Public Notice, GN Docket No. 09-51, WC Docket No. 05-337, RM-11584, DA 09-2558 (rel., Dec. 8, 2009).
• February 17, 2010 – Reply comments due on FCC Public Notice regarding an appropriate analytical framework for examining the various issues raised in the FCC’s January 2005 “Special Access” Notice of Proposed Rulemaking which launched a review of rules for setting the rates charged for interstate special access services by ILECs subject to price cap regulation.  See Parties Asked to Comment on Analytical Framework Necessary to Resolve Issues in the Special Access NPRM, FCC Public Notice, WC Docket Nos. 05-25, RM-10593, DA 09-2388 (rel., Nov. 5, 2009); see also 74 Fed. Reg. 63702.
• March 5, 2010 – Reply comments due on FCC “Net Neutrality” Notice of Proposed Rulemaking proposing six enforceable “net neutrality regulations applicable to providers of broadband Internet access services.  See Preserving the Open Internet; Broadband Industry Practices, Notice of Proposed Rulemaking, GN Docket No. 09-191, WC Docket No. 07-52, FCC 09-93 (rel., Oct. 22, 2009).
• TBD – Comments and reply comments on Further Notice of Proposed  involving Qwest International, Inc. v. FCC in which the 10th Circuit remanded the FCC’s rules for providing high-cost universal service support to non-rural carriers.  See High-Cost Universal Service Support; Federal-State Joint Board on Universal Service, Further Notice of Proposed Rulemaking, WC Docket No. 05-337, CC Docket No. 96-45 (rel., Dec. 15, 2009).

The Washington Monitor is published by the Rural Cellular Association (RCA). The Washington Monitor is not intended to provide legal or business advice and may, despite good intentions, contain errors and omissions.

Disclaimer: RCA members should determine the applicability of all Federal Communications Commission rules and policies, as well as other information contained herein, to their own operations and consult their own counsel as may be appropriate. RCA assumes no responsibility for errors or omissions in The Washington Monitor.

© 2009 Rural Cellular Association