CommLawBlog

[Commentary] If you’re the owner of a full-power or Class A broadcast television station or are a multichannel video program distributor, and anticipate receiving a winning bid or seeking reimbursement funds from the Commission post-incentive auction, how will you get your money? The Federal Communications Commission has created an online tutorial to explain how this will work. To see the tutorial, go to the Auction 1001 website and click on the “Education” tab.

A recent DC Circuit Court decision concerns access charges billed by over-the-top VoIP carriers. In 2015 the Federal Communications Commission issued a declaratory ruling regarding the classification of end office local switching when Internet service providers (“ISPs”) collaborate with over-the-top VoIP providers to complete interexchange calls. AT&T didn’t like what the FCC came up with and asked the DC Circuit to weigh in.

The court has now vacated and remanded the declaratory order so the Commission might clear up its “muddled treatment” of the term “functional equivalence”. The court decision reduces the revenue that over-the-top VoIP service providers receive from long distance carriers like AT&T when the VoIP carrier completes a long distance call for the long distance carrier. Instead of receiving payment of an end office switching rate, over-the-top VoIP service providers will receive payment of a tandem switching rate, which is generally much lower. After applying the FCC’s functionally equivalent test, the court held that the FCC had failed to identify functions performed by the VoIP carriers that were functionally different from tandem switching and unique to end office switching. In vacating the FCC decision allowing VoIP carriers to charge for end office switching, the court has limited over-the-top VoIP carriers to billing for tandem switching instead.

In a unanimous decision, the DC Circuit Court of Appeals rejected a claim by small wireless carrier NTCH, Inc. the Federal Communications Commission had unlawfully awarded thousands of licenses to Verizon Wireless in violation of the Communications Act. The case arose out of Verizon’s application in 2012 to acquire numerous licenses from SpectrumCo, a consortium of cable companies. The transaction involved a fairly routine examination of whether the acquisition would give Verizon undue power in various submarkets until the very end of the FCC’s review process.

A new administration always bring many questions from clients about how their Federal Communications Commission issues may be impacted. A Trump presidency brings even more questions than usual, because his campaign did not set out detailed proposals on telecommunications and spectrum policy.
While much speculation brews inside the Beltway, this is what we can say for sure:

• The FCC is an independent federal agency. That means that it is not a cabinet agency and, at least theoretically, is independent of the president’s control. (The White House sets its telecommunications policies through the Department of Commerce’s National Telecommunications and Information Administration.) But President Trump will select the new FCC Chairman and his party will hold a majority of the five Commissioner positions. Those selections will dictate the tone of the Commission’s activities, if not the specific policies.
• It will take time to get a new FCC Chairman. Based on recent history, we doubt that a new FCC Chairman will be nominated and confirmed until late spring or early summer. While the lack of information from the Trump campaign does not mean that no one has thought about possible nominees (and certainly there are plenty of Republicans itching to push their favorite nominee), FCC appointments are not highest on a new president’s to-do list. Meanwhile, the most senior Republican, Ajit Pai, likely will become Acting Chairman after the inauguration.
• The FCC’s professional staff will keep the agency running. The Commission employs a large number of highly competent and professional staff – lawyers, engineers and others – who are well-versed in running the Commission’s day-to-day activities. Most work is done at the “staff level” and that work should continue on schedule. Whatever big policy issues are not wrapped up by December will be on hold until new leadership arrives.

[Commentary] As we have observed more than once, the Federal Communications Commission’s quadrennial media ownership review process is Sisyphean in nature: even before the Commission can complete one review, the next begins, and previously completed reviews return thanks to court remands. Now, with the release of a Second Report and Order (2d R&O), the boulder has reached the top of the mountain again. How long it will stay there this time is anybody’s guess. The 2d R&O sprawls across more than 160 pages. The following are some of the highlights.

Three years ago – doesn’t the time just fly? – we told you about Towerstream, a wireless Internet service provider (WISP) whose transmitters had caused interference to airport weather radars. The Federal Communications Commission proposed a fine of $202,000, apparently in keeping with its rumored policy of “jacking up the fines till we get their attention.” Towerstream has since negotiated a consent decree with the FCC that knocked the fine down to a more manageable $40,000. The company has also committed itself to a compliance monitoring program.

Case closed … we hope. Towerstream hopes so, too. Because the FCC put a spring-loaded trap into the consent decree. The $162,000 the FCC took off the original fine did not go away. It became a “suspended penalty” that Towerstream will owe if it causes the same kind of interference within three years – in addition, no doubt, to whatever separate fine the FCC will impose for the new interference. The FCC has applied these suspended penalties only a few times before, all of them in 2016. We are guessing they are now a standard feature of the FCC’s consent decree template, along with another recent change that eliminated the defendant’s chance to pay the fine – then dubbed a “voluntary contribution” – without admitting guilt. Now the fine is a “civil penalty,” the defendant has to admit the violation, and a large balance remains as an overhanging threat for years.

[Commentary] The Federal Communications Commmission takes steps in anticipation of extensive auxiliary operation at upcoming conventions, inauguration. It looks like Louis Libin won’t be getting much time off in August, or next January either, for that matter. That’s because he has been designated as the single point of contact for frequency coordination operations under Section 74.24 at (deep breath, please) the Republican National Convention, and the Democratic National Convention, and the Presidential Inauguration.

Coverage of confabs like the conventions and the inauguration generally entails extensive use of frequencies licensed for the broadcast auxiliary services (BAS) under Part 74 of the FCC’s rules. Use of all those licensed devices has got to be coordinated in any event. But coordination is further complicated by the fact that the BAS rules (Section 74.24, to be exact) permit the temporary, unlicensed use of BAS frequencies by eligible broadcasters for up to 720 hours per year. That gives rise to the possibility of scads of short-term unlicensed operations vying for scarce BAS spectrum with scads of licensed operations. Hence, the importance of identifying a single authority in charge of insuring that all unlicensed, short-term operations play nicely with one another and with their licensed confrères in the high-pressure, congested-spectrum environment of these three high-profile events.

Trimble Navigation Limited and Deere & Company -- two members of the GPS Innovation Alliance -- filed a joint petition asking for more stringent limits on AWS-3 emissions into radionavigation satellite system spectrum.

Meanwhile, Engineers for the Integrity of Broadcast Auxiliary Services Spectrum also sought reconsideration. Their complaint: in its decision the Federal Communications Commission appears to have completely ignored their comments regarding the FCC’s decision to move Department of Defense operations into the 2 GHz TV Broadcast Auxiliary Services band.

The deadline for comments on either or both of these petitions, however, won’t be set until the FCC’s public notice shows up in the Federal Register.

[Commentary] The Federal Communications Commission answers some questions on next phase of Connect America Fund (CAF), but raises new questions about the CAF Phase II and Mobility Fund Phase II Auctions.

[Commentary] Not all spectrum is created equal. Low-band spectrum gets special treatment in the upcoming “Incentive Auction” and in the Federal Communications Commission’s case-by-case analysis of secondary market transactions.

More specifically, for mobile telephony/broadband applications, low-band (i.e., below 1 GHz in frequency) spectrum offers better signal propagation for enhanced geographic coverage than high-band (i.e., above 1GHz) spectrum, but high-band is better at transmitting larger amounts of data (albeit over shorter distances).

Low-band spectrum, which wireless carriers covet due to better coverage capabilities and lower deployment costs, is in shorter supply than high-band spectrum. AT&T and Verizon will be most constrained by the new rules when it comes to bidding on 600 MHz spectrum in the Incentive Auction.

But the ultimate success of that auction depends largely on maximizing the proceeds from the “forward auction” component. Those proceeds will have to pay for the First Responder Network Authority, the Next Generation 911 program and federal deficit reduction (all as required by Congress) while also paying off broadcasters in the “reverse auction”. That last element is particularly important because the amount of spectrum available for the “forward auction” may depend to a significant degree on how much spectrum broadcasters opt to make available in the “reverse auction”. And, obviously, the financial incentive for broadcasters to do so may be seriously compromised if the returns from the “forward auction” will be artificially depressed by the partial exclusion of the two deepest pocketed bidders.