Articles Posted in Telecommunications

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5/18/2010
Prepaid “cards, codes and other devices” redeemable solely for telephone services are exempt from a new federal law that goes into effect August 22, 2010. However, if they can also be redeemed for related technology services, these products will (at least in most instances) be subject to provisions restricting fees, prohibiting expiration in less than five years, and imposing strict disclosure requirements if fees are charged or the products expire.

On March 23, 2010, the Federal Reserve Board (“Board”) issued its Final Rule implementing Title IV of the federal Credit Card Accountability, Responsibility and Disclosure Act of 2009, which was signed into law by President Obama on May 22, 2009 (collectively, the “CARD Act”). The CARD Act amends the federal Electronic Funds Transfer Act (EFTA), and the Final Rule amends the EFTA’s implementing regulation, Regulation E. It takes effect August 22, 2010. It applies to prepaid card products sold to a consumer on or after August 22, 2010, or provided to a consumer as a replacement for such product. State laws that are consistent with the CARD Act are not preempted, which means the CARD Act provides a minimum floor. State laws that provide greater protection for consumers are not inconsistent with the CARD Act.

The CARD Act restricts most fees and expiration dates on prepaid cards, and requires various disclosures if fees are charged or the products expire. This Advisory, one of several Advisories on the CARD Act, focuses on the exemption for cards, codes and other devices useable solely for telephone services (referred to collectively as “Prepaid Calling Cards”).1 Companies that offer or issue Prepaid Calling Cards may be surprised to learn that if these products are also redeemable for related technology services, they will not qualify for this exemption. All persons involved in issuing or distributing Prepaid Calling Cards should review and potentially revise their disclosures, as well as their redemption policies and procedures.

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The press is buzzing with news, leaked late yesterday and announced today in a document entitled The Third Way: A Narrowly Tailored Broadband Framework, that FCC Chairman Genachowski is proposing to reclassify the transmission component of broadband Internet access as a “telecommunications service” subject to FCC regulation. As almost everyone in the telecom world knows, the US Court of Appeals recently found that the FCC does not have direct jurisdiction to impose “network neutrality” rules as long as it classifies broadband as just an “information service.”

With the Chairman’s support, three of the five FCC Commissioners now favor reclassifying broadband as a telecommunications service, a first step towards adopting network neutrality rules.

For broadcasters, the net effect of net neutrality rules isn’t as easy to assess as it may at first seem. As producers and distributors of broadband and mobile services, net neutrality rules should assure broadcasters that their content will not be blocked or unfairly degraded by broadband network operators. Broadcasters that provide mobile news apps and operate rich media web sites have the same general interest in nondiscriminatory network access as do Internet behemoths like Google, Amazon and eBay.

On the other hand, broadband providers have argued convincingly that their networks are extremely expensive to build and that they must have flexibility to manage Internet traffic on their networks to assure a good quality of service to their subscribers. If the FCC limits broadband operators’ ability to manage traffic, those operators may have to upgrade their infrastructure, raising costs to web publishers and end users alike.

Mobile network operators assert that network neutrality rules could have proportionally greater adverse effects on them. Mobile network capacity is generally more costly and less robust than that of copper and fiber networks. If network neutrality rules increase the load on mobile networks and limit the ability of network operators to manage that traffic, their arguments that they need more spectrum to meet growing demand may be more convincing.

At this stage, no one knows how any proposed network neutrality rules would treat mobile broadband operators. However, it is plausible that aggressive network neutrality rules could increase the load on mobile networks, and mobile operators are sure to argue that they will need more spectrum to respond.

With broadcast spectrum already squarely in the sights of the same FCC that is now proposing to impose network neutrality rules, broadcasters should pay close attention to this debate.

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For those tired of having their dinner conversations interrupted by others’ cell phone calls, or watching movies in a theater by the light coming off the screens of nearby texters, technology has provided a solution. Unfortunately it is illegal.

In a recent decision, the FCC fined a company called Phonejammer.com $25,000 for marketing jamming equipment in the U.S. through its website, www.Phonejammer.com. The FCC discovered the violations when its field agents, responding to complaints from a cellphone service provider in Dallas, and a County’s Sheriff’s office in Florida, traced the interference in each case to a local business, and discovered that the proprietor had purchased and was operating a Phonejammer unit acquired through the website. Unfortunately, the FCC’s decision does not indicate the type of businesses that were using the Phonejammer, so it is not clear if they were restaurants, theaters, or just businesses tired of their employees texting their friends all day.

Under the Communications Act, it is illegal to sell jamming equipment because of the harm done, both intentionally and otherwise, to electronic communications. While putting an end to loud cell phone calls in upscale restaurants, or to students texting in class, might sound appealing to managers of such places, the interference to communications cannot easily be confined to just that location. Of course, the problems with jamming are not limited to just unintentional interference to nearby areas. There are similar issues affecting the business location seeking to jam calls. You can imagine what would happen if a patron had a heart attack on the premises and the emergency response was delayed when other patrons’ cell phone calls to 911 couldn’t get through.

Because of these concerns, the U.S. has always strictly prohibited the marketing of jamming devices, and not even police are permitted to use jammers. To appreciate the extent of the government’s concern with jamming, note that jamming equipment is not permitted even in prisons, where smuggled cellphones have caused unrelenting headaches for prison officials, with some inmates continuing to manage criminal enterprises via cell phone while still in prison.

That may be about to change, however. The Senate last year passed S.251, the Safe Prisons Communications Act of 2009, to permit targeted jamming of cell phone service within prisons. While it has not yet been approved by the House of Representatives, support for the idea has been strong. As with most well-intentioned ideas, however, the question is what unintended consequences will be involved, particularly if the jammers are not carefully monitored and regulated. For example, will a highway that passes a prison inevitably be a cellular dead zone for passing commuters, or will the technology, once permitted, be refined to largely eliminate unintended interference (if that is possible)? Again, it may be a minor annoyance to lose a call when driving by a prison, but a serious traffic accident in that area can make reliable cell phone service a life and death issue.

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Comments are due by March 1, 2010 and Reply Comments are due March 30, 2010 to the FCC’s proceeding to implement national emergency alert testing at least once a year and to collect station data from such tests.

In a Second Further Notice of Proposed Rulemaking (“NPRM”) concerning updating of the nation’s Emergency Alert System (“EAS”) to meet modern security concerns, the FCC proposes to require testing of the EAS on a nationwide basis. To date, the EAS has never been used to deliver a national EAS alert. While Part 11 of the FCC’s rules requires periodic testing of state and local EAS alerts by all radio and television EAS participants, no national test of the EAS has ever been conducted, and the current rules do not require such testing. As a result, it is not known whether the system would in fact function as required should the President issue a national alert. Accordingly, the FCC proposes to require EAS participants to take part in national EAS testing, as well as continue a modified schedule of the weekly and monthly EAS already in effect.

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December 2009
Earlier this week, the FCC released a Public Notice seeking “specific data on the use of spectrum currently licensed to broadcast television stations.” According to the Public Notice, in other proceedings related to the FCC’s development of a National Broadband Plan some commenters “have expressed concern that the United States will not have spectrum sufficient to meet the demand for wireless broadband services in the near future and have urged the Commission to make available more spectrum for commercial uses.” In response, the Public Notice states that “the FCC is reviewing various spectrum bands to understand if all or a portion of the spectrum within these bands could be repurposed for wireless broadband services.”

The Public Notice assumes that existing allocations are insufficient to meet the growing mobile broadband market, and that spectrum must be reallocated to meet this demand. The questions and issues posed in the Public Notice (re-printed below) are probing and complex, questioning whether broadcast television should be “diminished,” whether multiple broadcasters can “share” a 6 MHz channel, whether the FCC can reduce the amount of spectrum assigned to advanced television licensees and what actions, including adoption of receiver standards, the FCC might take to enable broadcasters to make more efficient use of their spectrum.

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December 2009
Today, the FCC released a Public Notice announcing that as of December 9, 2009, the new FCC Form 323 will become available online in the FCC’s CDBS filing system.

Additionally, the FCC announced the availability of a “Special Use FRN” option in reporting attributable interest holders on the new FCC Form 323. The FCC stated that if a filer “is unable to obtain an FRN for any specific individual required to be reported on Form 323, the electronic form contains a mechanism for generating an interim ‘Special Use FRN’ solely for the purposes of completing the form.” The Special Use FRN is only to be used in filing biennial ownership reports on FCC Form 323 and may not be used for any other purpose at the FCC. According to the Public Notice, this option should be used only when necessary and filers should use their “best efforts” to obtain FRNs from all attributable interest holders. The FCC indicates that those who take advantage of the Special Use FRN are still expected to later obtain a “fully compliant” FRN which must be used in all future biennial ownership report filings.

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9/10/2009
On September 8, 2009, the Office of Foreign Assets Control (“OFAC”) of the Department Treasury and the Bureau of Industry and Security (“BIS”) of the Department of Commerce issued final rules in the Federal Register amending the Cuba Sanctions program and the Export Administration Regulations (“EAR”) to increase the range of telecommunications services that can be provided between the United States and Cuba and exports and re-exports of items to implement those services, as well as authorizing related payments and travel. These are included in a larger set of rule changes implementing the President’s April 13, 2009, directive to promote contact between family members and the flow of information between the two countries.

The new OFAC rule removes the policy directive requiring individual licenses for the provision of telecom­munications services and authorizes certain telecommunications services, contracts, related payments, and travel-related transactions by general licenses. Of primary importance is the addition of satellite (including radio and TV) and cellular services as covered technologies. Certain additional transactions involving third countries and related to the provision of services between Cuba and the U.S. will now be permitted but will require specific licenses.

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8/4/2009
Practitioner comment on T-Mobile USA, Inc. v. City of Anacortes (No 08-35493, slip op. (9th Cir. July 20, 2009), available at 2009 WL 2138980).

The Telecommunications Act of 1996 (“TCA”) was enacted with goals that were at once complementary and contradictory–to increase competition and facilitate rapid deployment of new technology, on the one hand, while preserving the autonomy of states and municipalities, on the other. Since enactment, telecommunications service providers, and local and state governments, have resorted to the Act to suit their respective objectives. Providers, driven by technologies and market demand for new services, have continuously sought to install, upgrade and maintain telecommunications facilities upon both private and public property. State and local political leaders, motivated by changing values and community aesthetic objectives, have resisted and sought to regulate and control the installations. The TCA has proven to be an inconsistent guide, at best, to resolving this tension. More than a decade after enactment of the TCA, major questions about local right to control or deny telecommunications installations remain unanswered. Recent decisions in the Ninth U.S. Circuit Court of Appeals clarify the law as to wireless facilities but reveal remaining tension between local prerogatives and provider needs.

Lara-Beye Molina, an associate in the San Francisco office of the firm, assisted in the preparation of this Advisory.

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4/16/2009
Upcoming Deadlines
FCC Form 499-Q is Due by May 1, 2009
All providers of interstate telecommunications within the United States, with limited exceptions, must file a FCC Form 499-Q Telecommunications Reporting Worksheet by May 1, 2009 containing revenue information for January 1 through March 31 and projections for July 1 through September 30. The completed FCC Form 499-Q should be mailed to:

Form 499 Data Collection Agent
Attn: USAC Customer Service
2000 L St NW
Suite 200
Washington, DC 20036
Providers who have obtained a USAC Filer ID number may file the form electronically at: https://forms.universalservice.org/usaclogin/login.asp. A late fee may be imposed for failing to file or filing the worksheet after the due date.

The 499-Q form and instructions can be found on USAC’s website at: http://www.universalservice.org/fund-administration/forms/. The Universal Service Fund (“USF”) contribution factor for the second quarter 2009 is 11.3%.

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January 2009:

Upcoming Deadlines

  • FCC Form 499-Q is Due by February 1, 2009
  • Customer Proprietary Network Information Certification is Due by March 1, 2009

Enforcement Matters:

  • Telecommunications Carrier Enters Into $10,080,600 Consent Decree for CPNI and Universal Service Fund Violations
  • Telecommunications Carrier Found Apparently Liable for More than $650,000 for Failure to Register and Obtain 214 Approval and Failure to Comply with USF Requirements

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