This Week in Telecom – Week Ending 2.18.18

In honor of Leslie Herbst-Saporito[1] 

Below is a smattering of telecommunications stories from this past week.  Some are trendy, some are interesting, and some are just weird.  This is by no means an exhaustive account of the past week in telecommunications.  It is simply what I personally found interesting from the wide array of telecommunications news.

Disclaimer – The views expressed in this summary are my own and not necessarily those of Bradley, Berkland, Hagen & Herbst, LLC.

I.  Universal Service 

Federal Communications Commission (“FCC”) Wireline Competition Bureau (“WCB”) Releases FCC Forms 499 and Accompanying Instructions – The FCC WCB has released the FCC Forms 499-A, FCC Forms 499-Q, and accompanying instructions.  The FCC Form 499-A and accompanying instructions are to be used in April 2018 to report calendar year 2017 revenues.  The FCC Forms 499-Q and accompanying instructions are to be used in calendar year 2018 to report quarterly projected and collected revenues.  According to the Public Notice, the revisions to the FCC Forms 499 are limited to date changes, a circularity factor update, and other non-substantive form revisions.  The Public Notice can be accessed at FCC Form 499 Public Notice and the official revised FCC Forms 499 and accompanying instructions will be made available shortly on the Universal Service Administrative Company’s (“USAC”) website at USAC Forms – Contributors.

Commissioner Clyburn Talks Federal Universal Service Fund (“USF” or “Fund”) Contributions – In her February 14, 2018, comments at the Winter Summit, Commissioner Clyburn expressed concerns about the sustainability of the federal USF absent changes to the method of assessing contributions.  Acknowledging that contribution reform “has languished for far too long,” Commissioner Clyburn advocated for the following contributions assessment system: “the infrastructure that is supported by the Fund, should be the infrastructure that is assessed by the Fund.”  Responding to objections that broadband connections should not be included in the USF contributions assessment methodology, Commissioner Clyburn asserted that the Internet Tax Freedom Act does not bar assessing contributions on broadband and a hybrid connections/revenue approach would not only significantly reduce consumers’ per-connection fees, it would also significantly reduce the contribution factor.  Should contribution reform by the Joint Board fail, Commissioner Clyburn advocated for a pitch competition that would invite new, outside experts to consider and present their ideas for contributions reform.  The only caveat, according to Commissioner Clyburn, is that the “pitches must be ideas[] that have not been hashed, rehashed, or rehashed again in the contributions docket.”  Commissioner Clyburn’s comments also addressed the High Cost and Lifeline programs.  A full transcript of Commissioner Clyburn’s remarks can be accessed at Clyburn Remarks. 

II.  Open Internet/Net Neutrality 

House Democrats Send Letter to Federal Communications Commission (“Commission”) Chairman, Ajit Pai Asking for Information About How the Commission Analyzed Public Comments Filed In the Restoring Internet Freedom Proceeding – In a February 13, 2018 letter, twenty-four (24) Democratic members of the House Energy and Commerce Committee asked Chairman Ajit Pai to answer a series of questions about how the Commission analyzed public comments in the Restoring Internet Freedom Proceeding.  The inquiries primarily seek information regarding any guidelines and/or internal legal analyses provided to staff working on the proceeding, the treatment of consumer comments filed in the proceeding, data to support the Chairman’s statement that comments filed from Russian email addresses were in favor of net neutrality, reasons for the FCC’s refusal to cooperate with New York Attorney General Eric Schneiderman’s criminal investigation, any verification or procedural devices used to confirm the identities of persons who allegedly filed comments in the proceeding, how the Commission decided which arguments filed by members of Congress should be considered in the proceeding, what analysis the Commission used to determine that consumer complaints about net neutrality violations were not relevant to the Commission’s net neutrality decision, why the Commission did not remove fraudulent comments from the public website, the scope of comment review and resources devoted to that review, and whether any training sessions were held for staff tasked with record review.  The letter asks Chairman Pai to respond to these questions no later than March 6, 2018.  The full contents of the letter can be viewed at Letter to Pai Concerning Net Neutrality Comments. 

Multiple Entities File Motions Seeking to Intervene in Restoring Internet Freedom Appeal – On February 14, 2018, AT&T, the American Cable Association (“ACA”), the Internet & Television Association (“NCTA”), USTelecom, and CTIA (collectively “Entities”) filed motions with the D.C. Circuit, First Circuit, and Ninth Circuit Courts to intervene in the Restoring Internet Freedom Appeal.  According to the Entities, they filed the motions to intervene to preserve their right to participate in judicial review, if the Federal Communications Commission’s motions to dismiss petitions seeking review of the Restoring Internet Freedom Order are not granted.  The Case Nos. for each Circuit are as follows: (1) D.C. Circuit – Case No. 18-1011; (2) First Circuit – Case No. 18-1053; and (3) Ninth Circuit – Case No. 18-70133.

Federal Communications Commission (“Commission”) Files Motions to Dismiss Petitions for Review of Restoring Internet Freedom Order – On February 9, 2018, the Commission filed motions with the D.C. Circuit, First Circuit, and Ninth Circuit to dismiss Petitions for Review (“Petitions”) filed by New America Foundation’s Open Technology Institute.  The Commission argued that the Petitions are premature because neither a summary of the Restoring Internet Freedom Order, nor the text of the amended rules have yet been published in the Federal Register.  The Case Nos. for each Circuit are as follows: (1) D.C. Circuit – Case No. 18-1011; (2) First Circuit – Case No. 18-1053; and (3) Ninth Circuit – Case No. 18-70133. 

III.  Telephone Consumer Protection Act (TCPA) 

A Pattern of Egregious Behavior and Procedural Defects Undercut Petition to Reconsider $1.84 Million Fine – On February 15, 2018, the Federal Communications Commission (“Commission”) rejected a Petition to Reconsider (“Petition”) filed by Scott Malcom and his companies DSM Supply, LLC and Somaticare, LLC (collectively “Companies”).  The Companies sought reconsideration of a $1.84 million fine issued by the Commission in February 2016 for the illegal transmission of unsolicited facsimile advertisements (“junk faxes”).  Rejecting the Petition on procedural grounds, the Commission noted that: (1) the Petition relied on facts and arguments previously raised by the Companies and rejected by the Commission; and (2) with respect to the Companies’ argument that the fine violated the Excessive Fines Clause of the Eighth Amendment, the time to raise that argument was in 2014, in response to the Commission-issued Notice of Apparent Liability (“NAL”).  Specifically, regarding the Companies’ actual ability to pay, the Commission found that the Companies’ Petition relied on financial information that could have been presented in response to the NAL and the Companies had not disputed their ability to pay when responding to the NAL.  The Commission further found that the public interest did not justify a reconsideration of the fine because, the Companies’ “TCPA violations were numerous, egregious, and occurred after [the Companies were] issued a citation advising [them] that [they] were violating the law.”  Although the Commission dismissed the Companies’ Petition on procedural grounds, it also rejected the Companies’ Eighth Amendment argument on the merits. Specifically, the Commission found that the Companies did not meet their burden to show that the forfeiture imposed was unconstitutionally excessive given the maximum statutory forfeiture amounts and the gravity of the Companies’ underlying offenses.  Note that, according to the Order on Reconsideration, the Companies filed their response to the NAL nearly seven (7) months after the filing deadline, engaged in rude and dismissive behavior when responding to complaining consumers, and the Commission received over 350 consumer complaints after the Companies received their first warning that their conduct was in violation of the law.  Click on the following links to view the Press Release and the Order On Reconsideration.

IV.  Broadband 

Trump Releases American Infrastructure Initiative and Fiscal Year 2019 Budget – According to Trump’s American Infrastructure Plan released on February 12, 2018, “$50 billion of the $200 billion in direct Federal funding will be devoted to a new Rural Infrastructure Program to rebuild and modernize infrastructure in rural America.”  The plan will also allocate $20 billion to expanding infrastructure financing programs, including rural utility lending.  Additional details on Trump’s rural infrastructure goals can be found in the Trump American Infrastructure Initiative and the Trump Fiscal Year 2019 Budget 

Trump Discusses Rural Broadband at Infrastructure Proposal Meeting – The White House released remarks made by Trump on February 14, 2018 about Rural Broadband Infrastructure during a meeting of bipartisan members of Congress.  The remarks contain the following information regarding rural broadband infrastructure:

  1. Trump has laid out principles for an infrastructure initiative;
  2. The infrastructure initiative seeks to implement a faster permitting process of two years, as opposed to ten years, with a goal of one year, if possible;
  3. $50 billion will be spent on rural infrastructure and Internet access.

A transcript of the remarks can be accessed at Trump Infrastructure Remarks. 

V.  In the Press 

Law360 – Law360 published two articles this week discussing the involvement of Federal Communications Commission (“FCC”) and Department of Justice (“DOJ”) officials in ongoing investigations or trials.  In one article, Law360 states that the FCC Office of Inspector General is investigating Chairman Ajit Pai over allegations that he improperly pushed for rule changes relaxing media ownership rules for the benefit of Sinclair Broadcasting Group.  In the second article, Law360 states that AT&T Inc. is seeking to have Makan Delrahim, head of the U.S. Department of Justice’s Antitrust Division, testify in the case challenging AT&T’s planned purchase of Time Warner Inc.  According to Law360, there has long been speculation about what motivated the DOJ’s November decision to sue over the $85.4 billion mega-merger, with some attributing the action to undue influence by Trump.  You must have a subscription to Law360 to view and read these articles.  Subscription information can be found at Law360 Telecom Website.

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[1] I recently lost my dear friend and work colleague, Leslie Herbst-Saporito.  Leslie always wanted us to do a weekly telecom write-up.  Sadly, we did not accomplish that goal prior to her passing.  Leslie would have supported the idea of generating this summary.  Leslie, you are with me every day in this practice.  I will miss you always.

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