September 2018 News Update
California Enacts Net Neutrality Law, DOJ Files Lawsuit
September 30, 2018 – California governor Jerry Brown has signed into law SB 822, the California Internet Consumer Protection and Net Neutrality Act of 2018. In general, the law prohibits fixed and mobile Internet service providers from blocking lawful content, applications, services, and nonharmful devices; impairing or degrading lawful Internet traffic on the basis of Internet content, application, or service, subject to reasonable network management; engaging in paid prioritization; and engaging in certain practices relating to zero-rating. California is the first state to adopt comprehensive net neutrality regulations since the repeal of the FCC’s open Internet rules.
Before the ink was even dry on Governor Brown’s signature, the U.S. Department of Justice filed a lawsuit against California to overturn the law. The DOJ claims SB 822 “unlawfully imposes burdens on the Federal Government’s deregulatory approach to the Internet.” Earlier this year, the FCC released the Restoring Internet Freedom Order, which reclassified broadband Internet access service as an information service subject to Title I of the Communications Act. The FCC’s order repealed existing net neutrality rules and put in place a federal policy of deregulation for broadband services. Perhaps in anticipation of what was to come, the FCC also specifically warned states not to adopt their own net neutrality rules, reminding them that “[f]ederal courts have uniformly held that an affirmative federal policy of deregulation is entitled to the same preemptive effect as a federal policy of regulation.” The DOJ’s lawsuit also seeks a preliminary injunction.
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FCC Issues NPRM on Cable Franchising Issues
September 25, 2018 – The FCC has released a second notice of proposed rulemaking on cable franchising fees to address the issues raised by the U.S. Court of Appeals for the Sixth Circuit’s remand in Montgomery County, Md. et al. v. FCC. In the NPRM, the FCC primarily seeks comment on what it calls two tentative conclusions: (1) it should treat cable-related, “in-kind” contributions required by a franchising agreement as “franchise fees” subject to the statutory five percent cap on franchise fees set forth in Section 622 of the Communications Act, with limited exceptions; and (2) it should apply its prior mixed-use network ruling to incumbent cable operators, thus prohibiting local franchising authorities from using their video franchising authority to regulate the provision of most non-cable services, such as broadband Internet access service, offered over a cable system by an incumbent cable operator.
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NTIA Seeks Comment on Developing Consumer Privacy Regime
September 25, 2018 – The National Telecommunications and Information Administration (NTIA) has requested public comment “on ways to advance consumer privacy while protecting prosperity and innovation.” Comments are due on or before October 26, 2018, and may be submitted by email to privacyrfc2018@ntia.doc.gov. The request for comment is the Trump administrations effort to develop comprehensive Federal privacy regulations to protect consumers and their data. NTIA notes the “time is ripe” for leadership on the privacy front and there is a need for uniform protections, as many foreign countries and U.S. states “have articulated distinct visions for how to address privacy concerns, leading to a nationally and globally fragmented regulatory landscape.” NTIA’s proposed privacy regime is separated into outcomes and goals: (1) a set of user-centric privacy outcomes that underpin the protections that should be produced by any Federal actions on consumer-privacy policy, and (2) a set of high-level goals that describe the outlines of the ecosystem that should be created to provide those protections. NTIA is seeking comment on the following outcomes:
Organizations should be transparent about how they collect, use, share, and store users’ personal information.
Users should be able to exercise control over the personal information they provide to organizations.
The collection, use, storage and sharing of personal data should be reasonably minimized in a manner proportional to the scope of privacy risks.
Organizations should employ security safeguards to protect the data that they collect, store, use, or share.
Users should be able to reasonably access and correct personal data they have provided.
Organizations should take steps to manage the risk of disclosure or harmful uses of personal data.
Organizations should be accountable for the use of personal data that has been collected, maintained or used by its systems.
NTIA is seeking comment on the following goals:
Harmonize the regulatory landscape.
Legal clarity while maintaining the flexibility to innovate
Comprehensive application
Employ a risk and outcome-based approach
Interoperability
Incentivize privacy research
FTC enforcement
Scalability
Comments are invited on the full range of questions presented by NTIA, as well as issues not specifically raised in the document. All comments received will be part of the public record and will be posted on the following NTIA website, www.ntia.doc.gov/privacyrfc2018.
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Final Agenda For FCC September Meeting
September 19, 2018 – The FCC has released the final agenda for its September open meeting scheduled for Wednesday, September 26, 2018, containing the following items:
Kari’s Law NPRM – The FCC will consider a Notice of Proposed Rulemaking addressing calls to 911 made from multi-line telephone systems, pursuant to Kari’s Law, the conveyance of dispatchable location with 911 calls, as directed by RAY BAUM’S Act, and the consolidation of the Commission’s 911 rules. (PS Docket Nos. 18-261, 17-239).
CAF II Auction Results – The FCC will hear a presentation on the results of the Connect America Fund Phase II auction results.
Wireless Infrastructure Order – The FCC will consider a Declaratory Ruling and Report and Order that will clarify the scope and meaning of Sections 253 and 332(c)(7) of the Communications Act, establish shot clocks for state and local approvals for the deployment of small wireless facilities, and provide guidance on streamlining state and local requirements on wireless infrastructure deployment. (WT Docket No. 17-79; WC Docket No. 17-84)
Enforcement Bureau Actions – The FCC will consider two enforcement actions.
Clarifying Local Franchising Authorities Regulation of Cable Operators – The FCC will consider a Second Further Notice of Proposed Rulemaking addressing two issues raised by a remand from the U.S. Court of Appeals for the Sixth Circuit concerning how local franchising authorities may regulate incumbent cable operators and cable television services. (MB Docket No. 05-311)
Cable Data Collection – The FCC will consider a Report and Order that eliminates the Form 325, Annual Report of Cable Television Systems, filing requirement. (MB Docket Nos. 17-290, 17-105)
Toll Free Assignment Modernization – The FCC will consider a Report and Order that will amend the FCC’s rules to allow for use of auctions to assign certain toll free numbers and takes other actions to modernize the administration and assignment of toll free numbers. (WC Docket No. 17-192; CC Docket No 95-155)
Satellite Earth Stations in Motion – The FCC will consider action to facilitate the deployment of and harmonize the rules concerning three types of Fixed-Satellite Service earth stations authorized to transmit while in motion: Earth Stations on Vessels, Vehicle-Mounted Earth Stations, and Earth Stations Aboard Aircraft. (IB Docket No. 17-95)
The meeting is scheduled to begin at 10:30 a.m. EDT and will be streamed live online at www.fcc.gov/live.
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Netflix & Hulu Seek Dismissal of Lawsuit Over Missouri Video Service Provider Fees
September 14, 2018 – Netflix and Hulu have asked a federal court in Missouri to dismiss the class action lawsuit brought against them by a group of towns in Missouri. The state municipalities claim Netflix and Hulu have not been paying video-service-provider fees owed under Missouri law, and are seeking fees due for the past five years, plus interest and penalties. Netflix and Hulu claim their over-the-top services do not meet the definition of video service under Missouri’s 2007 Video Services Providers Act, and neither company has obtained a video service authorization from the Missouri Public Service Commission. For these two reasons, Netflix and Hulu argue the law does not apply to them and the suit should be dismissed.
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New Record! USF Contribution Factor Will Be 20.1 Percent for Q4 2018
September 12, 2018 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the fourth quarter of 2018 will be 20.1 percent. This is a new record high for a USF contribution factor, breaking the previous record of 19.5 set in the first quarter of 2018. Here are all the contribution factors for 2018:
2018-Q1 – 19.5
2018-Q2 – 18.4
2018-Q3 – 17.9
2018-Q4 – 20.1
2018 Average: 18.975
The Universal Service Administrative Company (USAC) projects $12.40 billion in total interstate and international end-user telecommunications revenues will be collected from October through December 2018. USAC estimates that $2.05876 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the fourth quarter of 2018. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved. Historical information on quarterly universal service fund contribution factors is available online from the FCC.
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Commissioner O’Rielly Weighs In On RUS e-Connectivity Pilot Program
September 10, 2018 – FCC Commissioner Michael O’Rielly submitted a letter in response to the Rural Utilities Service’s notice of inquiry and request for comments on the implementation of its e-Connectivity Pilot Program. First, Commissioner O’Rielly urges RUS to “first and foremost direct funding to those communities with no access at all.” He says the definition of “sufficient access” should not focus on the number of competitors in a given area, nor should the definition of sufficient access “reflect a gold-plated version of the statutory speed requirement for eligibility.” Next, Commissioner O’Rielly states that RUS should identify areas already receiving Universal Service Fund support and exclude those areas from pilot program funding. This includes areas that received funding from NTIA’s Broadband Technology Opportunities Program. Lastly, Commissioner O’Rielly urges RUS to distribute funding using a reverse auction.
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FCC Releases U.S. Broadband Deployment Data as of June 30, 2017
September 10, 2018 – The FCC’s Wireline Competition Bureau and Wireless Telecommunications Bureau have released updated data, collected from FCC Form 477, on fixed broadband deployment and mobile voice and broadband deployment in the U.S. as of June 30, 2017. Fixed Deployment Data are available at https://www.fcc.gov/general/broadband-deployment-data-fcc-form-477 and Mobile Deployment Data are available at https://www.fcc.gov/mobile-deployment-form-477-data.
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8th Circuit Says Charter’s VoIP Service is an Information Service
September 7, 2018 – In a 2-1 decision, the U.S. Court of Appeals for the Eight Circuit has affirmed a lower court’s ruling that Charter’s VoIP service is an “information service” under the Communications Act and that state regulation of Charter’s VoIP services is therefore preempted. As part of a restructuring “to segregate its VoIP services from its regulated wholesale telecommunications services” and decrease state regulatory burdens, Charter moved its VoIP offering – known as Spectrum Voice – from Charter Fiberlink to a newly created affiliate named Charter Advanced. The Minnesota Public Utilities Commission then sought to regulate Charter Advanced by asserting that VoIP is a “telecommunications service” as defined by the Communications Act. In response, Charter commenced an action in U.S. District Court arguing that its VoIP service is an “information service,” and sought: (1) declaratory relief finding that Minnesota state regulations are preempted, and (2) injunctive relief prohibiting the Minnesota PUC from regulating its VoIP services. The district court sided with Charter, concluding that VoIP is an information service. The Minnesota PUC appealed to the eighth circuit.
On appeal, the Eight Circuit affirmed. To reach its decision, the Court adopted the lower court’s “net protocol conversion” rationale: “As the district court put it, the touchstone of the information services inquiry is whether Spectrum Voice acts on the consumer’s information – here a phone call – in such a way as to transform that information. IP-TDM calls involve just such a transformation. For those calls, because information enters Charter’s network in one format (either IP or TDM, depending on who originated the call) and leaves in another, its system offers net protocol conversion, which the FCC has defined as occurring when an end-user can send information into a network in one protocol and have it exit the network in a different protocol. Spectrum Voice’s service is an information service because it makes available information via telecommunications by providing the capability to transform that information through net protocol conversion.” Additionally, the majority found the telecommunications management exception did not apply.
In contrast, Judge Grasz, in his dissent, found the issue on appeal to be much more narrow: whether the Communications Act categorizes net protocol conversions in interconnected VoIP as an information service. Judge Grasz concluded it does not, finding “the net protocol conversion in Charter’s service makes it either a telecommunications service or something entirely outside the primary categories of services in the Communications Act.” Among other things, Judge Grasz argues that Charter is using a technicality to avoid the FCC’s IP-in-the-Middle Order precedent because a Charter VoIP customer’s voice signal is converted from analog to IP at the embedded Multimedia Terminal Adapter which is located in the customer’s home. (It should be noted that the FCC’s IP-in-the-Middle Order addressed AT&T interexchange traffic that was routed through a gateway where it was converted to IP format, then transported over AT&T’s Internet backbone before being converted back to TDM and terminated.) Comparing AT&T’s service at issue in that FCC order with Charter’s VoIP service, Judge Grasz provides the following:
“If performing the conversion from TDM to IP inside a customer’s home is sufficient to convert a telecommunications service into an information service, then AT&T, or any similarly situated provider, could greatly reduce its regulatory burden simply by moving converter boxes inside customers’ homes. A simple change of physical location would transform what used to be telecommunications services to information services. This may explain why the FCC has yet to make categorical pronouncements on protocol conversions. An overarching category for all net protocol conversions would create a potential pathway for every company to escape the heavier telecommunications service regulations.”
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FCC Reminder: C-Band Registration Window Closes October 17
September 7, 2018 – The FCC’s International Bureau has released a Public Notice to remind operators with fixed-satellite service (FSS) earth stations in the 3.7-4.2 GHz band that were constructed and operational as of April 19, 2018 that the filing window to license or register such stations closes on October 17, 2018. In April, the FCC announced a temporary freeze on filing new or modification applications for FSS earth station licenses in the band, while opening a 90-day window during which entities that own or operate existing FSS earth stations may file an application to register or license those stations currently not registered or licensed. Also, the FCC waived the requirement that applications for earth station licenses or registrations demonstrate frequency coordination with terrestrial stations. In June, the 90-day filing window was extended to October 17, 2018. The limited filing window is intended to help identify existing unregistered earth stations, which could give the FCC a better understanding of current operations before making any substantial changes to the band, such as repurposing parts of it for mobile broadband and other use.
In its June Public Notice extending the filing window to October 17, the FCC clarified that “operators with multiple receive-only antennas at a single geographic location or address may apply to register these antennas under a single earth station application and pay a single application fee of $435.” The FCC also stated it will allow entities to register a large number of geographically diverse earth stations by filing an application for a single “network” license and paying a single fee in IBFS (fee code BGV, currently $10,620), and entities with a large number of geographically diverse earth stations will be allowed to file an application for a single “network” license with a single fee (IBFS fee code BGV, currently $10,620).
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Tentative Agenda For FCC September Meeting Includes Wireless Infrastructure Order
September 5, 2018 – FCC Chairman Ajit Pai has announced the following tentative agenda for the FCC’s September open meeting scheduled for Wednesday, September 26, 2018:
Kari’s Law NPRM – The FCC will consider a Notice of Proposed Rulemaking addressing calls to 911 made from multi-line telephone systems, pursuant to Kari’s Law, the conveyance of dispatchable location with 911 calls, as directed by RAY BAUM’S Act, and the consolidation of the Commission’s 911 rules. (PS Docket Nos. 18-261, 17-239).
Wireless Infrastructure Order – The FCC will consider a Declaratory Ruling and Report and Order that will clarify the scope and meaning of Sections 253 and 332(c)(7) of the Communications Act, establish shot clocks for state and local approvals for the deployment of small wireless facilities, and provide guidance on streamlining state and local requirements on wireless infrastructure deployment. (WT Docket No. 17-79; WC Docket No. 17-84)
Enforcement Bureau Actions – The FCC will consider two enforcement actions.
Clarifying Local Franchising Authorities Regulation of Cable Operators – The FCC will consider a Second Further Notice of Proposed Rulemaking addressing two issues raised by a remand from the U.S. Court of Appeals for the Sixth Circuit concerning how local franchising authorities may regulate incumbent cable operators and cable television services. (MB Docket No. 05-311)
Cable Data Collection – The FCC will consider a Report and Order that eliminates the Form 325, Annual Report of Cable Television Systems, filing requirement. (MB Docket Nos. 17-290, 17-105)
Toll Free Assignment Modernization – The FCC will consider a Report and Order that will amend the FCC’s rules to allow for use of auctions to assign certain toll free numbers and takes other actions to modernize the administration and assignment of toll free numbers. (WC Docket No. 17-192; CC Docket No 95-155)
Satellite Earth Stations in Motion – The FCC will consider action to facilitate the deployment of and harmonize the rules concerning three types of Fixed-Satellite Service earth stations authorized to transmit while in motion: Earth Stations on Vessels, Vehicle-Mounted Earth Stations, and Earth Stations Aboard Aircraft. (IB Docket No. 17-95)
The meeting is scheduled to begin at 10:30 a.m. EDT and will be streamed live online at www.fcc.gov/live.
