Commlaw Source

FTC Releases New Rule Provisions That Expand Company Responsibilities Under The CAN-SPAM Act

2008-05-15T17:35:00.000-05:00

On Monday, May 12, 2008, the Federal Trade Commission (“FTC”) released a several new rules under the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act” or “Act”). The Act and the implementing rules establish standards for sending commercial email messages.

The new rules stem from two rulemaking proceedings and are intended to clarify the existing requirements as follows: :

(1) add a definition of the term “person” to clarify that CAN-SPAM’s obligations are not limited to natural persons;
(2) modify the definition of the term “sender” such that when multiple parties’ products and services are promoted, it is easier to determine which entity is responsible for CAN-SPAM compliance;
(3) clarify that a sender may satisfy the “valid physical postal address” by using a registered post office box or private mail box established under U.S. Postal Service regulations; and
(4) clarify that email recipients who wish to opt-out from receiving future email messages cannot be required to pay a fee, provide any information in addition to their email address and opt-out preferences, or otherwise be required to take any steps other than sending a reply email or visiting a single webpage.

The FTC also released a Statement of Business and Purpose (SBP), which addresses several topics that were addressed in the rulemaking proceeding but that are not subject to new rules. For example, the FTC declined to alter the length of time in which a sender may honor an opt-out request. The FTC also declined to expand the statutory definition beyond the five categories of “transactional” or “relationship” services it exempts from the CAN-SPAM Act’s requirements, as codified at 16 C.F.R. § 316.2(o).

These rules have the potential to promote greater marketing flexibility as they preserve the ability of entities to jointly and efficiently market products and services through commercial and promotional email. However, entities must be careful to understand the responsibilities that ensue from classification as a “sender” when such marketing endeavors are pursued.

Leased Access Order Imposes Significant Regulatory Burdens on Cable Providers

2008-02-07T18:05:00.000-05:00

On November 27, 2007, the Federal Communications Commission (“Commission” or “FCC”) released an Order and Further Notice of Proposed Rulemaking in its Leased Access Proceeding (“FNPRM”). The Order was released on February 1, 2008.

In the Report and Order, the Commission modified its leased access rules which require cable operators to set aside channel capacity for commercial use by unaffiliated video programmers. Specifically, § 612 of the Communications Act authorizes the Commission to promulgate leased access rules to promote diversity of programming at reasonable terms and conditions. In its Notice of Proposed Rulemaking sought comment on a number of provisions relating to enforcement, rates and procedural issues. The Commission adopted a plethora of cumbersome new rules in all of these area that all cable operators must fully comply with, in addition to the already existing regulatory standards. The Commission attempts to justify the rule modifications by claiming that they are necessary in order to create uniformity in customer service standards, negotiation standards, rates, reporting requirements. However, these rules significantly limit the ability of cable operators to carry out their business plans in a manner that is tailored to their specific business needs. These rules become effective 90 days after publication in the Federal Register.

The Commission tried to take a preemptive strike against any challenge by cable operators, claiming that the rules, as adopted withstand constitutional scrutiny. While the DC Circuit has already held that the leased access provisions of the 1992 Cable Act are not content-based, further regulation may not survive the intermediate scrutiny standard of review due to the elimination of public access obligations in the broadcast context and the great possibility of a negative impact on revenue impact may be a taking. Further, robust growth in access to the Internet and increasing consumer preference for web-based and other alternative forms of content diminishes the need for access through traditional cable service.

FCC Releases Proposals to Reform USF

2008-02-01T15:35:00.000-05:00

On Tuesday, January 29, 2008, the Federal Communications Commission ("Commission") released three Notices of Proposed Rulemaking ("NPRM") to examine the deficiencies in the high-cost Universal Service Fund ("USF"). The Commission asks for comment in three areas: (1) changes to the identical support rule for wireless providers; (2) use of reverse auctions to distribute subsidies; and (3) recommendations of the Federal-State Joint Board on Universal Service including making broadband services eligible to receive subsidies.

These reform proposals are long overdue as the stability of the fund, in terms of both contribution base and distributions has waned in recent years. Whether the reform efforts announced will actually go through is yet to be determined. Commission Democrats have already expressed dissenting views on the use of reverse auctions, demonstrating a lack of unity on the proposals. And, industry backlash is highly likely.

NCTA Appeals Commission’s MDU Order

2008-01-24T16:37:00.000-05:00

On January 22, 2008, the National Cable & Telecommunications Association (“NCTA”) filed a Petition to Stay a Federal Communications Commission (“Commission”) Order, prohibiting exclusive contracts between multichannel video programming distributors (“MVPDs”) subject to section 628 of the Communications Act and owners of multiple dwelling units (“MDUs”). NCTA petitioned the D.C. Court of Appeals for review of the Order on January 16, 2008. Prior to the Commission’s ruling, exclusive contracts were not regulated by the Commission. NCTA takes issue with the fact that the Order not only bans exclusive deals on a prospective basis, but also renders all previously exclusive deals void, stripping MVPD providers of their contractual rights and jeopardizing their ability to provide video, voice and data services.

NCTA’s petition rests on the premise that the Commission has no statutory authority to prohibit exclusive deals, and even if it did, the Commission can not abrogate existing deals. Further, NCTA argues that the Commission’s decision is arbitrary and capricious as it dramatically changed its position and analysis from just four years ago and, failed to state why meddling with existing contracts results in any tangible benefit for consumers.

Given the wide range of parties involved and the nature of the issues, the Court will certainly have its hands full trying to balance the interests of all parties involved to reach a fair and workable outcome.

Recent Forbearance Petitions Demonstrate Need for Meaningful Intercarrier Compensation Reform

2008-01-16T11:00:00.000-05:00

On January 11, 2008, Embarq filed a forbearance petition with the Commission to eliminate the “Enhanced Service Provider” (“ESP”) Exemption to interstate access charges. Embarq claims that grant of its petition would make ESPs telecommunications carriers, thus subject to regulation. ESPs would no longer be considered “customers” of telecommunications carriers.

The Embarq petition makes clear that it is targeting specific types of companies for new regulation. Foremost, Embarq seeks to create additional regulatory obligations for interconnected VoIP providers, such as cable operators and Vonage. In addition, the proposed regulation would extend to purely Internet-based calling services like Skype. Most damaging is that the petition appears to treat all ESPs, including conference calling companies, voicemail providers, and others, as telecommunications carriers, subject to full Commission regulation, including reporting requirements and access charges.

Meanwhile, late last year, Feature Group IP also filed a forbearance petition requesting that the Commission affirm the ESP Exemption, as applicable to advanced IP communication systems.

Both petitions emphasize the greater need of a comprehensive reform effort to treat like services with regulatory parity under a unified rate scheme. Rather than perpetuating the interim regime, which is built upon discriminatory regulations, sponsored by industry giants, the Commission should seize the opportunity as a means toward obtaining equal treatment for all telecommunications traffic by eliminating disparate intercarrier compensation rate structures for otherwise identical functionality to even the playing field among providers and enhance consumer benefit.

FCC Seeks Comment in MDU Exclusivity Proceeding

2008-01-08T10:56:00.001-05:00

On Monday, January 7, 2008 an FCC order which voids exclusive contracts between multichannel video programming distributors (“MVPDs”) subject to section 628 of the Communications Act and owners of multiple dwelling units (“MDUs”) was published in the Federal Register. The FCC also released a notice of proposed rulemaking (“NPRM”) seeking comment on whether providers of Direct Broadcast Satellite (“DBS”) and Private Cable Operators (“PCOs”) should be permitted to have exclusive access to MDUs. The notice also considers prohibiting exclusive marketing arrangements and bulk billing. The purpose of the NPRM is to determine whether these practices benefits or harms video consumers in MDUs. Comments are due on or before February 6, 2008 and reply comments are due on or before March 7, 2008.

Martin in the Hot Seat (Again)

2007-12-18T15:06:00.000-05:00

Today, the Federal Communications Commission (“Commission” or “FCC”) voted to overturn its 32-year old media ownership prohibition. Under the ban, broadcasters in the nation’s 20 largest markets are prohibited from also owning a newspaper. Today’s vote is somewhat surprising due to the intense criticism that Chairman Kevin Martin & Co. have received in recent weeks from members of the House and Senate on media ownership, Commission oversight and operations, as well as a host of other issues. Legislators have questioned Martin’s self-imposed “KGB-like atmosphere,” lack of accessibility and a slew of decisions based on little evidence or notice. Although Martin promised lawmakers more transparency, Martin appears to have ignored his own recommendations by continuing his pattern of making last minute changes to the proposal prior to the Commission vote. Again, significant backlash is expected due to Martin’s rush to bring the item to agenda and a vote.

Cable companies are most affected by Martin’s erratic regulatory agenda. It is expected that the Commission will pass a rule prohibiting cable companies from serving no more than 30% of the nation’s subscribers in the near future. Martin also has hopes of reincarnating his a-la-carte pricing plan and extending indecency rules to apply to cable. Hopefully Martin will raise these, and all other issues, in an open forum, where such contentious issues are subject to the appropriate level the rhetoric and debate warranted.

GAO Urges the FCC to Develop a Comprehensive DTV Transition Plan

2007-12-13T15:49:00.001-05:00

The Federal Communications Commission (“Commission”) has suffered yet another embarrassing moment in its highly criticized digital television (“DTV”) transition planning. On December 11, the General Accountability Office released a report, expanding upon points made in prior Congressional testimony which faulted the Commission for not having a fully developed plan in place, with a little over a year until the hard date of the transition is met. Specifically, the GAO requested that the plan include: (1) detailed goals, milestones, and time frames that can be used to gauge performance and progress, identify gaps, and determine areas for improvement; (2) strategies for collaboration between public and private sector stakeholders to agree on roles and responsibilities; (3) a description of reporting requirements to track stakeholder efforts against planned goals; and (4) strategies for managing and mitigating risks to avoid potential problems and target federal resources.” All this, of course, takes valuable Commission time and resources, both of which are running thin given the time constraints that the Commission is now operating under.

While Commissioner Copps emphatically stated that “[i]t continues to astound [him] that we do not have a comprehensive DTV transition plan,” and that “[t]his effort is far too important to be left to chance or patchwork decisions by individual companies,” it remains to be seen whether the Commission will act expeditiously to implements a workable solution.

Commission Seeks to Extend Do-Not-Call Registry Beyond 5-Year Limit

2007-12-06T12:13:00.000-05:00

On November 27, the Commission adopted a NPRM that examined whether numbers placed on the Do-Not-Call registry should be kept on the list beyond the current 5-year period. The NPRM proposes that telemarketers would be obligated to honor the registrations either until the number was removed by consumers or the database administrator, due to disconnection or reassignment.

Extension of the Do-Not-Call registry rules would prolong the tension between the Commission’s existing Customer Proprietary Network Information (“CPNI”) rules and telemarketing regulation. If a subscriber is listed on a Do-Not-Call registry, the carrier or marketer would not be permitted to contact that customer via telephone, even if contact would be permissible under the existing CPNI regime.

Commission Examines Formalized Forbearance Procedures

2007-12-03T10:12:00.001-05:00

In a Notice of Proposed Rulemaking (“NPRM”) released on November 30, 2007, the Commission responded to a petition filed by several CLECs asking the Commission to tighten its procedural requirements for granting forbearance under Section 10 of the Telecommunications Act of 1996 (“Act”).

The CLECs asked for rules establishing notice and burden-of-proof requirements, opportunity for comment, and access to documents in forbearance proceedings.

Approval of the petition marks a significant win for CLECs, who have been abused by last-minute submissions made by the Bells to the Commission. The Bells have used the lax forbearance rules to their advantage in recent years. Currently the Bells are permitted to ask the Commission to ease pricing restrictions on services they sell to competitors on a market-to-market basis. The lack of procedural safeguards has left everyone except the entity seeking relief completely unaware of the extent of the relief granted to the Bells. Establishing formalized procedures guarantees transparency in the process by ensuring that all affected parties have a full and fair opportunity to voice concerns to the Commission.

Commission Voids Exclusive Deals in MDUs.

2007-11-15T16:20:00.000-05:00

The Federal Communications Commission ("FCC" or "Commission") released the full text of the order adopted at its October 31, 2007 meeting, which takes the unprecedented step of voiding existing exclusive contracts between multichannel video programming distributors ("MVPDs") subject to Section 628 of the Communications Act of 1934, as amended, and owners of Multiple Dwelling Units ("MDUs"). The order applies retrospectively to existing contracts as well as any future agreements.

This order is the FCC’s latest gift to AT&T and Verizon, who are in the midst of rolling out their own video services. The order is one of the most extensive and abrupt policy changes ever taken by the Commission. The FCC’s actions will no doubt be challenged in court by both the cable and MDU industries on the basis that it constitutes an unconstitutional regulatory taking (an argument the FCC attempts to defend against in five short paragraphs of the order (¶¶ 56-60)). Once again the FCC relied on its "ancillary jurisdiction" to take sweeping regulatory action.

Martin Proposes Leased Access Rate Cut

2007-11-13T16:15:00.000-05:00

Today, Kevin Martin, chairman of the Federal Communications Commission, proposed a 75% cut on the rates that cable television companies may charge for leased access to spare channels. Martin’s proposal calls for the current rate of $.40 per subscriber to be cut to $.10 per subscriber in the hopes of promoting competition and bringing more programming from women and minorities into the market.

It remains to be seen whether such a drastic rate cut is merited. The Commission is expected to vote on the proposal later this month.

Commission Expands Local Number Portability Obligations to Interconnected VoIP Providers

2007-11-09T17:23:00.001-05:00

In an Order released Nov. 8, 2007, the Federal Communications Commission (“Commission”) took several actions relating to local number portability (“LNP”) that affect all carriers, including VoIP carriers.

With the ostensible goal of streamlining the LNP process across the telecommunications industry, the Commission unequivocally extended LNP obligations to interconnected VoIP providers for the first time. Imposition of such obligations is ironic, in light of the fact that VoIP providers still have no right to obtain numbers directly, and instead typically rely on partner CLECs in order to provide numbers to their end users. The Commission reiterated that entities obligated to provide local number porting, including VoIP providers, may not obstruct or delay the porting process by demanding excessive information from the porting-in entity. The Commission also issued a Final Regulatory Flexibility Analysis (“RFA”), in response to the D.C. Circuit’s stay of the Commission’s 2003 Intermodal Number Portability Order. In response to the D.C. Circuit, the FCC clarified that wireline carriers qualifying as small entities under the RFA are required to port numbers to wireless carriers when the wireless carrier’s coverage area overlaps the location of the territory where the wireline number is provisioned, provided that the porting-in carrier maintained the number’s original rate center designation following the port.

This is the FCC’s latest order in a series of orders that has extended traditional wireline regulation to interconnected VoIP carriers citing its exercise of its “ancillary jurisdiction;” the same rationale provided by the FCC (and upheld by the D.C. Circuit) in imposing USF obligations on other interconnected VoIP carriers.

Internet Taxes: Battle Lines are Drawn

2007-10-29T12:59:00.000-05:00

One of the most hotly debated issues concerning telecommunications this Congressional term comes over whether a permanent ban on Internet taxes should be imposed. The current moratorium expires on November 1. Proponents of a permanent ban is necessary to encourage growth and deployment of the Internet and broadband facilities. Opponents argue that a permanent ban brings too many fiscal implications that harm local businesses who rely on the Internet. Legislators are stuck with the task of trying to strike a bi-partisan balance. The best proposal so far seems to be the recently passed Senate bill which extends the moratorium for seven years while lawmakers work towards a better understanding of Internet access. The bill, H.R. 3878 is now being considered in the House.

Update: Senate Intelligence Committee Passes Bill Giving Telecom Companies FISA Immunity

2007-10-19T08:25:00.000-05:00

Late Thursday night, the Senate Intelligence Committee passed a bill, by a vote of 13-2, giving Telecom companies immunity under FISA for the release of confidential consumer information.

While the bill lets telcos off the hook for releasing consumer information under less than perfect court ordered administrative subpoenas and mere requests for information, the issue of whether such warrantless wiretaps and searches are legal still looms.

Whether a bill granting such immunity passes on the Senate floor remains to be seen.

CPNI: The Government's Playground

2007-10-18T15:20:00.000-05:00

On Monday, Verizon, in a letter to congressional lawmakers, revealed that it had provided customers’ proprietary telephone records, or CPNI, to federal authorities without formal court orders hundreds of times since 2005. Specifically, Verizon has provided information including: the identifying information of individuals making phone calls, all of the people that customer called and the people that those people called. Verizon disclosed this information in response to administrative subpoenas issued by the FBI.

The willingness of companies, like Verizon, to provide such a range of information in response to an administrative subpoena begs Congress, the FCC and other regulatory agencies to reexamine this sensitive issue in the future. While, FISA and the Patriot Act permit warrantless surveillance without a court order for the purpose of obtaining foreign intelligence information for a period up to one year, it remains to be seen whether an administrative subpoena issued by the FBI qualifies as a lawful court order, or whether these agencies are infringing upon the constraints of the Fourth Amendment as an unlawful search of customers’ valuable CPNI.

While it is doubtful the FCC will initiate any action to reiterate that these practices are within the scope of CPNI exemptions, the FCC could take action through a consumer complaint driven process in the future.

NTIA Creates New $1.5 Billion Consumer Equipment Market

2007-03-15T08:20:00.000-05:00

The National Telecommunication and Information Administration of the US Department of Commerce (NTIA) on March 13 created a new $1.5 billion dollar market for consumer settop equipment designed to convert digital television signals to analog signals. Pursuant to the Digital Television Transition and Public Safety Act of 2005 Congress will require all television broadcast stations to cease operating on the analog channels they currently use and broadcast only digital signals. Read more...

GAO special access report brings FCC to the reality-based universe

2006-12-01T09:56:00.000-05:00

Like some other aspects of the Administration, the FCC has been criticized by some for describing the world as they would like it to be, rather than how it is.

Yesterday, GAO admonished the FCC for failing to reasonably define "effective competition" and for failing gather data to adequately measure competition in the $16 billion dollar a year dedicate access business, which is dominated by AT&T and Verizon.

Kudos to GAO. We hope this report and others like it will bring the Eighth Floor to the reality-based universe.

Pennsylvania becoming more VoIP friendly?

2006-11-30T08:36:00.000-05:00

Today, the PAPUC is expected reverse two ALJ decisions and grant Core Communications and Sprint licenses to provide service in rural areas of Pennsylvania.

To date, Pennsylvania RLECS have aggressively -- and successfully -- fought to keep competitors out of their incumbent territories. Their most aggressive advocacy has been against companies like Sprint, which is seeking to rollout a wholesale offering to aid small cable operators in providing VoIP.

With licenses in place, new entrants will be able to bring VoIP and other services to all consumers in Pennsylvania, not just those in the big cities.

AT&T/BellSouth Merger: The Speculation Continues

2006-11-21T13:44:00.000-05:00

We have been on a bit of a hiatus here at Commlaw Source but we're back now, we promise. Luckily, not much has happened in the time since our last update due to the fact that the election froze most Federal regulatory activity. With the Dems on top and committee assignments made on the Senate side, as it was before the election so it is after, with continuing speculation on whether the AT&T/BellSouth merger will be approved by the FCC before the end of the year. And before the new Democratically controlled 110th Congress is seated in January. Democrats on the relevant oversight committees have urged the parties to slow down the merger and warned that the proposed transaction will likely be the subject of oversight hearings in the 110th Congress. Analysts at Stifel/Nicolaus today though said that they believe a bi-partisan approval of the merger at the FCC is possible before year end, which would short circuit such hearings and perhaps allow the Dem FCC Commissioners to get some meaningful conditions on the merged company, but the clock is ticking fast for that to happen.

AT&T/BellSouth Approval Merger On the Cusp

2006-09-22T09:56:00.000-05:00

It appears as though the FCC's draft order approving the AT&T/BellSouth merger went on circulation last night, setting the transaction up for approval at the October 12 meeting.

It shouldn't come as a surprise, given Ed Whitacre took a limousine ride over to the Commission last week to discuss "international and state" approvals of the merger. We look forward to the announcement of the AT&T/Verizon/Qwest merger.

Pre Election Scramble @ the FCC

2006-09-07T15:52:00.000-05:00

We have it on good information that the FCC is scrambling to approve the AT&T/BellSouth merger at its September agenda meeting. This is counter to the conventional wisdom that had the FCC holding off on acting on the merger until after the Election and after the posture of the Tunney Act case (reviewing the DOJ and FCC approval of the SBC/AT&T merger) was more certain.

In addition to approval of the merger, word is that folks on the Hill are trying to schedule Chairman Martin's confirmation hearing this month before the Election recess. It appears that after a slow August, its back to business as usual in the halls of Congress and the FCC!

USF Notice of Apparent Liability Issued

2006-09-05T14:30:00.000-05:00

Commission Issues Notice of Apparent Liability for Forfeiture
for Failure to Contribute to the Universal Service Fund

The Federal Communications Commission ("FCC") has assessed a forfeiture of $529,000 against Local Phone Services, Inc. d/b/a Best Phone ("LPSI"), for repeated and willful failures to contribute fully and timely to the Universal Service Fund ("USF") and certain additional violations.

LPSI failed to timely file certain required Telecommunications Reporting Worksheets ("Worksheets"). The FCC uses the information submitted in these Worksheets to determine the amount of the USF payment due by that telecommunications carrier. The failure to file the Worksheets and pay the subsequent USF assessments results in disproportionate distribution of USF liability between carriers. Compliant carriers end up bearing the "economic costs and burdens associated with universal service", while delinquent carriers reap "an unfair competitive advantage."

Although a reduction in the forfeiture amount is typical when the violation is disclosed voluntarily, the FCC declined to reduce the forfeiture in this case. The FCC expects the voluntary disclosure to be accompanied by "swift and effective corrective actions" which were not forthcoming in the instant case.

Please feel free to contact us with any questions you may have regarding Universal Service obligations.

FCC Warns Verzion and BellSouth on DSL USF

2006-08-25T14:45:00.000-05:00

It seems some of the folks at the FCC have caught wind of plans by Verizon and BellSouth to continue charging consumers, in effect, the USF surcharge on DSL lines, but calling the charge a "regulatory recovery fee" and pocketing the money.

According to the Wall Street Journal, the carriers should check the mail for a letter of inquriry asking for "documentation about how the surcharges are consistent with federal Truth-in-Billing laws as well as how the underlying costs of providing high-speed Internet services are supported by the surcharges. Additionally, the FCC wants information on why the companies are imposing the surcharges on all Internet customers, both those who buy bundled packages and those who subscribe only to high-speed Internet."

Its nice to see the FCC taking pro-active, pro-consumer enforcment role and we hope its a trend.

BellSouth and Verizon Swap USF Charge for "Regulatory Cost Recovery Fee"

2006-08-22T08:05:00.000-05:00

Last year when the FCC effectively removed all common carrier regulation from DSL services provided by the RBOCs the Commission also removed the obligation of DSL providers to pay Universal service surcharges on their DSL line revenues. Great news for end users, who will no longer have to pay those assessments, right?

But according to today's Wall Street Journal BellSouth and Verizon won't be passing the savings on to their customers. "Verizon recently emailed subscribers announcing that it dropped the universal-service fee as of Aug. 14 and will impose a new "supplier surcharge" beginning Aug. 26. The new fee -- $1.20 a month for slower-service customers and $2.70 a month for faster ones -- is almost exactly what consumers would have saved with the government's change. BellSouth yesterday said it also intends to continue charging Internet subscribers its $2.97 a month "regulatory cost recovery fee.'"

We are shocked! This is just like the "Missoula Plan" a/k/a Pimp Plan, which is supposed to "fix" the universal service problem without impacting incumbent revenues. Call us crazy, but we see a pattern emerging here.

Mixed Messages From Verizon on Future of Local?

2006-08-18T07:51:00.000-05:00

There was lots of print this week about the health (or lack of) and future (or lack of) of the wireline telephone business.

The week started off with the story that Verizon is again looking to dump tens of thousands of access lines in Maine, Vermont and possibly New York (though a previous plan to throw off those lines didn't go over so well with the NYPSC). This was ironic news, in light of the fact that Verizon's Doreen Toben told analysts on the 2Q 2006 earnings call just a few weeks ago that "We remain confident that wireline margins will expand and show sequential improvement as we go through the year." I guess she meant as a result of the liquidation? The same old VZ double talk? You decide. At the same time Business Week Online had a story about the rough time the guys at the Carlyle Group (headed by former FCC Chairman Bill Kennard) are having with their own 2004 acquisition of Verizon's Hawaiian local business.

No matter what VZ says, it's clear that while the local business is tough these days, its far from dead. We think that the predictions of 100% VoIP replacement within 5 or even ten years are a bit optimistic and rumors of the death of local are exaggerated a bit.

Verizon In a "Race for Survival"

2006-08-14T21:36:00.000-05:00

We were amused today by the New York Times story below the fold on the cover of the Business section headlined: "Verizon is Rewiring New York, Block by Block, In a Race for Survival." Our amusement was compounded by the fact that the headline appeared on the same day that two of the few remaining CLECs that were born out of the 1996 Telecom Act and who suvivied the telecom bust, US LEC and Paetec, announced that they are combining, with US LEC being acquired by Paetec.

The New York Times story shows the brilliance of Verizon's PR and legal machine, which has sought (successfully in many cases) to convince regulators that they and the other 2 remaining BOCs are on the verge of being put out of business by the cable companies and Vonage. Verizon and AT&T (the new new AT&T) are always one piece of legislation away from being able to "compete" in the marketplace. In fact, Verizon's version of "barely surviving" is having cash flow from operations for 2Q '06, according to the transcripot of the VZ analysts call, "total $11.5 billion, which is $1.6 billion better than the first-half of last year."

Pardon me while I dab a tear.

in the meantime, the few remaining competitors who remain are scrambling to sell assets at fire sale prices. The US LEC deal comes just on the heels of the closing of the TelePacific acquisition of Mpower. As we've said before, hopefully the remaining competitors and the cable companies will take a page from the BOCs war plans and fight the fight on every front.

More From WSJ's Wanna-Be FCC Commissioners

2006-08-09T11:36:00.000-05:00

We remain fascinated by the focus of the Wall Sreet Journal's editorial board on the arcane world of telecom regulatory policy. The omniscient editors have never been shy about pontificating about things they clearly know little about.

Today's WSJ editorial page carries an editorial about Sprint's announcement this week that it plans to build a multi-billion dollar WiMAX network over the next several years. According to the closet FCC commissioners at the Journal this announcement solves virtually every major policy debate now happening in DC because "high-speed wireless Internet access, however, means no more duopoly." As a result, there is no more duopoly (according to the Journal) and therefore is no need for any "net-neutrality" guarantees, no need to regulate broadband in any way, and no need to regulate access the last mile.

Gosh, that was so easy!

WaPo Newsflash: Comm. McDowell Is Independent!

2006-08-08T11:42:00.000-05:00

An interesting story in today's Washington Post about Commissioner McDowell asserting his independence on the Commission, most notably, according to the Post, in his refusal to sign onto the Chairman's "must carry" item.

While this fact may surprise some (including, apparently the Post editors who viewed the story as worthy of the Business section cover) those of us who know Commissioner McDowell from his years in the telecom industry are not surprised. While we had predicted here that Chairman Martin would seek to take advantage of having a Republican majority in the early days following his swearing-in, we never predicted that Commissoner McDowell would be a rubber stamp. He has always been independent, fair and thoughtful and we expect that he will continue to be on the Commission.

Another interesting thing in the article is the description of what happened on the XO Forbearance Petition (see our June 22, post). It appears that the regrettable decision to pull the petition at the last minute was made to avoid putting Commissioner McDowell in a "difficult position." We are sure that Commissioner McDowell could have handled the pressures assoicated with voting on the item, and it would have been nice to see the competitive industry not back down for a change. Maybe the industry will have another chance to prove its mettle soon.

AT&T BellSouth Merger Docket Quiet: Tunney Act Fallout?

2006-08-03T07:41:00.000-05:00

We have been closely monitoring the FCC docket in the AT&T/BellSouth merger and its been pretty quiet for the past few days. We're not sure whether the parties are reassessing strategy in light of next week's Tunney Act hearing or whether all of the lawyers for AT&T and BellSouth have retreated to their vacation homes on Martha's Vineyard for the month of August. In any event, today is day 105 on the FCC's 180 day self-imposed deadline for merger reviews and the conventional wisdom is that this merger will not be completed within the deadline.

The factors for the slow-down include first and foremost the November election (regulators and Congress don't want this anticompetitive debacle to be any kind of issue in the Election) and the Tunney Act bump in the road. Look for activity to pick up after Labor Day when the AT&T and BellSouth lawyers and executives get back from their vacations.

Vonage and Verizon report earnings ...

2006-08-01T07:49:00.000-05:00

Verizon announced a 24% drop in it second quarter profit do at least in part to customers switching to competitors, such as Vonage and cable operators. At the same time it's losing core customers, its expending huge sums on its FiOS fiber optics rollout.

Meanwhile, Vonage reports adding 1,005,000 net subscriber lines during the year ending June 30, 2006 -- with a whopping 256,000 coming in the most recent quarter. Vonage now boasts 1,853,000 total subscriber lines, a quarterly increase of 16% and an annual increase of 119%. It remains to be seen when Vonage will turn a profit, but it looks like the company is increasing its subscribership while decreasing its losses ... a positive combination that proved very elusive for first generation competitors.

The combination Vonage and Verizon announcements may very well explain Verizon's incessant legal and policy attacks on Vonage and other competitors. If you can't compete on the field, work the referees.

CLEC M&A increasing ...

2006-07-31T18:00:00.000-05:00

Well, after years of going very much sideways, it looks like the asset value for CLECs on the M&A front is finally on the upswing. Back in May, Telepacific announced a transaction with Mpower. On Friday, Time Warner Telecom announced a merger with Xspedius, and today, Cleartel announced a merger with SupraTelecom.

Let's hope we're well beyond the bottom and that the upswing continues.

Missoula (PIMP) Plan Is Put Out for Comment by FCC

2006-07-27T13:33:00.000-05:00

Demonstrating their dedication to reforming the intercarrier compensation system immediately(yeah, riiiight) the FCC has wasted no time in putting the PIMP plan out for comment. In a public notice yesterday the FCC announced that comments are due on September 25 and replies are due November 9.

The Plan is sure to be the subject of much discussion this week at NARUC in San Francisco (we will be there) and we look forward to hearing in person the defense of the somewhat twisted reasoning underlying the Plan....

Tunney Act Hearing Today Good News for Opponents of AT&T/BST Merger

2006-07-25T14:37:00.000-05:00

We understand from news reports that at today's Tunney Act hearing Judge Sullivan, who is reviewing the November 2005 SBC/AT&T and Verizon/MCI mergers, said that he did not have enough information to rule on whether the mergers are in the public interest and established a schedule to receive additional evidence on August 7. This is good news for CompTel and the other parties who have done a fantastic job of highlighting the many anticompetitive harms arising from the mergers and is potenially bad news for the pending AT&T/BellSouth merger. While no one expects last year's mergers to be undone by Judge Sullivan, the door is open now for additional conditions to be imposed on them while at the same time signaling to the FCC and DOJ not to simply rubber stamp the latest AT&T merger, the AT&T/BellSouth merger.

Update: The Missoula Plan (a/k/a P.I.M.P. Plan) Is Out

2006-07-24T15:14:00.000-05:00

It turns out that the rumors were true and today was the day NARUC filed the Missoula Plan (the PIMP Plan as some are calling it) at the FCC. The listed supporters, included among others: AT&T Inc., BellSouth Corp., Cingular Wireless, Commonwealth Tel. Co., Global Crossing, Level 3, Madison River and the numerous members of the the Rural Alliance. Stay tuned.

P.I.M.P. Plan May Be Filed At FCC This Week

2006-07-24T09:06:00.000-05:00

We hear that the P. I. M. P. (Promote Incumbent Monopoly Payments) intercarrier compensation reform plan (see May 9 post) may be filed at the FCC this week. The filing of the plan at the FCC comes just ahead of NARUC's meeting in San Francisco next week. As we have said before, we see little hope that the PIMP plan will be put out for public comment any time before late September. The plan, backed by AT&T, BellSouth and RLECs is an RLEC giveaway and regardless of when it's considered, we see little chance of its adoption in its current form. The biggest problem is that it's attempting to tackle intrastate access charges with little legal or political cover. In any event, we look forward to seeing the PIMP plan, whenever it emerges.

Adelphia Merger Conditions -- The Power Of A Tangible Example

2006-07-14T07:04:00.000-05:00

As expected, the FCC approved the acquisition of Adelphia's assets by Comcast and Time Warner with a couple of conditions designed largely to ensure that content providers can get their programming to consumers.

Sounds pretty vague, right? Here in DC, however, a real world example exists to highlight the carriage issue. Namely, Comcast and Mid-Atlantic Sports Network have been in a dispute about the terms (ok, price is the big item) that Mid-Atlantic must pay Comcast to carrier Nationals games and other content over Comcast's cable system.

Had this issue come in Kansas City, Pittsburgh, or some other market, it very likely would not have gained the pominence it has in DC -- the home-away-from home of national politicians, many of whom have been personally frustrated by not being able to watch the Nat's at home because of the carriage dispute. As we've said before, where you stand depends on where you sit.

Our Take On The Adelphia/Comcast/Time Warner Deal

2006-07-13T07:16:00.000-05:00

This morning, the FCC is expected to approve the acquisition of Adelphia's assets by Comcast and Time Warner. Our sources tell us that the deal will be approved with at least two conditions:

- Comcast and Time Warner will be barred from entering exclusive arrangements for regional sports programming, except in Philadelphia (Comcast owns that network)

- Competing video providers also will be able to file for binding arbitration if they can't otherwise get programming deals with Comcast or Time Warner.

All and all, it looks like the primary winner of the merger conditions effort will be DirecTV and other DBS providers.

In the order, we'll be paying particular attention to the FCC's analysis of "merger harm" and how the Commission expects the adopted conditions will alleviate that harm. In its past precedent, the FCC has stated that it will only adopt conditions designed to alleviate specific harms that may result from a combination.

Today's Tunney Act Hearing ... Be Hopeful, But Keep Your Expectations In Check

2006-07-12T07:35:00.000-05:00

Good luck to the competitors moving forward with today's Tunney Act hearing on the SBC/AT&T and Verizon/MCI mergers. Like many, we have been watching this one pretty closely, and we sincerely commend the creative efforts and hard work of the proponents.

Regretfully and unfortunately, even though we agree wholeheartedly with the merits of the competitive cause, our expectations on the ultimate result are very, very low.

We all like to use the rallying cry of the "rule of law" as a basis for why we believe we should be treated fairly. But as to fairness, the rule of law only guarantees judicial process, not justice. The district court has provided a lot of process. We don't, however, expect any justice.

Numbers-Based USF Movement Gets Its Own Association

2006-07-11T10:23:00.000-05:00

The effort to change the system for collecting universal service funding from an assessment based upon interstate telecom revenues to a system based on per-telephone number assessments got a boost today with the announcement of the formation of a new coalition, the "USF by the Numbers Coalition (or Numbers Coalition for short)." While the name of the group isn't too catchy, the coalition boasts a powerful membership (Bell companies, CTIA, NCTA) and is headed by seasoned industry veterans. According to the press release issued this morning, the group will be headed by former ALTS President John Windhausen and advised by former FCC commissioner Harold Furchtgott-Roth and "will urge policy-makers to act quickly to adopt a numbers-based system for collecting universal service funding. " Although the legal and policy case for numbers-based reform is less than clear at the moment, the formation of this group certainly moves the advocacy needle in that direction and the momentum in favor of adoption of numbers-based USF is picking up.

VoIP IP litigation update...

2006-07-10T08:55:00.000-05:00

Vonage announced this morning that it had acquired "three significant patents" related to packet compression from Digital Packet Licensing Inc.

According to Vonage, acquisition of these patents "places Vonage in control of pending litigation against Sprint Communications LP and Verizon Communications" in federal court.

We're glad to see Vonage fighting back, but we expect protracted IP litigation to continue on the VoIP front for quite a while. Congrats. to Digital Packet Licensing Inc. ... must have been a nice pay day.

Next Week's FCC Meeting Should Be Interesting...

2006-07-07T14:01:00.000-05:00

The FCC has released the agenda for its July 13 meeting and it looks like it could be a relatively busy meeting (at least for the FCC in the middle of the summer). Among the items on the agenda are approval of the long-pending Adelphia/Time Warner Cable transaction and from what we understand there are only a couple very minor conditions. Also, as part of its further efforts to crack down on data brokers who illegally obtain and sell other people's phone records, the the FCC is adopting an NAL against LocateCell.com, the databroker, for repeated failure to respond to FCC subpoenas in connection with the Commission's CPNI investigation. We expect to see continued enforcement action in this arena. In fact, the FCC's CPNI and slamming rules are the rules that the Commission seems most interested in enforcing. The interconnection rules? Not so much. Missing from the agenda is the multi-cast/must-carry item that some folks had expected to see.

Rocketoom.com Gone Bust

2006-07-06T15:17:00.000-05:00

The blogosphere has been buzzing the past couple of days about the departure of anchor Amanda Congdon from Rocketboom.com and today the Washington Post published a Business section cover story about her departure from the popular video blog over an apparent falling-out with her business partner. According to the Post, some commentators are saying that Amanda pulled a Star Jones and ambushed her partner with the announcement. However, hopefully he is smart enough to understand that she was the primary reason folks were tuning in so reliably and in such numbers. While Rocketboom.com as we knew it may be dead, rest assured the video blog revolution is just getting started.

FCC Order Applying CALEA to VoIP Providers Effective Aug. 4

2006-07-05T08:47:00.000-05:00

The FCC's new CALEA rules, applying CALEA to interconnected VoIP providers and providers of broadband Internet access, were published in today's Federal Register and will be effective on August 4, 2006. As you will recall, the D.C. Circuit last month upheld the FCC's decision to extend CALEA obligations to VoIP and Internet access providers (see June 13 post here).

Even though the rules technically go into effect on August 4, 2006, VoIP providers and facilities-based broadband Internet access providers have until May 14, 2007 to come into compliance with CALEA. In the meantime carriers will have to file interim reports with the FCC explaining how they plan to meet the May 2007 deadline, however the format and form of those reports has not yet been finalized. A further notice setting out the requirements will be released later.

Today's New York Times: The Telecom Edition?

2006-07-03T09:22:00.000-05:00

Today's New York Times carries two big telecom stories. First, on page one, the Times has an article entitled "Internet Calling Pressures Bells to Lower Prices." It's not clear to us what makes this front-page news, but the article discusses how VoIP calling plans offered by Vonage, SunRocket, Skype and others are pressuring the Bells to lower prices on traditional calling plans that are increasingly offered in bundled packages of voice, data and now video in some areas. The article also notes what we have discussed here before: specifically, that while the Bells now offer their own VoIP calling plans, they are not really very serious offerings. As the Times notes, "these services are rarely advertised. It is cheaper to cut prices [on landlines] than to try to win customers later from a rival." The article also notes (correctly) that "the Bells still control the bulk of the country's 180 million landlines and are far from giving up on what has been a giant cash cow." So much for "intermodal competition."

The other Times story is a Business section above-the-fold cover on AT&T's video rollout ("AT&T IS Calling About TV Service. Will Anyone Answer?") The article discusses the hurdles AT&T and Verizon both face in capturing enough video subscribers to pay for the cost of deploying their respective video networks and also highlights just how slowly and discretely the roll-outs are taking place, noting that just 5,000 subscribers in San Antonio will be able to receive AT&T's service. Contrast that reality with the hype filling the regulatory ether here in DC, where you can't avoid the Bell's non-stop TV, radio and print advertisements begging for regulatory "relief" as though the Bells were ready to offer video to millions if only Congress and the FCC would let them. The reality is very different.

FCC Releases Universal Service Reform Order and Notice

2006-06-29T09:21:00.000-05:00

On Tuesday, June 27, the Federal Communications Commission ("FCC" or "Commission") released an Order and a Notice of Proposed Rulemaking related to Universal Service Fund ("USF") contribution mechanisms. The Commission styled its Order as "interim," noting that it expects to take further action on its USF contribution methodology, pursuant to the Notice or otherwise.

With regard to wireless providers, the FCC increased the interstate "safe harbor" percentage from 28.5% to 37.1%. Accordingly, wireless providers electing to utilize the safe harbor going forward will need to base their USF contributions on the assumption that 37.1% of their traffic is interstate, and thus subject to USF contribution. Alternatively, wireless providers may remit payment based on actual interstate usage or on a traffic study estimating interstate usage. Providers electing to utilize actual a traffic study, however, must submit the study to the Commission and to the Universal Service Administration Corporation for review. The Commission expressed concern that carriers may be under-reporting interstate calling in traffic studies, and stated that requiring providers to submit traffic studies for review would minimize any such under-reporting.

Interconnected VoIP providers - which essentially includes any voice application over a broadband connection that allows for calling to the traditional phone network - must contribute to USF under the existing revenue-based methodology used for landline voice services. The FCC established a 64.9% safe harbor for interconnected VoIP providers. The Commission also concluded that interconnected VoIP providers may utilize traffic studies to estimate actual interstate usage, however, any such traffic studies must be approved by the Commission before implementation.

Interconnected VoIP providers will need to register with the Commission using FCC Form 499-A to obtain an FCC Registration Number and file an FCC Form 499-Q beginning on August 1, 2006. Finally, interconnected VoIP providers are required to begin filing FCC Form 400-A on April 1, 2007.

In the Notice, the Commission requests comment on a number of items related to the safe harbors established, as well as on the appropriate means of establishing the jurisdiction of calls for traffic study purposes. For example, some parties utilize the originating and terminating telephone numbers as a proxy for determining the jurisdiction of a call. Because of the "nomadic" nature of mobile wireless services and interconnected VoIP services, others have asserted that merely comparing originating and terminating telephone numbers is insufficient to establish the jurisdiction of a call. The Commission also seeks comment on whether and to what extent it can (and should) adopt a revised methodology for interconnected VoIP providers to contribute to USF. Comments are due 30 days after the Notice is published in the Federal Register, and reply comments are due 60 days after publication of the Notice.

Post Story on Martin Details Magazine Photo "Flap": Headline in Search of a Story?

2006-06-26T04:20:00.000-05:00

We are amused by today's cover of the the Washington Post Business section, which carries the ridiculous "story" about the June/July Details magazine article on the "21 media mavericks who are "quietly shaping your world" and "determining what you'll be watching and listening to in the near future."

According to the Post, certain quarters are scandalized by the picture accompanying the Details story, which shows Chairman Martin being standing on edge of a bed in a room at the Mandarin Oriental hotel in DC in a kind of crouch looking down at Alex Vogel, a partner at the high-tech lobbying firm Mehlman Vogel Castagnetti, who is sitting next to Eric Logan, an executive at XM Satellite Radio. We've seen the picture and its actually pretty funny. If you've met Chairman Martin you know he has a good sense of humor and any suggestion that the picture confirms that he is "in bed" with lobbyists is ludicrous. Details magazine is not exactly The Economist. Instead it's basically the men's version of of the women's magazine Cosmo. We suggest the Post and those quoted in the story lighten up!

XO pulling the plug on its forbearance petition? Say it isn't so, please.

2006-06-22T13:17:00.000-05:00

The word on the street is that XO may be pulling the plug on its pending forbearance petition, which seeks the elimination on some of the unbundling restrictions related to EELs (loop and transport combos) and DS1 loops.

We hope this isn't true, and if it is, we're sorely disappointed. Withdrawing gives the FCC a free pass. Forcing the FCC to decide would make the individual Commissioners culpable for their action or in-action, as the case may be. Plus, whenever the Commission is forced to act on a timeline other than its own, anything is possible.

Some would suggest (and we know who you are) that withdrawal is better than a bad forbearance decision. We disagree. It's best know where you stand, and to make people that are hostile to your business reveal themselves publicly. In this case, there is no "other day" to save the fight.

Summer of love? Perhaps not ...

2006-06-21T13:12:00.000-05:00

Back on June 1, we suggested that Chairman Martin would be able to utilize his newly-constituted majority (with Commissioner McDowell coming on board) to begin pushing through a number of controversial items.

Today, however, the Commission officially withdrew from consideration a controversial "multi-cast must carry" order that Chairman Martin supported. Apparently Commissioner McDowell could not support the order as drafted, and accordingly the item was pulled from the agenda of today's Open Meeting.

Vonage: Verizon's latest target of "fear uncertainty and doubt"?

2006-06-19T14:13:00.000-05:00

Verizon apparently has sued Vonage for patent infringement related to certain Verizon patents on VoIP-related services.

We suspect this move is as much about Verizon creating "fear, uncertainty, and doubt" for Vonage and its shareholders as anything. This blog has been no great friend to Vonage, but come on, Vonage has been doing business basically the same way for years. We find it curious to say the least the Verizon held its lawsuit until now.

We'll be interested to see if Verizon goes after other providers, like SunRocket, 8X8, Comcast, Level3, Net2Phone, and AT&T for that matter. If Vonage is really infringing, countless other service providers and possibly equipment manufacturers must be too.

Verizon has a history of using the legal and regulatory process to disrupt its competitors, and that may be what's going on here. Remember when Verizon scared the FCC into sticking Nextel with an extra BILLION DOLLARS in fees as part of its spectrum reallocation? Bummer.

If you get in Verizon's crosshairs, watch out. They have a ton of money, and huge number of underutilized lawyers ... a poisonous synergy, to say the least.

DC Circuit upholds FCC's Triennial Review Remand Order

2006-06-16T09:09:00.000-05:00

Earlier this morning the US Court of appeals for the DC Circuit upheld the FCC's Triennial Review Remand Order, in which the FCC set forth its standard for evaluating whether and to what extent BOCs and other ILECs need to make unbundled network elements available to competitors.

The opinion in Covad Communications Co. v. FCC was written by Judge Sentelle, who noted that the FCC "has thrice attempted -- unsuccessfully -- to implement the 'unbundling' provision of the Telecommunications Act of 1996 ... [and] we conclude the Commission's fourth time is a charm."

XO's forbearance petition ... the forbearance shoe is on the other foot

2006-06-14T09:19:00.000-05:00

Coming up quick in the FCC queue is an XO forbearance petition, which will be "deemed granted" on June 23 unless the FCC otherwise issues an order resolving it.

More interesting than the substance of the petition is the political dynamic emerging among the Commissioners.

With Commissioner McDowell recusing himself (due to his role at Comptel), our sources tell us that a 2-2 tie exists, with Chairman Martin and Commissioner Tate opposing XO's petition, and Commissioners Copps and Adelstein prepared to let the petition take effect through the "deemed granted" provision of the statute.

Back in March, Chairman Martin used the "deemed granted" provision of the statute to let a Verizon forbearance petition take effect by operation of law. This outraged the Commissioners Copps and Adelstein. But in a reversal of fortune, Commissioners Copps and Adelstein are now in the "deemed granted" driver's seat on the XO petition.

In Washington, where you stand often times depends on where you sit.

To the extent the XO petition is "deemed granted," we'll be watching for a couple of things:

-- Statements by Commissioners Copps and Adelstein explaining why "deemed granted" is appropriate in this case, but not in the Verizon case

-- Statements by Chairman Martin and Commissioner Tate explaining the opposite

-- Any changes in positions in court filings at the DC Circuit, where CLECs have opposed use of "deemed granted" and Verizon has supported it

As usual, we're in the land of "things that make you go 'hmmmm'...."

Wall Street Journal on Pulver

2006-06-13T08:48:00.000-05:00

Today's Wall Street Journal has a nice piece on Jeff Pulver, the founder of Pulver.com and organizer of the well known VON conferences. If you're a reader of Jeff's blog you already know that he's been talking lots about how IP is revolutionizing video. In fact, if you attended VON San Jose in March you likely scored yourself a Slingbox, which allows you to control and watch your Tivo/DVR real-time over any broadband connection. It's a fantastic technology, but will no doubt be set upon by industries with a vested interest in keeping content confined to a specific time and place. Get one now and enjoy it while you can.

FCC Result-Oriented Decision Upheld Again...

2006-06-13T08:23:00.000-05:00

We finally had a chance to review the decision that was released by the D.C. Circuit on Friday in American Council on Education v. FCC , which upheld the FCC’s ruling that VoIP providers and broadband service providers can be subjected to the lawful intercept provisions Communications Assistance for Law Enforcement Act (CALEA).

The American Council on Education challenged the FCC ruling on three grounds: (1) its application of CALEA to VoIP; (2) its application of CALEA to broadband services; and (3) its application of CALEA to "private networks." The court shot down ACE's challenges on all counts and agreed with the FCC's decision to treat broadband Internet access services as an "information service" for the purposes of relieving Bells and cable companies of traditional telecom regulation in the Brand X case, but treating the same broadband Internet access services as"telecom services" for the purposes of the CALEA statute. It seems like the D.C. Circuit is more than willing to endorse whatever results oriented decision the FCC slops together to get where it wants to go.

No Net Neutrality and Vonage Short Sellers...Oh My!

2006-06-09T07:40:00.000-05:00

The Bells dodged a Freaky Friday upset on the net neutrality vote when the House passed the Barton bill late last night on a 321-101 vote. The Markey amendment, which sought to add some teeth to the bill's "network neutrality" provisions, failed 269-152. See you see, Wednesday's vote to allow the floor consideration of the amendment was all a short bad dream for the Bells.

In the continuing saga that is the fall-out from the Vonage IPO, the Wall Street Journal is reporting this morning that "Securities regulators have launched an investigation into how short sellers may have played a role in the steep decline in the stock price" of Vonage. The article says that for now the investigation is being conducted by the regulatory unit of the New York Stock Exchange, which sent a letter to trading houses yesterday "asking questions about how the dealers may have facilitated short sales." If the news on Vonage continues in this vein we could have enough for a beach read by the end of the summer.

Interesting Twist in Net Neutrality Fight on the Hill

2006-06-08T08:34:00.000-05:00

Maybe it was because it was the day after 6/6/06, or maybe some other supernatural phenomenon was occurring, but yesterday the Bells suffered a minor set-back when the House Rules Committee approved a rule allowing full House consideration of the net neutrality amendment sponsored by Ed Markey of Massachusetts, the ranking Democrat on the Energy and Commerce Telecommunications and the Internet Subcommittee.

The Markey amendment (supported by Microsoft Corp., Google Inc. and public interest groups who count Moby and Pat Robertson as members) would prevent broadband network providers from prioritizing traffic and essentially impose common carriage obligations on them. That is, under the Markey broadband network providers could not favor their own online traffic or make business deals with some Internet companies to guarantee faster access to consumers. The Barton bill, as written, would allow such deals.

The full House vote on the Barton bill is scheduled for tomorrow. Stay tuned to see if the Bells have a Freaky Friday or if things return to normal...

AT&T/BellSouth Merger Comments Are In and...

2006-06-06T15:43:00.000-05:00

We've reviewed the comments filed Monday in the FCC's AT&T/BellSouth merger docket. The sparse number of comments filed by carriers one would typically expect to see reflects not only how much the industry has consolidated in the last 5 years, but also reflects the feeling of inevitability that the merger will be approved, as well as exhaustion among players.

The more interesting comments, filed by Clearwire and Sprint Nextel and other wireless players, discuss the combined company's warehousing of spectrum and the significant weight that the new post-merger AT&T Wireless (the company is dumping the Cingular brand) will carry in the marketplace. We're betting that any conditions placed on the merger by the FCC will be focused more on wireless concerns and less on issues of the traditional wireline carriers.

Chairman Martin at Globalcomm ...

2006-06-06T07:05:00.000-05:00

Yesterday, FCC Chairman Martin spoke at Globalcomm, and he offered a pretty clear summary of where he wants to go (or not go) in the short term. Here are a few quick take aways

-- Adelphia, Comcast, Time Warner ... don't expect any merger conditions
-- Net neutrality ... don't expect anything in addition to the FCC actions in the SBC/AT&T and Verizon/MCI mergers ... BellSouth could be brought into the mix as part of the SBC transactions
-- Video franchising relief for the Bells will continue to pick up steam

Assessing USF on VoIP ... Questions, Questions, Questions...

2006-06-02T07:41:00.000-05:00

As reported by a number of folks, the FCC is poised to assess federal universal service charges on interconnected VoIP providers, like Vonage, Sunrocket, and cable operators.

We haven't seen any reports on the FCC's legal theory for doing so, but we expect an interesting read once the order comes out.

Here are few things to think about ....

In the FCC's 2004 Vonage Order (appeal pending at the 8th Circuit), the FCC stated that Vonage's service is interstate and that it is either a telecommunications service or an information service.

If VoIP is an interstate telecommunications service, then it would seem that 100% of revenues would be subject to USF, rather than 65% as reported in the press. If it's an information service, then it's hard to see how any USF gets assessed at all (numbers-based flow through aside).

A "telecommunication service" finding on VoIP would be interesting for a number of other reasons too.

For example, "telecommunications service" finding would seem to resolve in Time Warner's favor its interconnection dispute with the South Carolina Public Service Commission (which denied Time Warner a CLEC license), which is pending at the FCC.

As another example, this would be the first time that the FCC has established a software application as a "telecommunications service." What's ironic is that this software-based "telecommunications service" can only be utilized over an unregulated "information service" -- cable modem or DSL (neither of which are subject to USF).

Software = telecom service; physical network facilities = information service?

Fascinating stuff ... either way, the FCC is sure to be heading to some court of appeals to defend this one. And given the kluge of results-oriented decisions leading up to this point, our money is on the appellants.

2006: The FCC's Summer of Love?

2006-06-01T07:50:00.000-05:00

With the confirmation of Rob McDowell, Chairman Martin now has a full complement of Commissioners (and a Republican majority for the first time since assuming the Chairmanship) and it appears that the Chairman plans to use Commissioner McDowell's honeymoon period to move several very high profile and controversial items that have been simmering on the back burner for a long while.

Among the items rumored to be on what promises to be a very full agenda for the FCC's June 15 meeting are: Media ownership rules (altering the longstanding rules that prohibited a company from owning a television station and a daily newspaper in the same market); Must-carry rules (imposing rules requiring cable operators to carry broadcaster's digital programming signals); and Universal Service rules that mandate that VoIP providers pay USF on 65% of their traffic and increasing the wireless safe harbor from 28.5% to 37.1% of revenues.

Each of these items is independently controversial, but Chairman Martin appears to have calculated that there will never be a better time to address these issues than while Commissioner McDowell is fresh and unscathed by back and forth that would have taken place during even a few months on the Commission.

Congratulations to Commissioner McDowell!

2006-05-30T08:40:00.000-05:00

Our Congratulations go out to Rob McDowell, who recieved Senate confirmation as an FCC Commissioner last Friday.

AOL and Microsoft making moves into the online ad space...

2006-05-25T06:51:00.000-05:00

Internet-based advertising has been on the upswing for a while, and we're seeing some big companies take different approaches to entering the space.

A week ago, AOL announced its acquisition of Lightningcast, a pioneer of on-line streaming video advertising and software that targets advertising to consumers on-line. On-line ad revenue has been a bright spot for many web portals, and it seems to make sense for AOL to expand into this line of business.

Today, the WSJ reports that Microsoft is looking at acquiring Third Screen Media, one of the first companies to develop web-like advertising over mobile phones. Your phone either has (or will have) Microsoft software riding on it, so why not have advertiser use Microsoft software to reach mobile users? Maybe a good way to avoid "do not call" regs.

In the scheme of things, each of these deals is small but they highlight the on-going evolution of both companies and the revenue opportunity of wired advertising.

Upside-downside ... Vonage completes first day of trading

2006-05-24T15:26:00.000-05:00

After being pummeled in the press for weeks, Vonage (VG) completed its first day of public trading today.

On the upside, Vongage raised nearly $500 million.

On the downside, the stock priced at $17 per share, but closed at $14.85, down nearly 13% -- the weakest first day performance of any IPO this year.

Given the substantial negative press from Businessweek Online and other BOC-centric publications, we're not surprised by this one day result (see our May 5 post, for example).

That said, the past is the past, and VG has $500m to prove-in its business plan. The proof is in the profit!

FCC extends AWS Auction 66 deadlines

2006-05-22T08:47:00.000-05:00

Late Friday, the FCC issued a Public Notice extending the AWS Auction 66 deadlines. The new schedule is as follows ....

June 5, 2006; 12:00 p.m. ET -- Short-Form Application Filing Window Opens
June 19, 2006; 6:00 p.m. ET -- Short-Form Application Filing Window Deadline
July 17, 2006; 6:00 p.m. ET -- Upfront Payments (via wire transfer)
August 7, 2006 -- Mock Auction
August 9, 2006 -- Auction Begins

A lot of folks filed their Short-Forms a couple of weeks ago to comply with the FCC's previous schedule. If you didn't file but would like to, you now have a second bite at the apple. Plus, with a little research, you can get a pretty good sense of who is looking for licenses where.

Pat Robertson and Moby Walk Into a Bar....

2006-05-19T09:16:00.000-05:00

What do Michael Stipe of R.E.M, Gun Owners of America and the Feminist Majority have in common? There's no punch line. R.E.M., Gun Owners of America, the United Church of Christ and the Feminist Majority are all members of the Save the Internet Coalition and they had a big press conference here in DC yesterday.

Yesterday's Coalition press event was aimed at AT&T, Verizon, and other supporters of H.R. 5252, the Barton bill, which would allow broadband companies like AT&T and cable modem providers to provide "priority access" to the the sites of companies willing to pay for it; in effect tiered classes internet service for a fee. Barton's bill does not include the FCC's statement of net freedoms, but says the FCC can investigate charges of discriminatory pricing only on a case-by-case basis.

Net neutrality advocates were likely pleased yesterday when Rep. James Sensenbrenner, R-Wis., who chairs the House Judiciary Committee, introduced H.R. 5417, which would make it an antitrust violation to set preferential rates for Internet services. As National Cable & Telecommunications Association President Kyle McSlarrow said yesterday, "This [net neutrality] is now the number one issue." In fact, people on the Hill who didn't know how to turn on a computer six months ago are now passionately arguing the pros and cons of net neutrality. Stay tuned, the crowd is likely to get bigger and even more diverse...

Our Client Advisory on the FCC's new CALEA order

2006-05-17T15:50:00.000-05:00

Bottom line, the FCC has greatly expanded the reach of CALEA, but hasn't exactly said what companies need to do to comply....

AOL enters the Voice fray with AOL Phoneline

2006-05-16T12:39:00.000-05:00

Today, AOL (LLC) announced the launch of voice integrated with instant messaging. The free service appears to give users a NANP telephone number, voicemail, and unlimited in-bound calling. For a fee, you can make outbound calls as well.

It looks like Broadwing is the carrier that is handling PSTN mediation as well as 911 and other carrier-type obligations.

Looks like an interesting VoIP application. Among other things, however, we wonder whether a "numbers"-based Universal Service contribution requirement would kill this fledgling service, not that the powers that be would mind, or anything.

WSJ Editorial Board: FCC In Exile?

2006-05-15T12:16:00.000-05:00

It is clear to us that some members of the Wall Street Journal editorial board are harboring secret fantasies of becoming FCC commissioners. How else to explain the page's almost monthly pontification on some aspect FCC policy? Remember when they went after Chairman Martin for voting with the Democrats against then Chairman Powell's triennial review Bell give away?

Today's nugget of wisdom, entitled "More Spectrum, Please," blames the FCC's spectrum management policies for the poor showing of the United States in rankings of world-wide broadband deployment (an April report ranked the U.S. 12th in world behind Korea, Canada, Germany, Sweden, Belgium, Italy and a host of other nations).

The editorial is ironic for a couple of reasons. First, the report cited by the editorial is from none other than the Progress & Freedom Foundation, a Washington "think tank" that is usually more than happy to shill for the Bell companies. Second, FCC decisions over the past 6 years--all of which have made it harder for competitors to provide broadband services to compete with the Bells--are the single largest reason why the U.S. is in the cellar in broadband deployment and the Wall Street Journal was one of the biggest cheerleaders of those FCC actions.

If the Journal's editorial board members don't realize their FCC dreams I have every confidence they can put their propaganda skills to work elsewhere. Ed or Ivan, are you hiring?

Privacy benchmarks ... a new line of merger attack?

2006-05-12T06:54:00.000-05:00

By now, you all know that AT&T, BellSouth, and Verizon have been secretly handing over billions of call records to the federal government.

Only Qwest asked for DOJ or FISA court confirmation that providing this data would be lawful. Kudos to Qwest, as it shows that the house cleaning it went through actually resulted in some pretty effective controls.

In the late 90s, FCC merger analysis considered the "comparative benchmark" affect of mergers. As an industry segment consolidates, there are fewer companies (benchmarks) that policy makers can compare to determine what's reasonable for the industry. With multiple players in a segment, it's easier for the FCC to get a sense of what's what.

Yesterday's revelation that the country's biggest phone companies are routinely handing over massive amount of customer data should spur privacy rights advocates and consumer groups to bring comparative benchmark issues to the forefront of the FCC's analysis of the proposed AT&T/BellSouth merger.

Hey Wonks, It's About Enforcement, Not Regulation...

2006-05-10T07:46:00.000-05:00

Yesterday Verizon's Tom Tauke threatened to do for any net neutrality legislation what Verizon and the other Bells did for the 1996 Telecom Act: destroy it through endless litigation. Verizon and AT&T loooove competition! Just ask them, or check out the 2 full page ad in today's Washington Post. But competition with an effective enforcement mechanism?! Gasp!

In the current net neutrality debate, the one item missing is enforcement. Our Hill "idea guys" apparently don't care much for "implementation." If there's one lesson to be learned from the 1996 Telecom Act it's that enforcement matters. And lack of enforcement will kill an industry.

The old AT&T and MCI failed colossally by focusing on policy, not enforcement.

Case in point ... interconnection agreements. Even though the Communications Act (and Telecom Act) make it clear that parties can go directly to federal court for violations of the Act and federal contracts made under the Act, the BOCs pretty successfully bogged competitors down into an endless mire of state public service commission proceeding.

Name one case, just one case in the last 10 years where a federal district court awarded damages to a competitor under an interconnection agreement?

Right, we don't know of one either, and it's not because the BOC is so nice.

The closest we know of is case filed at a state commission 1999 that is STILL on-going. There the competitor obtained a bad faith finding against the BOC. The best hopes is that the competitor will be able to pursue a damages claim in federal court by the end of this year - over seven years after the initial filing.

WAKE UP WONKS ... it's about enforcement. Tom Tauke will filibuster you to death in policy debates, and haul you to the D.C. Circuit at the drop of a hat. Even if you win a round or two of the fight, you'll have nothing without a real means of enforcement.

Newsflash ... Universal Service and Intercarrier Compensation reform top the FCC's wireline agenda ...

2006-05-09T12:12:00.001-05:00

Top FCC folk yesterday reiterated that universal service and intercarrier compensation reform are at the top of their wireline agenda.

As some of you no doubt know, these same two items topped the FCC's wireline agenda a year ago, and we doubt very much that we will see any significant reform steps taken by the FCC this year. Not to get ahead of ourselves, but our first prediction for 2007 is that USF and Intercarrier Comp reform will top FCC's wireline agenda. Maybe the third time will be the charm.

Here's our back of the cocktail napkin math:

The NARUC GXX (used to be 11, but a bunch have dropped out) is trying to put together a legal analysis for its PIMP plan (Promote Incumbent Monopoly Payments plan -- thanks, J.S.!). In all likelihood, the PIMP plan will need to get vetted by NARUC at the summer meetings in mid-July. Even if it obtains unanimous NARUC approval, the earliest we see anything going to FCC is August, and no one is around DC in August. Maybe the FCC puts out a request for an additional round of comments in September, but maybe not. Either way, cable, wireless, CLECs, and consumer groups will all chime in against the PIMP throughout the fall, and we see little if any chance for any kind of comprehensive reform order this year.

USF reform strikes us as harder to pin down with precision. The bottom line is that the Hill is way out in front on this one. We see no upside for the Commission to take any action while there are so many bills floating around, especially right before an election. That said, it's conceivable that we could see an order after the 2006 elections, but we lay odds on 2007.

VoIP Price War or Rhetorical Point?

2006-05-05T07:57:00.000-05:00

Earlier this week, Verizon cut the price of its "VoiceWing" VoIP product to $24.95 in an ostensible effort to "compete" with Vonage and others.

In our personal view, however, Verizon's move is as much about creating uncertainty for Vonage's upcoming IPO as anything else.

Sounds petty? Are we just conspiracy theorists? Nah.

Take a look at Verizon's history. Remember back in the day when Verizon publicy accused MCI/WorldCom of being a vast criminal conspiracy to get favorable terms in the bankruptcy proceeding? That was before Verizon bought them. Remember when Verizon threatened to have the FCC Commissioners criminally prosecuted during NexTel's spectrum reallocation proceeding? That one cost NexTel $1 billion.

Verizon plays hardball, and no one should forget it. As for VoiceWing? Verizon has only about 50,000 customers and does basically nothing to market the service -- why cannibalize your own base? Moreover, the new price ain't all that. SunRocket, to name one competitor, offers a similar VoIP product for $17 per month.

Listen for the drumbeat of Verizon and others as the Vonage IPO approaches, and watch for planted articles.

FCC Applies CALEA Obligations to Facilities-Based VoIP and Broadband Carriers

2006-05-03T17:50:00.000-05:00

At its meeting today the FCC took another step toward applying traditional wireline regulatory obligations to facilities-based interconnected VoIP and broadband providers as it adopted its Second Report and Order and Memorandum Opinon & Order (Order) relating to the implementation of the Communications Assistance for Law Enforcement Act (CALEA). CALEA, which was adopted in 1994, is designed to ensure that communications equipment is compatible with the ability of law enforcement agencies to utilize wiretaps and electronic surveillance.

The full order has not yet been released, but the FCC's press release gives a broad summary of the actions taken by the Commission today:

The Order held that all facilities-based VoIP and broadband carriers must be in compliance with CALEA requirements by May 14, 2007;
The Order requires all facilities-based VoIP and broadband carriers to sumbit interim reports to the FCC to ensure that they will be in compliance by the May 14, 2007 deadline and orders carriers implicatedin the first CALEA order to be in comliance with those rules within 90 days of the effective date of today's Order;
The FCC held that it would leave standards-setting to other standards setting bodies and not promulgate its own;
The FCC restricted the ability of manufacturers to obtain additional compliance deadline extensions (which to date have been routinely applied for and granted), and clarifies how carriers may obtain reimbursement for CALEA compliance costs;
The Order clarifies that the FCC may take independent enforcement action to ensure compliance with its CALEA rules;
The FCC declined to adopt a CALEA surcharge to allow carriers to defray implementation costs (in light of the plethora of federal state, local and other surcharges, including, no doubt, USF).

Put Another Log on the Fire: Another Telecom Act Rewrite Bill

2006-05-02T13:17:00.000-05:00

Yesterday Senate Commerce Committee Chairman Stevens circulated a wide ranging draft telecom overhaul bill. It joins several other measures under consideration on Capitol Hill, all of which are primarily aimed at giving the Bell companies video franchising relief (because, you know, the Bells are all about competing these days). In addition to streamlining Bell video entry by forcing local franchising authorities to act upon franchise applications within 30 days, the bill addresses a host of other thorny issues:

universal service: the bill expands the fund by subjecting for the first time cable, VoIP, intrastate, and broadband to USF obligations; creates a $500M rural broadband fund; prevents the FCC from limiting USF support to a single line
VoIP interconnection: provides VoIP providers with a right to 251 type interconnection right;
net neutrality: the bill essentially punts and requires the FCC to "study" the issue for 5 years and come up with legislative proposals for Congressional consideration;
municipal broadband: the bill precludes state legislatures and cities from adopting measures to prevent cities from deploying their own broadband networks;
white spaces: requires the FCC to complete its rulemaking and allow unlicensed devices to use available spectrum not used by broadcasters;
digital tv: requires the FCC and the industry conduct consumer outreach and education, including labeling sets that are not digital and permits cable operators to transmit analog signal for any broadcast station requesting to ensure that broadcast signals are available to cable subscribers with analog TVs.

Given the competing proposals on the Hill and the truncated session this election year, the odds of this bill passing in anything approaching this form are very uncertain.

Who needs 251(g) and 254(g), anyway?

2006-05-01T07:39:00.000-05:00

On Thursday April 27, 2006, Core Communications, Inc. filed a petition with the FCC seeking forbearance from rate regulation under section 251(g) (ILEC access charge preservation) and 254(g) (IXC rate averaging and integration). Grant of Core's petition would place all FCC-regulated traffic under section 251(b)(5) for rate regulation purposes. It would also eliminate implicit subsidies to rural LECs by enabling interexchange carriers to recover access charges from their end users, which is now prohibited by the Commission's rate averaging and integration rules. Click here for a copy of Core's petition.

For all you intercarrier compensation aficionados, April 27 was the fifth anniversary of the FCC's ISP Remand Order.

FCC Releases Proposed Rulemaking on DE Rules

2006-04-27T08:45:00.000-05:00

On Wednesday the FCC released an FNPRM proposing revised rules regarding how bidding credits will be provided to "Designated entities" (DEs)(small and woman/minority owned small businesses or rural telcos). The FCC's proposed rules prohibit the awarding of DE credits to companies that have a "material relationship" with large in-region incumbent wireless companies, but the FCC is considering whether to expand the ban to other large companies like big manufacturers of equipment, cable companies or others. Some stakeholders who had urged reform of the DE rules are not at all happy with the revised rules, but the Chairman said in his statement that the revised rules will ensure that small businesses are able to compete in the upcoming spectrum auctions. Comment deadlines on the new rules have not been established yet.

The Numbers, Please...

2006-04-27T08:12:00.000-05:00

The California PUC is planning to open a new rulemaking by the end of May to re-examine all of the rules and funding mechanisms for California's extensive stand-alone state universal service and public policy programs (i.e. Calif. Teleconnect, Deaf and Disabled). Interestingly, AT&T is urging the CPUC to get rid of its surcharges on intrastate telecom revenues, and urging adoption of a numbers-based USF funding mechanism based on working telephone numbers that mirrors the proposal being advocated by some at the federal level. AT&T's proposal was unveiled in comments that were filed on a CPUC Staff Report in advance of a two-day workshop held in San Francisco on Tuesday and Wednesday this week, led by Commissioner Rachelle Chong and the assigned ALJ. The same questions that are greeting the federal proposal were raised at the workshop, including whether the contribution base would be adequate and whether or how the CPUC could assess surcharges on California numbers utilized by VoIP carriers that are not being used for intrastate access or in any way associated with California.

What a JIP!

2006-04-26T15:32:00.000-05:00

For all of you negotiating with the "New AT&T," push hard on the new JIP language in their master services agreements. Let them know that their regulatory folks are running around the FCC saying that the JIP isn't useful for anything and that it would be expensive and wasteful to implement. Their FCC advocacy to the contrary, AT&T's business people are holding firm that carriers have to pass JIP in the SS7 stream.

Pot, meet kettle.

What Consensus? NARUC Intercarrier Compensation Taskforce Update

2006-04-25T07:11:00.000-05:00

Last Friday, the NARUC Intercarrier Compensation Taskforce announced that "it had received support from enough stakeholders for the industry plan to proceed with a Task Force review."

Since that press release, consumer advocates, cable operators, wireless providers, and competitive LECs have announced that they did not endorse the so-called "Missoula Plan."

So, how much support is "enough" to have an "industry plan"? Apparently, support from AT&T (or should we say AT&T, BellSouth, and SBC) and some rural LECs is enough to create "consensus." From our perspective, this "industry plan" is probably better characterized as an incumbent LEC plan.

The leadership of the NARUC Taskforce has done an admirable job of trying to develop a consensus plan over the last two years. But an incumbent LEC plan is an incumbent LEC plan.

The "Courageous CLEC" Fights for Real Interconnection Agreement Enforcement under the 1996 Act

2006-04-24T10:32:00.000-05:00

Core Communications, Inc., dubbed the Courageous CLEC by Jonathan Askin of pulver.com, is heading to the Court of Appeals for the Third Circuit to fight for real interconnection agreement enforcement as required by the 1996 Telecom Act.

A key issue is whether a CLEC must pursue relief at a state public service commission before going to federal court. The BOCs have effectively precluded real interconnection agreement enforcement by forcing CLECs to litigate at the state commission before going to federal court, even though nothing in the 1996 Telecom Act requires such a wasteful step. State PUCs generally have no authority to award damages, hear tort claims, or even require reasonable discovery. By creating a legal morass at the state commissions, BOCs have precluded competitors from virtually any successful enforcement action.

In his March 21, 2006 opinion, federal judge Timothy Savage stated that "strict construction of the" 1996 Act "demonstrates that Congress did not intend the states to make decisions regarding contractual disputes between parties to such agreements." He also strongly suggested that private rights of action to enforce contractual rights under federal interconnection agreement belong in the courts, not state executive agencies. Click here to take a look at Judge Savage's opinion.

Parties interested in effective enforcement should watch this case carefully. Without effective enforcement, even the best FCC rules on net neutrality, VoIP, and other matters will be effectively worthless.

Effective private enforcement of interconnection agreements and other federal requirements is critical to non-ILEC segments of the industry, and the Courageous CLEC is giving the industry another chance give us all the 1996 Act that Congress intended, not what the BOCs have made it.

FCC Establishes Pleading Cycle On Georgia PSC Section 271 UNE Rate Petition

2006-04-21T16:07:00.000-05:00

On April 18 the Georgia PSC (GPSC) filed a petition asking the FCC to bless the rates it established for Section 271 UNEs. The full petition is available here. Specifically, the petition for declaratory ruling seeks clarification that the GPSC is not preempted by federal law from setting just and reasonable rates under Section 271 of the Act, for local switching, high capacity loops and transport, and line sharing. In the alternative, the if FCC decides that GPSC is in fact preempted from setting Section 271 rates, the GPSC asks the FCC to find that the rates it has already adopted for high capacity loops and transport and line sharing are just and reasonable, and that BellSouth is obligated to abide by those rates in Georgia. If the Commission instead finds that the rates ordered by the GPSC are not just and reasonable, and that the GPSC is preempted from setting rates in this context, the GPSC asks the Commission to set just and reasonable rates for BellSouth's high capacity loops and transport, and line sharing in Georgia based on the record in the state proceeding the GPSC attached to its petition. Comments on the petition are due May 19, 2006 and reply comments are due June 5, 2006. Please contact us if you would like more information or like to file comments in the proceeding.

Final AWS Auction Rules Published in Today's Federal Register

2006-04-21T14:55:00.000-05:00

The rules for the upcoming AWS auction, which the FCC adopted at its April 12 meeting, are published in today's Federal Register. The auction of licenses in the 1710-1755 MHz and 2110-2155 MHz bands, used mostly for mobile wireless services, is scheduled to begin on June 29, 2006. The FCC's final bidding rules are a departure from past auctions. To address concerns that some bidders may have colluded in the past, the FCC adopted "blind bidding" rules. That means that the identity of bidders will be kept secret following each round of the auction unless certain competitive auction thresholds are met. Under the new blind bidding approach, the FCC will disclose at the end of each round of bidding the gross amount of every bid placed but not the identity of the bidder. The rules are designed to prevent bidders from signaling each other or from coordinating bids. This also is the first auction subject to the Commercial Spectrum Enhancement Act, which requires that auction proceeds must be sufficient (at least 110 percent) of estimated relocation costs of eligible federal entities. The winning bids for this auction must total at least $2.06 billion for the FCC to close the auction and award the licenses.

Ross Buntrock