Washington Monitor
Volume XVII, No. 20 November 2, 2009

FCC ADOPTS LONG-ANTICIPATED “NET NEUTRALITY” NOTICE OF PROPOSED RULEMAKING

On October 22, the FCC adopted and released its much anticipated Notice of Proposed Rulemaking (NPRM) on net neutrality, seeking comment on the best means of preserving a “free and open Internet” across all broadband platforms. In its self-described quest to preserve the open internet by balancing protections for expected network uses with safeguarding the potential for unexpected ones, the Commission has proposed high-level rules specifying impermissible practices that it believes will best promote an Internet environment of widespread innovation and light-handed regulation. The NPRM seeks comment on several items.

First, the Commission proposes to codify the Four Internet Principles that were articulated in its 2005 Internet Policy Statement. This codification is meant to remove any question of whether or not these principles are enforceable by the Commission. Specifically, under the draft rules, subject to reasonable network management, a provider of broadband Internet access service may not:

Prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet.
Prevent any of its users from running the lawful applications or using the lawful services of the user’s choice.
Prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network.
Deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers.

The Commission also proposes to codify a fifth principle that would require a broadband Internet access service provider to treat lawful content, applications, and services in a nondiscriminatory manner, and a sixth principle requiring disclosure of information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in the NPRM.

The Commission makes clear in its NPRM that the principles would not supersede any obligation a broadband Internet access service provider may have – or limit its ability – to deliver emergency communications or to address the needs of law enforcement. The Commission also affirms that the six proposed principles apply to all platforms for broadband Internet access, and then inquires on how, in what time frames or phases, and to what extent the principles should apply to non-wireline forms of Internet access, including, but not limited to, terrestrial mobile wireless, unlicensed wireless, licensed fixed wireless, and satellite.

While FCC Chairman Julius Genachowski succeeded in securing support from the two GOP minority members, effectively moving the regulatory process and debate to the next level, both republican Commissioners dissented on the factual and legal basis the NPRM uses to justify proposing the rules. FCC Commissioner McDowell stated he did not share the majority’s view that the Internet is “broken,” or that the government is the best tool to fix it. He was particularly concerned with the potential for government regulation to impede innovation and investment, as well as the example stricter internet regulation would set internationally. In addition, McDowell disagreed with the premise that the Commission has the legal authority to regulate Internet network management. FCC Commissioner Baker echoed these same sentiments.

Initial comments on the NPRM are due January 14, 2010. Reply comments are due March 5, 2010.

See Preserving the Open Internet; Broadband Industry Practices, Notice of Proposed Rulemaking, GN Docket No. 09-191, WC Docket No. 07-52, FCC 09-93 (rel. Oct. 22, 2009).

U.S. SENATE COMMITTEE HOLDS OVERSIGHT HEARING ON NTIA’s & RUS’ IMPLEMENTATION OF BROADBAND STIMULUS PROGRAMS

On October 27, the U.S. Senate Committee on Commerce, Science, and Transportation held a full committee hearing on Oversight of the Broadband Stimulus Programs in the American Recovery and Reinvestment Act. The witnesses included: Lawrence Strickling – Assistant Secretary for Communications and Information, National Telecommunications and Information Administration (NTIA), Jonathan Adelstein – Administrator, Rural Utilities Service (RUS), and Mark Goldstein – Director, Physical Infrastructure Issues, General Accounting Office (GAO).

Chairman Jay Rockefeller (D-WV) began the hearing by reiterating the main goal of the American Recovery and Reinvestment Act – to reinvigorate the nation’s communications networks in order to make a difference in people’s lives. Chairman Rockefeller went to say that in order to be fair to applicants, work still needs to be done to simplify the grant programs. He also suggested while there may be lingering doubts that the Agriculture Department was the right place to locate broadband policy, RUS was ready to address the matter. Finally, Chairman Rockefeller suggested that additional thought was still needed on how the FCC’s broadband plan can be harmonized with the NTIA and RUS stimulus programs.

Larry Strickling, Assistant Secretary for Communications and Information at NTIA, provided a snapshot of the first round applications received by NTIA. He noted that almost 2,200 applications were received requesting nearly $28 billion in funding for proposed broadband projects reaching all 50 U.S. States, five territories, and the District of Columbia. Applications came in from a diverse range of parties including State, tribal and local governments; nonprofits; industry; small businesses; anchor institutions, such as libraries, universities, community colleges, and hospitals; public safety organizations; and other entities in rural, suburban, and urban areas.

Mr. Strickling also stated that broadband mapping application packages were received from every State, territory, and the District of Columbia, meaning that all governments that were eligible to apply for grants did so. NTIA has already awarded some grants and will continue to announce awards on a rolling basis. The one change Mr. Strickling noted was that funding for the state mapping and data collection efforts will be for a two-year period, as opposed to the five-year period originally contemplated. Mr. Strickling also announced that initial grant awards would be delayed by approximately one month. NTIA’s self-imposed deadline had been early November, but because of the complexity of the programs and the demands on the agencies, Mr. Strickling explained that a few more weeks are required.

RUS Administrator Jonathan Adelstein focused much of his remarks on the success RUS has historically had with broadband programs, no doubt directly in response to the concerns about RUS handling a portion of the grant program. Mr. Adelstein also addressed some challenges RUS has encountered while reviewing applications for the initial round of funding. In particular, and one of the key issues discussed at the hearing, was that applicants have struggled with the requirements of the “remote” definition for last-mile rural remote project. Mr. Adelstein indicated the current definition of 50 miles from an urban area might not be the only way to define remote. Mr. Adelstein assured the Committee that RUS is mindful of its obligation to commit funds no later than September 30, 2010, and suggested the best way to achieve that goal may be to compress the planned for second and third rounds into a single round. This would give applicants additional time to create stronger proposals.

Both NTIA and RUS agreed that there would be changes in criteria for the next round of funding, but until the review of all the initial round applications is completed, the agencies would not know exactly what those changes will be.

Mark Goldstein, Director, Physical Infrastructure Issues, GAO, discussed the GAO’s findings on the challenges with which NTIA and RUS have been confronted. Specifically, Mr. Goldstein stated that both agencies face scheduling, staffing, and data challenges in evaluating applications and awarding funds. Mr. Goldstein described the steps the agencies have taken to meet these challenges, such as the development of the two-step evaluation process. The first step is to initially evaluate and score an application based on criteria in the Notice of Funds Availability (NOFA) in order to narrow the pool of applicants, and the second step is to conduct due diligence to verify all the information contained in the application.

Some of the main concerns Mr. Goldstein highlighted were that the agencies lack the needed time to apply lessons learned from the first funding round and that the agencies face a compressed schedule to review new applications. GAO believes consolidating three rounds of funding into two would help avoid the risk of awarding funds to projects that are not sustainable.

AT&T ANNOUNCES WILLINGNESS TO ACCEPT CONDITIONS AS PART OF CENTENNIAL ACQUISITION

On October 22, AT&T sent a letter to the Chief of the FCC’s Wireless Telecommunications Bureau in the FCC’s ongoing AT&T-Centennial Communications merger proceeding, making eight specific commitments for the stated purpose of expediting approval of the pending merger transaction.

The first commitment relates to roaming obligations. AT&T indicates that it will honor Centennial’s existing agreements with other carriers, and AT&T specifically commits to continue the rates, terms, and conditions in the Centennial agreements (as of the merger closing date) for the full term of the existing agreements. The commitment also provides that any carrier with less than 10 million subscribers that has a roaming agreement in effect with Centennial (as of the merger closing date) may elect to continue to obtain roaming services under that agreement (in those areas where the agreement applied as of the merger closing date), for the later of: (1) a period of 48 months after the merger closing date; or (2) the full term of the carrier’s agreement with Centennial.

AT&T points out that the commitment does not limit its right to reasonably manage its networks to support the provision of 3G or 4G services to customers, and the commitment must not be interpreted to restrict AT&T’s ability to modify, upgrade, or sunset Centennial’s existing network, features, or functionalities, as AT&T implements its network technology of choice in areas covered by Centennial’s roaming agreements. AT&T also specifies that the roaming commitment does not apply to: (1) any properties other than those AT&T is acquiring through the Centennial merger; and (2) any properties that must be divested.

Finally, AT&T states that, notwithstanding any obligation in the roaming commitment, AT&T will operate and maintain a CDMA network in Puerto Rico and the U.S. Virgin Islands for 18 months after the merger closing date, after which AT&T will have no obligation to operate or maintain a CDMA network in those territories.

The remaining seven commitments made by AT&T all relate to its business arrangements with América Móvil S.A.B. de C.V. (AMX), including consulting arrangements, the seconding and assignment of AT&T employees to AMX, information flow safeguards, alterations of AMX’s special board committee, restrictions placed on AT&T representatives on the AMX Board of Directors, and the appointment by AT&T of a compliance officer to oversee compliance with the various AMX commitments.

On October 13, the U.S. Department of Justice approved AT&T’s $944 million acquisition of Centennial Communications Corp., subject to the condition that AT&T divest assets to address competition concerns in eight markets in Louisiana and Mississippi. AT&T had previously announced an agreement to sell five of these markets to Verizon Wireless in May 2009. The three remaining divestiture markets are CMA 205 (Alexandria, LA), CMA 456 (LA RSA 3-DeSoto), and CMA 501 (MS RSA 9-Copiah).

RCA MEETS WITH FCC’s WIRELESS BUREAU ON ISSUES OF CONCERN TO RCA MEMBERS

On October 27, RCA representatives met with FCC Wireless Bureau representatives, including Chief Ruth Milkman, to encourage the FCC to take action on RCA’s Petition for Rulemaking in the FCC’s exclusive handset proceeding, to adopt rules that would extend automatic roaming obligations to data services and eliminate the in-market exception, and to discuss conditions that should be imposed on AT&T should the Commission decide to conditionally permit AT&T’s acquisition of Centennial. RCA made clear that the conditions should be significantly enhanced from those already offered by AT&T.

On the issue of exclusive handset arrangements, RCA representatives provided FCC staff with recent data showing that, in September 2009, 46 of the 50 top-selling handsets in the United States were subject to exclusive handset arrangements involving one of the nation’s four largest carriers. RCA encouraged Bureau staff to move forward expeditiously with a Notice of Proposed Rulemaking to investigate the widespread use and anticompetitive effects of exclusivity arrangements between commercial wireless carriers and handset manufacturers, and, as necessary, adopt rules that prohibit such arrangements when contrary to the public interest. RCA representatives also discussed the consumer and competitive harms being caused from the growing use of exclusive handset arrangements by the nation’s largest carriers.

On data roaming, RCA representatives encouraged the Bureau staff to promptly take action that would extend the FCC’s automatic roaming rules to data services. RCA representatives explained that the ability for rural consumers to have access to data services while roaming is a critical service offering to consumers and communities, and essential to the competitive viability of regional and rural carriers. RCA representatives also made clear that the expansion of automatic roaming obligations to include data is a basic and fundamental building block of achieving the Administration’s goal of providing broadband to rural America, consistent with the Commission’s stated goals in developing its National Broadband Plan. RCA representatives explained that there will be a detrimental impact to broadband deployment in rural America if automatic roaming obligations are not extended to data services.

On the proposed acquisition of Centennial by AT&T, RCA representatives explained that the Commission should condition grant of the merger, at a minimum, by requiring AT&T to honor the same roaming conditions that were imposed on Verizon Wireless as a condition of its acquisition of Alltel, including language that makes clear that post-acquisition AT&T’s obligations with respect to its roaming partners’ choice of roaming agreement applies to the entirety of the selected agreement and to the future service areas and spectrum bands of each carrier. In addition, RCA noted that grant of the merger should be conditioned upon AT&T’s commitment to limit its exclusive handset arrangements to a maximum of six months, at which point all of its handsets would immediately be made available to regional and rural carriers, consistent with terms of a similar commitment already made by Verizon Wireless.

UPCOMING REGULATORY DEADLINES

November 4, 2009 – Comments due on FCC Public Notice seeking comments on the cost and availability of middle and second mile transport services, particularly in rural, unserved and underserved areas, as part of its efforts to develop a National Broadband Plan (NBP), as required by the American Recovery and Reinvestment Act of 2009. See FCC Seeks Comments on Middle and Second Mile Access for the National Broadband Plan (NBP #11), Public Notice, GN Docket Nos. 09-47, 09-51, 09-137, DA 09-2186A1 (rel. Oct. 8, 2009).
November 5, 2009 – Reply comments due on Fostering Innovation and Investment Notice of Inquiry; See In the Matter of Fostering Innovation and Investment in the Wireless Communications Market; A National Broadband Plan for Our Future, Notice of Inquiry, GN Docket Nos. 09-157, 09-51, FCC 09-66 (rel. Aug., 27, 2009); see also Commission Revises Applicable Ex Parte Procedures for Wireless Innovation and Investment Notice of Inquiry and Extends Comment and Reply Comment Deadlines, GN Docket Nos. 09-157, 09-51, FCC 09-73 (rel. Sept. 10, 2009)
November 12, 2009 – Reply comments due to the FCC on USAC’s Requests for Guidance; See Comment Sought on Request for Universal Service Fund Policy Guidance Requested by the Universal Service Administrative Company, Public Notice, WC Docket Nos. 05-337, CC Docket No. 96-45, DA 09-2117 (rel., Sept. 28, 2009).
November 13, 2009 – Reply Comments due on Sufficiency of Spectrum Allocations for the National Broadband Plan; See Comment Sought on Spectrum for Broadband, NBP Public Notice #6, GN Docket Nos. 09-47, 09-51, 09-137, DA 09-2100 (rel. Sept. 23, 2009).
November 16, 2009 – Comments due on FCC Public Notice seeking comments on the notion of establishing a “broadband clearinghouse” for easy access to broadband “best practices,” as part of its efforts to develop a National Broadband Plan, as required by the American Recovery and Reinvestment Act of 2009. See FCC Seeks Comments on a Broadband Clearinghouse for the National Broadband Plan (NBP No. 10), Public Notice, GN Docket Nos. 09-47, 09-51, 09-137, DA 09-2167 (rel., Oct. 2, 2009).
January 14, 2010 – Comments due on FCC “Net Neutrality” Notice of Proposed Rulemaking proposing six enforceable “net neutrality regulations applicable to providers of broadband Internet access services. See Preserving the Open Internet; Broadband Industry Practices, Notice of Proposed Rulemaking, GN Docket No. 09-191, WC Docket No. 07-52, FCC 09-93 (rel. Oct. 22, 2009).
March 5, 2010 – Reply comments due on FCC “Net Neutrality” Notice of Proposed Rulemaking proposing six enforceable “net neutrality regulations applicable to providers of broadband Internet access services. See Preserving the Open Internet; Broadband Industry Practices, Notice of Proposed Rulemaking, GN Docket No. 09-191, WC Docket No. 07-52, FCC 09-93 (rel. Oct. 22, 2009).

The Washington Monitor is published by the Rural Cellular Association (RCA). The Washington Monitor is not intended to provide legal or business advice and may, despite good intentions, contain errors and omissions.

Disclaimer: RCA members should determine the applicability of all Federal Communications Commission rules and policies, as well as other information contained herein, to their own operations and consult their own counsel as may be appropriate. RCA assumes no responsibility for errors or omissions in The Washington Monitor.

Washington Monitor Volume XVII, No. 20 November 2, 2009