USTA and ACA Comment on FCC's NPRM on Exclusive Contract Prohibition of Program Access Rules

3/25. On March 20, 2012, the Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rulemaking (NPRM) [108 pages in PDF] regarding the exclusive contract prohibition of the program access rules.

See, stories titled "FCC Adopts NPRM on Exclusive Contract Prohibition of Program Access Rules" and "Commentary: Cablevision I and the Exclusivity Rule" in TLJ Daily E-Mail Alert No. 2,352, March 21, 2012.

Walter McCormick, head of the US Telecom, stated in a release that "Competition in the market for video services continues to develop, and consumers continue to enjoy numerous choices in terms of better service, newer technologies and lower prices. Revenue from the provision of video services has been shown to be a key driver supporting the economics of deploying robust broadband networks in higher cost areas."

But, he continued that "content remains king, and competition will not be able to thrive if cable companies are allowed to withhold certain essential programming, such as regional sports networks that allow consumers to see their favorite local sports teams."

McCormick wrote that "Initiating this rulemaking is an important step in ensuring consumers continue to enjoy the benefits of a competitive market."

Matthew Polka, head of the American Cable Association (ACA), which represents small cable operators, stated in a release that the "ACA commends the FCC for asking the right questions in the program access NPRM released yesterday. Importantly, the FCC asks whether the program access rules adequately address potentially discriminatory volume discounts, and if not, how to revise the rules to address these concerns."

The FCC wrote in this NPRM, citing comments filed with the FCC by the ACA and others, that small multichannel video programming distributors (MVPDs) "have expressed concern that cable-affiliated programmers charge larger MVPDs less for programming on a per-subscriber basis than smaller MVPDs due to volume discounts, which are based on the number of subscribers the MVPD serves. As a result, smaller MVPDs claim that they are placed at a significant cost disadvantage relative to larger MVPDs. Some commenters have claimed that this price differential is not cost-based because program production and acquisition costs are sunk; delivery costs do not vary; and administrative costs are not different. According to some commenters, without a basis in cost, this wholesale practice amounts to price discrimination." (Footnotes omitted.)

See for example, this ACA comment, beginning at page 17, and this ACA comment.

Polka added that "The FCC also seeks comment on whether and how to revise rules that address uniform price increases imposed by vertically integrated, cable operator-owned programmers."

The NPRM addresses volume discounts at paragraphs 98-100.

This ACA release states that "FCC regulations are flawed because they leave small operators with no more than a few remedies, if that, to combat vertically integrated suppliers of programming that demand discriminatory prices, terms, and conditions, and engage in other types of behavior barred by the rules".

The FCC's NPRM is FCC 12-30 in MB Docket No. 12-68, MB Docket No. 07-18 and MB Docket No. 05-192.

DC Circuit Issues Order in Proceeding Challenging FCC's BIAS Rules

3/23. The U.S. Court of Appeals (DCCir) issued an order in Verizon v. FCC, its consolidated proceeding on petitions for review and appeals of the FCC's December 2010 order adopting rules for the regulation of broadband internet access service (BIAS) providers' network management practices.

The FCC adopted this order, also know as the network neutrality order, on December 21, 2010, and released the text on December 23, 2010. See, Report and Order (R&O) [194 pages in PDF]. It is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52.

See also, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

Judicial review has been long delayed, largely as a result of dilatory tactics by the FCC, such as withholding publication of a notice in the Federal Register, and moving to hold all proceedings in abeyance.

All of the petitions for review and appeals have been consolidated in, and assigned by lottery to, the DC Circuit. However, the Court has yet to set a briefing schedule.

This March 23 order states as follows:

"It appearing that these consolidated cases present potential problems of duplicative briefing, it is
ORDERED, on the court's own motion, that the parties submit within 30 days of the date of this order, proposed formats for the briefing of these cases. The parties are strongly urged to submit a joint proposal and are reminded that the court looks with extreme disfavor on repetitious submissions and will, where appropriate, require a joint brief of aligned parties with total words not to exceed the standard allotment for a single brief. Whether the parties are aligned or have disparate interests, they must provide detailed justifications for any request to file separate briefs or to exceed in the aggregate the standard word allotment. Requests to exceed the standard word allotment must specify the word allotment necessary for each issue."

This case is Verizon v. FCC, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 11-1355. It is consolidated with Verizon v. FCC and USA, App. Ct. No. 11-1356, MetroPCS, et al. v. FCC, App. Ct. No. 11-1403, MetroPCS, et al. v. FCC and USA, App. Ct. No. 11-1404, and Free Press v. FCC and USA, App. Ct. No. 11-1411.

GAO Reports on National Security Risks of Reliance on Global IT Supply Chain

3/23. The Government Accountability Office (GAO) released a report [45 pages in PDF] titled "IT Supply Chain: National Security-Related Agencies Need to Better Address Risks".

This report states that "Reliance on a global supply chain introduces multiple risks to federal information systems and underscores the importance of threat assessments and risk mitigation. These risks include threats posed by actors -- such as foreign intelligence services or counterfeiters -- who may exploit vulnerabilities in the supply chain, thus compromising the confidentiality, integrity, or availability of the end-system and the information it contains. This in turn can adversely affect an agency's ability to carry out its mission." (Footnote omitted.)

This report does not identify or describe any actual exploitations that have already occurred.

The GAO examined policies and procedures at only five federal agencies, the Department of Energy (DOE), Department of Homeland Security (DHS), Department of Justice (DOJ), and Department of Defense (DOD). This report does not address polices and procedures at the Office of the Director of National Intelligence (ODNI), National Security Agency (NSA), Central Intelligence Agency (CIA), and Defense Intelligence Agency (DIA).

Nor does the report address supply chain vulnerabilities in the private sector.

It finds that the DOE and DHS "have not developed clear policies that define what security measures, if any, should be implemented to protect against supply chain threats."

It also finds that the DOE, DOJ, and DHS "have neither developed and documented procedures for implementing supply chain protection measures nor established monitoring capabilities that are necessary to verify compliance with, and the effectiveness of, these measures."

In contrast, the report finds that the DOD "has made greater progress by defining supply chain protection measures and implementing procedures".

The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold a hearing at 10:00 AM on March 27 titled "IT Supply Chain Security: Review of Government and Industry Efforts". The witnesses will be Gregory Wilshusen (GAO), Mitchell Komaroff (Department of Defense), Gil Vega (Department of Energy), Larry Castro (Chertoff Group), and Dave Lounsbury (The Open Group). See, notice.

House Commerce Committee Democrats Question Companies Regarding Smart Phone Theft

3/23. Rep. Henry Waxman (D-CA), Rep. Ed Markey (D-MA), and Rep. Anna Eshoo (D-CA) sent similar letters to communications carriers, handset manufacturers, and operating system developers regarding what they are doing, or could be doing, to combat rising theft of smart phones, and protect consumers from theft of personal and financial information.

See for example, letter to Apple.

See also, related story in this issue titled "House Democrats Introduce Bill to Enable Service Blacklisting and Data Erasure for Stolen Mobile Devices".

The three are senior members of the House Commerce Committee (HCC). Rep. Waxman is the ranking Democrat on the HCC. Rep. Eshoo (at left) is the ranking Democrat on the Subcommittee on Communications and Technology.

They wrote that theft of smart phones has increased. Then, "Thieves erase subscriber identity in formation and resell stolen phones for pro fit or use these phones to commit other crimes. The information on the stolen phones might also be utilized for nefarious purposes."

They added that "Without the ability to lock or wipe cell phone memory, victims of cell phone theft not only have to worry about replacing their device, but are also at risk of having their personal and financial information stolen."

Also, "These incidents of theft raise important questions about what role wire less providers, operating system developers, and handset manufacturers might play to combat cell phone theft and protect the personal and financial in formation stored in wireless devices from falling into the wrong hands."

The letters then propound numerous interrogatories, to be answered in writing by April 11, 2012.

For example, they state that "Law enforcement and others have suggested that the ability to disable remotely mobile devices would reduce or eliminate resale value and thus lessen the incentive for cell phone theft", and then ask, "What are your views on this technology as a deterrent to theft?"

They also ask, "If your company has knowledge that a specific phone has been reported stolen, do you allow such a phone to be subsequently reactivated with a different phone number?"

The also stated that "Australia has implemented a cell phone ``blacklisting´´ program in which phones that have been reported stolen are placed on a list and cannot be reactivated if an individual brings them in to a local carrier. This has significantly reduced cell phone theft in Australia." They then ask, "Would a similar program work in the United States?" (Footnote omitted.)

See also, HCC Democrats web page with a list of the 19 companies, and hyperlinks to the 19 letters. This page does not reference a letter to Huawei, which makes smartphones. However, this page does list AT&T, which sells Huawei's Impulse.

AT&T Reproves FCC Over Call Center Closures

3/23. T-Mobile USA closed seven call centers in the U.S. See, story titled "T-Mobile to close third of US call-centres" in Financial Times, March 23, 2012, by Paul Taylor.

The FT wrote that "Deutsche Telekom's struggling T-Mobile USA unit is to close almost a third of its US call-centres and eliminate a net 1,900 jobs as part of an effort to cut costs in the face of a decline in subscribers."

AT&T seized the occasion to criticize the Federal Communications Commission (FCC) for the manner in which is reviewed and condemned the proposed merger of AT&T and T-Mobile USA last year. That proceeding was WT Docket No. 11-65.

AT&T's Jim Cicconi stated in a release that "Yesterday, T-Mobile made the sad announcement that it would be closing seven call centers, laying off thousands of workers, and that more layoff announcements may follow. Normally, we’d not comment on something like this. But I feel this is an exception for one big reason -- only a few months ago AT&T promised to preserve these very same call centers and jobs if our merger was approved. We also predicted that if the merger failed, T-Mobile would be forced into major layoffs."

Cicconi continued that "At that time, the current FCC not only rejected our pledges and predictions, they also questioned our credibility. The FCC argued that the merger would cost jobs, not preserve them, and that rejecting it would save jobs. In short, the FCC said they were right, we were wrong, and did so in an aggressive and adamant way."

AT&T had represented to the FCC in its merger review proceeding that "T-Mobile non-management employees whose job functions are no longer required because of the merger will be offered another position in the combined company" and the merger "will not result in any job losses for U.S.-based wireless call center employees of T-Mobile or AT&T who are on the payroll when the merger closes".

On about December 1, 2011, the FCC released a document [157 pages PDF scan in 20 MB] titled "Staff Analysis and Findings". The Commission did not vote to adopt this document, or to reject the merger or the license transfers associated with the merger. However, this document roundly criticized the proposed merger, and AT&T and T-Mobile's arguments.

This document discussed the likely impact of the proposed merger on employment in paragraphs 259-265. The FCC did not actually reject or accept AT&T's representation that it would not lay off call center employees. Rather, it argued that the commitment was not significant because call centers have high turnover. See, Paragraph 263, and footnotes.

See also, stories titled "FCC Staff Releases Items in AT&T T-Mobile Merger Proceeding" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2011, and "Cicconi Calls Genachowski's Staff Report on AT&T T-Mobile Merger an Advocacy Piece" in TLJ Daily E-Mail Alert No. 2,317, December 1, 2011.

Cicconi stated that "Rarely are a regulatory agency's predictive judgments proven so wrong so fast. But for the government's decision, centers now being closed would be staying open, workers now facing layoffs would have job guarantees, and communities facing turmoil would have security."

Cicconi wrote that one lesson of this is the importance of "regulatory humility". He said that "The FCC may consider itself an expert agency on telecom, but it is not omniscient. And when it ventures far afield from technical issues, and into judgments about employment or predictions about business decisions, it has often been wildly wrong.

He said that the other lesson is that when the government is wrong, "the price of a bad decision is too often paid by someone else."

Gigi Sohn, head of the Public Knowledge (PK), which opposed the merger, stated in a release that "It was truly unfortunate that a top AT&T official blamed some layoffs at T-Mobile on the government's blocking of AT&T's takeover of its competitor. T-Mobile started losing customers and distributors when the takeover started. Their ads and marketing were frozen as the deal dragged on, and customers left. Now they face getting those customers back and investing in their network."

People and Appointments

3/23. President Obama announced that the U.S. is nominating Jim Yong Kim, President of Dartmouth College, to be President of the World Bank. The current President is Robert Zoellick, former U.S. Trade Representative. See, White House news office release. Historically, World Bank Presidents have been U.S. citizens.

More News

3/23. The U.S. China Economic and Security Review Commission (USCESRC) released a paper [71 pages in PDF] titled "The Chinese Communist Party and Its Emerging Next-Generation Leaders". The author is the USCESRC's John Dotson.

3/23. The Government Accountability Office (GAO) released a report [7 pages in PDF] titled "To Date, DISH Network Is Cooperating with the Court-Appointed Special Master’s Examination of Its Compliance with the Section 119 Statutory License".

3/23. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft NIST IR-7622 [97 pages in PDF] titled "Notional Supply Chain Risk Management Practices for Federal Information Systems". The deadline to submit comments is May 11, 2012.

House Democrats Introduce Bill to Enable Service Blacklisting and Data Erasure for Stolen Mobile Devices

3/22. Rep. Eliot Engel and others introduced HR 4247 [LOC | WW], the "Cell Phone Theft Prevention Act of 2012", a bill that would require service providers to not provide service to a stolen phone.

Rep. Engel (at right) stated in a release that "It makes no sense to reward the thief by continuing service on a stolen cell phone. It's simple common sense to say the victim of a crime isn't responsible for service they are no longer receiving. If service is cut off on a stolen phone, it just becomes a useless brick."

First, the bill would mandate that service providers not continue to provide service to a stolen phone. The phone owner would have to first file a complaint with police.

The bill would add a new section to the Communications Act that provides that "A provider of commercial mobile service or commercial mobile data service may not provide service on a mobile electronic device that has been reported to such provider as stolen", either by "the person who holds the account with respect to such service, if such person submits to such provider a copy of a report made to a law enforcement agency regarding the theft", or by "by another provider of commercial mobile service or commercial mobile data service".

Second, the bill would also require services providers to enable phone theft victims to erase data on their stolen phones.

It provides that "A provider of commercial mobile service or commercial mobile data service on a mobile electronic device shall make available to the person who holds the account with respect to such service the capability of deleting from such device, from a remote location, all information that was placed on such device after its manufacture."

To enable these mandates, the bill would require that any covered device manufactured in, or imported into, the US contain a unique identifier.

This bill would cover cell phones, smart phones, tablet computers, and any other devices for which commercial mobile service or commercial mobile data service is provided. However, it would exempt prepaid service, and any service for which "the consumer does not have a direct relationship with the provider of commercial mobile service or commercial mobile data service".

The bill would not take effect for two years.

The bill was referred to the House Commerce Committee (HCC). Rep. Engel is a member. The two original cosponsors are Rep. Jerrold Nadler (D-NY) and Delegate Eleanor Norton (D-DC).

See also, related story in this issue titled "House Commerce Committee Democrats Question Companies Regarding Smart Phone Theft".

FCC CSRIC Makes Recommendations Regarding ISP Cyber Security

3/22. The Federal Communications Commission (FCC) announced in a release that its Communications Security, Reliability and Interoperability Council (CSRIC) "adopted recommendations for voluntary action by Internet service providers (ISPs) to combat three major cyber security threats, including botnets, attacks on the Domain Name System (DNS), and Internet route hijacking". See also, second release, and speech by FCC Chairman Julius Genachowski.

Neither the FCC nor the CSRIC released the text of any recommendations.

These FCC releases, and Genachowski's speech, describe three CSRIC reports that contain a set of proposals, directed primarily at commercial providers of internet access services, compliance with which would be voluntary.

The FCC does not now propose to adopt any rules, or initiate any adjudicatory proceedings. Genachowski stated that "Solutions to cyber threats require the multiple stakeholders of the Internet community to work together and develop practical solutions to secure our networks. The goal isn't regulation".

He also stated that AT&T, CenturyLink, Comcast, Cox, Sprint, Time Warner, and Verizon "have already committed to implement the core recommendations of all three reports".

The FCC Chairman also predicted that the "CSRIC’s voluntary cybersecurity measures will soon become the industry standard operating procedures".

See, full story.

DOJ Files FCA Complaint Against AT&T for IP Relay Reimbursements

3/22. The Department of Justice (DOJ) filed a civil complaint in the U.S. District Court (WDPenn) against AT&T alleging violation of the federal False Claims Act (FCA) in connection with its receipt of federal payments for IP Relay calls by international callers who were ineligible for the service.

The DOJ explained in a release that "IP Relay is a text-based communications service designed to allow hearing-impaired individuals to place telephone calls to hearing persons by typing messages over the Internet that are relayed by communications assistants (CAs) employed by an IP Relay provider. IP Relay is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to IP Relay users. The FCC, through the TRS Fund, reimburses IP Relay providers".

The DOJ release states that the complaint alleges that "AT&T knowingly adopted a non-compliant registration system that did not verify whether the user was located within the United States" and that "AT&T continued to employ this system even with the knowledge that it facilitated use of IP Relay by fraudulent foreign callers"

The Federal Communications Commission (FCC) stated in a release that it "welcomes the Department of Justice's filing, which arises from an investigation that the Commission's Office of Inspector General actively assisted."

The FCC added that "Fraudulent IP Relay practices are a serious problem the Commission has been addressing, and the Commission's Enforcement Bureau also has ongoing investigations of IP Relay practices. We will continue to work with DOJ and other law enforcement authorities to protect these critical services from abuse."

This case is U.S. ex rel. Lyttle v. AT&T Corp., D.C. No. 2:10-cv-1376, U.S. District Court for the Western District of Pennsylvania..

House Judiciary Committee to Hold Hearing on IP Bills

3/22. The House Judiciary Committee (HJC) announced that its Subcommittee on Crime, Terrorism, and Homeland Security will hold a hearing on two intellectual property bills on Wednesday, March 29, 2012 -- HR 4216 [LOC | WW], the "Foreign Counterfeit Prevention Act", and HR 3668 [LOC | WW], the "Counterfeit Drug Penalty Enhancement Act of 2011".

HR 3668 would address the problem of counterfeit drugs, some of which are sold through the web sites dedicated to infringing activity that were targeted by the stalled the SOPA and PIPA bills. See, HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", and S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", "PROTECT IP Act", or "PIPA".

HR 4216 would enable Customs and Border Protection (CBP) to share information with, and thereby obtain assistance from, rights holders and injured parties regarding the importation of infringing products and circumvention devices. A similar provision was included as Section 8 of the stalled PIPA.

HR 3668 and Increased Penalties for Trafficking in Counterfeit Drugs. Rep. Patrick Meehan (R-PA) introduced HR 3668 on December 14, 2011. See also, HR 3468 [LOC | WW], introduced by Rep. Meehan on November 17, 2011. He is not a member of the HJC. However, Rep. Linda Sanchez (D-CA), co-sponsor of the bill, is a member.

The Senate passed its version of this bill on March 8, 2012, by voice vote. See, S 1886 [LOC | WW], also titled the "Counterfeit Drug Penalty Enhancement Act". See also, story titled "Senate Approves Bill to Increase Penalties for Trafficking in Counterfeit Drugs", in TLJ Daily E-Mail Alert No. 2,348, March 7, 2012.

HR 3668 and S 1886 are simple bills that would merely amend 18 U.S.C. § 2320(b) to increase penalties for trafficking of counterfeit drugs. They would increase the maximum penalties for individuals to $4 Million fines, and 20 years in prison. For corporations, the maximum fine would be raised to $10 Million.

Currently, the statute imposes the same maximum penalties for trafficking in counterfeit drugs and trafficking in counterfeit clothes and fashion accessories.

Sen. Patrick Leahy (D-VT) discussed S 1886 in the context of Google and online sales of counterfeit drugs in the Senate, and at a SJC meeting. He said that "we have taken steps to advance legislation to prevent the online sale of counterfeit drugs with the PROTECT IP Act."

Sen. Leahy, who is the lead sponsor of both S 1886 and the PIPA, added that "Unfortunately, some of the same large companies that through their businesses make money out of selling these drugs that end up killing Americans, were among those who tried to block, and did block, at least temporarily, the PROTECT IP Act. I hope that maybe people will start thinking about what is best for the American people, and not just what is best for their bottom line".

HR 4216 and Cooperation Between CBP and Rights Holders. Rep. Ted Poe (R-TX) and Rep. Steve Chabot (R-OH) introduced HR 4216 three days ago, on March 20, 2012.

This bill would amend the Trade Secrets Act, 18 U.S.C. § 1905, to allow the Department of Homeland Security's Customs and Border Protection (CBP) to share information and samples with rights holders and injured parties regarding infringement and circumvention devices.

See, related story in this issue titled "Rep. Poe and Rep. Chabot Introduce Bill to Allow Customs to Share Information with Rights Holders".

The hearing is scheduled for Wednesday, March 28, 2012, at 10:00 AM.

Judicial Appointments

3/22. The Senate Judiciary Committee (SJC) held an executive business meeting at which it again held over consideration of the nominations of Richard Taranto to be a Judge of the U.S. Court of Appeals (FedCir), Robin Rosenbaum to be a Judge of the U.S. District Court (SDFl), and Gershwin Drain to be a Judge for the U.S. District Court (EDMich). All three nominees are again on the agenda for the SJC's executive business meeting of Thursday, March 29, 2012. See, notice.

3/22. The Senate confirmed Rudolph Contreras to be a Judge of the U.S. District Court (DC). See, Congressional Record, March 22, at Page S2007.

3/22. The Senate confirmed Ronnie Abrams to be a Judge of the U.S. District Court (SDNY) by a vote of 96-2. See, Roll Call No. 58.

3/22. The Senate confirmed David Nuffer to be a Judge of the U.S. District Court (DUtah) by a vote of 96-2. See, Roll Call No. 57.

People and Appointments

3/22. The Federal Communications Commission (FCC) announced the appointment of 14 members to the FCC's Technical Advisory Board for First Responder Interoperability. See, FCC release.

FCC Adopts NPRM on Interoperability in 700 MHz Bands

3/21. The Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rulemaking (NPRM) regarding interoperability in the lower 700 MHz bands.

FCC Chairman Julius Genachowski wrote in his statement that "Since the completion of the 700 MHz auction in 2008, we have seen the emergence of two non-interoperable band classes for devices. This was an unanticipated development, and it is having consequences that raise real concerns."

This NPRM proposes no rules. It is in the nature of an inquiry that is intended to prompt AT&T, Verizon Wireless, and others to develop interoperability on their own.

FCC Commissioner Mignon Clyburn wrote in her statement that she wants either an industry solution, or an FCC mandate, by the end of the year.

Background. The FCC auctioned this spectrum in early 2008, as part of Auction 73. See, stories titled "FCC Closes 700 MHz Auction" in TLJ Daily E-Mail Alert No. 1,734, March 20, 2008, and "FCC Releases Details of 700 MHz Auction" in TLJ Daily E-Mail Alert No. 1,735, March 24, 2008.

AT&T and Verizon Wireless (VW) acquired most of the lower 700 MHz spectrum. Smaller companies acquired smaller slices. AT&T's winning bids in Auction 73 totaled over $6 Billion. VW's winning bids totaled more than $9 Billion. All bids totaled over $19 Billion.

The smaller companies have complained to the FCC that AT&T and VW have developed two distinct band classes, without interoperability, and that this has harmed their ability to develop their spectrum, and diminished consumer choice.

For example, there is now one version of Apple's iPad that works only with AT&T's service, and another that works only with VW's. Apple stated in a March 19 release regarding its latest iPad that "4G LTE is supported only on AT&T and Verizon networks in the U.S."

For a comparison of the two offerings, see for example, March 15, 2012, CNET story titled "AT&T vs. Verizon, 4G LTE networks battle it out", by Lynn La.

A group called the 700 MHz Block A Good Faith Purchaser Alliance filed a Petition for Rulemaking with the FCC on September 29, 2009. The members are Cellular South, Cavalier Wireless, Continuum 700, and King Street Wireless. The FCC assigned the number RM-11592. (The FCC has terminated this with the opening of this rulemaking proceeding, which is WT Docket No. 12-69.)

The lower 700 MHz band spectrum is located at 698-746 MHz. It consists of three blocks of 12 megahertz each of paired spectrum -- Lower A, B, and C Blocks -- and two blocks of 6 megahertz each of unpaired spectrum --Lower D and E Blocks. The Lower A Block is adjacent to Channel 51, at 692-698 MHz, which has been allocated for TV broadcast operations at power levels of up to 1000 kW.

Filings with the FCC by AT&T and VW on this issue assert that the potential for harmful interference is the cause of this lack of interoperability.

The upper 700 MHz spectrum includes the infamous upper D Block, which the FCC attempted but failed to auction in 2008. The just enacted incentive auction legislation reallocated the upper D Block -- 10 megahertz of paired spectrum at 758-763 MHz and 788-793 MHz -- for an interoperable public safety broadband network. See, HR 3630 [LOC | WW], the "Middle Class Tax Relief and Job Creation Act of 2012", and stories titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012, and "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012. That act is now Public Law No. 112-96.

FCC NPRM. The just released NPRM states that "Since the completion of the 700 MHz auction and the subsequent clearing of the spectrum, however, certain Lower 700 MHz A Block licensees have asserted that the development of two distinct band classes within the Lower 700 MHz band has hampered their ability to have meaningful access to a wide range of advanced devices. The result, they argue, is that this spectrum is being built out less quickly than anticipated (and in some cases not at all), so that a large number of Lower 700 MHz A Block licensees are unable to provide the level of service and degree of competition envisioned at the close of the auction and as contemplated by the Communications Act. The 700 MHz band, at 70 megahertz, one of the largest commercial mobile service bands, is the only non-interoperable commercial mobile service band." (Parentheses in original. Footnote omitted.)

This NPRM contains no proposed rules. Nor does it offer a description of a proposed mandate. Rather, it merely states that "we initiate this rulemaking proceeding to promote interoperability".

The NPRM states that "We will evaluate whether the customers of Lower 700 MHz B and C Block licensees would experience harmful interference -- and if so, to what degree -- if the Lower 700 MHz band were interoperable."

The NPRM adds, "We also explore the next steps should we find that interoperability would cause limited or no harmful interference to Lower 700 MHz B and C Block licensees, or that such interference can reasonably be mitigated through industry efforts and/or through modifications to the Commission's technical rules or other regulatory measures."

Statements by Commissioners. FCC Chairman Genachowski wrote in his statement that "I hope and expect that industry will take the lead in developing an interoperability solution to allow for additional deployment of mobile broadband networks and increase the choice of providers available to consumers. An industry-led solution would be the preferable solution, and multiple stakeholders have indicated that a unified band class can be win-win if interference concerns are addressed. Of course, we are launching this proceeding because no solution has been reached yet and we will be closely monitoring progress in addition to developing a record as part of this proceeding."

FCC Commissioner Robert McDowell wrote in his statement that "Although I support today's action, I hope that all interested parties will come to the negotiating table and work in good faith to develop their own solution. Government mandates should be a last resort."

He added that "we might not be here today were it not for earlier mandates handed down in July of 2007 from which I dissented." See, McDowell's statement [6 pages in PDF] dissenting in part from the FCC's Second Report and Order [312 pages in PDF], which adopted service rules for the 700 MHz auction. The FCC adopted that order on July 31, 2007, and released the text on August 10, 2007. It is FCC 07-132.

FCC Commissioner Mignon Clyburn (at right) wrote in her statement that when the FCC wrote service rules for the 700 MHz spectrum in 2007, it "did not anticipate there would be a standard setting process, which would divide the lower 700 MHz band, and would impede the ability of devices for A Block licenses to work on B Block and C Block networks."

She wrote that "This lack of interoperability means fewer device and service choices for consumers. Fewer competitive options result in higher prices."

The FCC's "failure to anticipate this particular anticompetitive development means the Commission needs to move as quickly as possible to achieve true interoperability".

She also stated that "the industry has already had more than four years to find a solution. This industry knows how to arrive at interoperability." She added that "until the splintering of the lower 700 MHz band occurred, the entire mobile wireless industry had been operating with the understanding that this Commission expects interoperability within all spectrum bands."

"This NPRM provides sufficient notice about the rules the Commission might adopt if the industry does not achieve true interoperability across the lower 700 MHz band".

She concluded, "I look forward to an industry solution, or the adoption of rules, by the end of this calendar year."

This NPRM is FCC 12-31 in WT Docket No. 12-69. Initial comments will be due within 60 days of publication of a notice in the Federal Register (FR). Reply comments will be due within 105 days of such publication.

Reaction to FCC NPRM on Interoperability in 700 MHz Bands

3/21. The Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rulemaking (NPRM) regarding interoperability in the lower 700 MHz bands. AT&T responded by criticizing proposals for an FCC interoperability mandate. Others, including holders of smaller amounts of this spectrum, argued that the FCC should impose such a mandate.

AT&T's Joan Marsh stated in a release on March 21 that "interference challenges" have "prevented both deployment and interoperability in the lower 700 MHz band".

"These challenges are well-documented and real. The high power broadcasts that are permitted in channel 51 and in the lower E-block create the potential for significant technical and deployment impediments in the neighboring lower 700 MHz blocks."

Marsh argued that "Some have argued that the technical and physical limitations of the band should simply be ignored, and have called for sweeping interoperability mandates. Such mandates would be an unprecedented regulatory intrusion into a carrier’s right to manage network and device deployment in a manner best suited to serve its customers."

She also asserted that "Such mandates would defy the consensus-driven 3GPP standards process that has standardized the band in a manner meant to address the real interference challenges present there.  And such mandates would do nothing to resolve the very serious limitations that act as a prohibition on lower A-block deployment in over 30 markets nationwide."

3GPP is the 3rd Generation Partnership Project.

The Rural Cellular Association (RCA) has been active in submitting filings with, and meeting with staff of, the FCC, on behalf of members that own smaller slices of the lower 700 MHz spectrum.

The RCA stated in a release on March 21 that "voluntary efforts to resolve these interference claims are not sufficient to facilitate the development of devices in the Lower 700 MHz spectrum band. An FCC requirement is necessary to prevent AT&T from further using its monopsony power to impede Lower A Block licensees from deploying 4G LTE mobile broadband throughout the U.S. An interoperability requirement will greatly benefit consumers, encourage mobile carriers to build out their networks, and help restore competition to the market."

Steve Berry, head of the RCA, stated in this release that RCA members "are unable to build out their networks and compete with others moving to 4G/LTE because of a lack of interoperability".

The Public Knowledge's (PK) Harold Feld stated in a release that "We are pleased the FCC has started down the path to help consumers by furthering competition. Consumers should be able to use expensive smartphones operating on the newest, fastest, spectrum bands on any carrier's service, and not have to buy another phone if they change companies."

The Free Press's Matt Wood stated in a release that "We hope and trust that the process begun today will lead to sensible interoperability requirements for the Lower 700 MHz band and beyond. Such rules could address any legitimate technical issues but should still prevent AT&T and Verizon from dividing this prime mobile broadband spectrum into exclusive technological enclaves. Waiting for the wireless industry to solve this problem on its own seems a vain exercise when we have already been waiting four years for such solutions, and none have been forthcoming from these duopoly providers."

He wrote that "Manufacturers like Apple produce two incompatible versions of the same product for the U.S. market -- an AT&T-only iPad and a Verizon-only iPad -- that have different types of radios built into them. Unwilling to bank solely on their ability to lock down customers and handsets by means of exclusive contracts, AT&T and Verizon have used their market clout to hardwire exclusivity into the devices."

Wood argued that "A large part of LTE's promise was the unification of technical standards. Those standards should give consumers the chance to switch providers without discarding their old phones or tablets, and give more carriers the chance to compete by offering cutting-edge devices."

FCC Adopts NPRM Regarding Use of MSS Spectrum for Terrestrial Broadband

3/21. The Federal Communications Commission (FCC) adopted a Notice of Proposed Rulemaking and Notice of Inquiry ((NPRM and NOI) [84 pages in PDF] regarding allowing more flexible use of 40 MHz of spectrum currently assigned to the Mobile Satellite Service (MSS) in the 2 GHz band.

The NPRM contains proposed rules changes that would facilitate the use of this spectrum for terrestrial mobile broadband. This NPRM proposes that the 2000-2020 MHz and 2180-2200 MHz spectrum bands be hereafter called "AWS-4".

This item also includes a NOI regarding a National Telecommunications and Information Administration (NTIA) proposal to reallocate 1695-1710 MHz from federal to commercial use.

FCC Chairman Julius Genachowski wrote in his statement that "With this item, we are moving to free up 40 MHz of 2 GHz spectrum for mobile broadband". He added that "Today's NPRM proposes freeing up spectrum by removing regulatory barriers and providing for flexible use of MSS spectrum. The specific barriers we propose to remove are rules that have limited this spectrum to satellite use."

In 1997 the FCC reallocated 70 megahertz of spectrum in the 2 GHz band to Mobile Satellite Service (MSS), a service involving transmission between mobile earth stations and one or more space stations. However, there remains little use of this spectrum.

In 2010 the Dish Network received approval from the U.S. Bankruptcy Court (SDNY) to acquire spectrum from two bankrupt spectrum licensees -- DBSD Satellite Services and TerreStar. Dish has stated in filings with the FCC that it wants to use this spectrum to build a nationwide broadband network.

The FCC's International Bureau (IB) approved the license transfer applications. However, the IB denied requests for waivers of MSS/ATC rules. See, March 2, 2012, FCC/IB order.

AT&T, for example, had argued that any conversion of the 2 GHz MSS band to terrestrial broadband operations should be conducted through rulemaking, not an ad hoc waiver process. See, AT&T's November 3, 2011, filing.

The just released NPRM pertains to allowing Dish to use this spectrum for terrestrial broadband.

The Public Knowledge's (PK) Harold Feld stated in a release that the FCC "is encouraging broadband competition by opening up terrestrial satellite spectrum for another potential competitor to help consumers".

The Computer and Communications Industry Association (CCIA) stated in a release that "The rulemaking today comes after the FCC faced incumbent carrier pressure to deny a routine waiver earlier this month that would have allowed Dish to deploy mobile handsets that didn't talk to satellite transmitters -- just ground towers. The waiver would have allowed Dish to develop the handsets and deploy them more cheaply to customers, making them a more viable competitor to Verizon and AT&T whose handsets also just talk to ground towers."

Cathy Sloan of the CCIA stated that "The FCC needs to move expeditiously on this proceeding -- because by definition it is slowing down competition in the form of new competitive entry into this marketplace. We can appreciate the pressure the FCC is under from those that don't want more competition, and would rather force Dish into less favorable arrangements with existing providers."

See also, the CCIA's November 3, 2011, filing with the FCC.

AT&T Bob Quinn stated in a release on March 21 that "We are encouraged by the Commission's action today to facilitate mobile internet use in the 2 GHz band. The events of the last two years have made clear that the challenges associated with finding additional spectrum for commercial use are significant."

Quinn added that "Without additional spectrum in the hands of internet infrastructure companies, consumers will not be able to realize all the mobile internet has to offer. It is therefore imperative that the Commission expeditiously work to free up additional spectrum and unlock the value in bands that are currently under-utilized because of interference or service rule limitations."

Christopher McCabe of the CTIA stated in a release that "CTIA commends the FCC for taking steps to bring the 2 GHz Mobile Satellite Spectrum to market for mobile wireless broadband services."

He added that the "CTIA has long called for the FCC to open a rulemaking as the next step in determining how the 2 GHz spectrum should be most effectively deployed. CTIA and our members look forward to working with the Commission to find ways to harness this underutilized spectrum to benefit the nation's wireless consumers."

The FCC also issued a release that describes this item. See also, statement by FCC Commissioner Robert McDowell, and statement by FCC Commissioner Mignon Clyburn. This item is FCC 12-32 in WT Docket No. 12-70, ET Docket No. 10-142, and WT Docket No. 04-356. Initial comments will be due within 30 days of publication of a notice in the Federal Register (FR). Reply comments will be due within 45 days of such publication.

Genachowski Forms Incentive Auction Task Force at FCC

3/21. Federal Communications Commission (FCC) Chairman Julius Genachowski announced the formation of an "Incentive Auction Task Force", and named Ruth Milkman its head.

Genachowski wrote in a statement that "Implementing incentive auction authority involves most of the Bureaus and Offices at the" FCC.

An incentive auction provides for the sharing of spectrum auction proceeds with the licensees, such as TV broadcasters, who voluntarily relinquish that spectrum.

The Congress passed legislation in February that gave the FCC incentive auction authority. It was contained within HR 3630 [LOC | WW], the "Middle Class Tax Relief and Job Creation Act of 2012".

See also, stories titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012, "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012, and "House and Senate Negotiators Reach Agreement on Spectrum Legislation" in TLJ Daily E-Mail Alert No. 2,339, February 17, 2012.

House Judiciary Subcommittee Holds Hearing on REAL ID Act

3/21. The House Judiciary Committee's (HJC) Subcommittee on Crime, Terrorism, and Homeland Security held a hearing titled "Secure Identification: The REAL ID Act's Minimum Standards for Driver's Licenses and Identification Cards".

Title II of the REAL ID Act imposes federal mandates on the states' identification document process, and mandates state electronic databases and data sharing. The Act sets minimum standards for states, penalizes states that do not implement its standards, but nevertheless relies upon states to implement it, at their own cost. Many states have refused to comply.

There is nominally a Department of Homeland Security (DHS) imposed extended deadline of January 15, 2013, for compliance. The DHS representative at the hearing said that "we have no plans to extend the deadline".

House Republicans used the hearing to prod the Obama DHS to be more active on REAL ID Act implementation and compliance.

Rep. James Sensenbrenner (R-WI), the Chairman of the Subcommittee, presided at the hearing. He said that "I authored REAL ID". He said that the DHS "is hindering its implementation by the states", and has not allocated sufficient resources to its implementation.

Sensenbrenner (at right) said that "states need to understand that ... secure identification is a DHS priority". He acknowledged that "there has been a disconnect between the DHS and the states".

He also said that the law has lead to the improvement of state ID laws, even in those states that have rejected the REAL ID Act. He urged the DHS to give better guidance on how to comply, and not to extend the deadline for compliance.

Rep. Lamar Smith (R-TX), the Chairman of the HJC, stated that "it seems that this administration has very little interest" in addressing this issue.

He said that the Obama administration has "undermined the REAL ID Act whenever possible", such as by extending deadlines for compliance. He also noted that Secretary of Homeland Security Janet Napolitano's support for its repeal.

He concluded that unless the Act is implemented, "we set ourselves up for another attack" like those of September 11, 2001.

Both Rep. Sensenbrenner and Rep. Smith focused on the use of improved identification systems to thwart terrorist attacks. They did not discuss the use of identification documents by employers in their capacity of de facto enforcers of federal immigration laws.

No other Republicans spoke at this hearing.

Rep. Bobby Scott (D-VA), the ranking Democrat on the Subcommittee, said that said that the REAL ID Act makes it more difficult for terrorists to obtain identification, but it "also makes it more difficult for everybody else", including law abiding citizens.

He said that there is resistance from the states, which have budgetary and privacy concerns. He said that many states view it as an unfunded mandate, and have stated that they will not comply with it.

He also noted that privacy advocates argue that the REAL ID Act creates "de facto national ID card", and raises privacy concerns.

He said too that "millions of Americans could be at risk of identity theft", and that it could make it harder for citizens to vote.

Rep. John Conyers (D-MI), the ranking Democrat on the Subcommittee, enumerated numerous groups and individuals who oppose the identification mandates of the REAL ID Act, including the ACLU, Consumer Federation of America (CFA), Consumer Watchdog, former Rep. Bob Barr (R-GA).

He too complained that it is a huge unfunded mandate on the states. He added that it raises privacy concerns, because it requires states to collect much personal information, and then make it available to many entities.

The witness panel included three persons who have worked to implement the REAL ID Act's identification mandates. See, prepared testimony of David Heyman, the current DHS Assistant Secretary for Policy, prepared testimony of Stewart Baker, who was DHS Assistant Secretary for Policy during the Bush administration, and prepared testimony of Darrell Williams, who was in charge of REAL ID Act issues at the DHS.

The sole critic of the REAL ID Act on the panel was David Quam ( National Governor's Association). See, prepared testimony.

Heyman (at right) stated that securing IDs is an imperative, and that states have made progress in implementing the identification provisions of the REAL ID Act.

He added that while states have "principal responsibility" for implementation, the DHS has provided grants to states. He also said that states and the DHS are building the technical infrastructure to verify source documents. He said that the DHS has "issued guidance documents", and will continue to issue guidance documents. He also said that the DHS will continue to engage in "outreach".

He said that states "have made significant progress", and "we commend them".

Williams described the DHS's outreach activities. He also said that states need greater certainty and clearer guidance.

He said in response to questions from Rep. Scott that fraudulent IDs are issued by state departments of motor vehicles, via corruption and bribery. However, he added that the REAL ID Act attempts to address this by setting standards for states.

Baker, who returned to the law firm of Steptoe & Johnson after his stint at the DHS, argued that the real privacy issue is that identity theft is facilitated by "fake or fraudulent drivers licenses". He also said that states should better protect the data that they collect.

He stated that even if most states comply, the fraudsters will migrate to the ID systems of those states that are not in compliance. Hence, he concluded that "until the last state comes on board we have a problem with our ID system".

He noted that the REAL ID Act allows the Secretary to impose penalties, but that there is no political will to impose penalties.

Quam said that "states have made progress", and that every Governor is concerned about the security of the states' drivers license systems. He said that the program as initially conceived was an "unworkable and unfunded mandate". He argued that "what we need is continued flexibility"

He noted that only six states have submitted full compliance statements, some states have stated that they will not comply, or will not comply without funding, and other states are in various degrees of compliance.

He stated that states need "clear guidance" from DHS, and "funding".

Rep. Jared Polis (D-CO) said that the REAL ID Act constitutes a "back door federal takeover" of the state drivers licensing process.

He also asked whether there are some immigrant categories that are not eligible for state drivers licenses, such as victims of illegally trafficking, and are therefore vulnerable.

Rep. Judy Chu (D-CA) said that REAL ID Act rules require that addresses be on ID cards, but that domestic violence victims do not want their address on ID cards. Williams said that the rules contain exceptions for judges, law enforcement officers, and victims of domestic violence.

Rep. Sheila Lee (D-TX) said that the Act is "a stalled law ready for burial". She added, "It is not functioning. It is not working." And, it raises both privacy and voting rights concerns.

The REAL ID Act was enacted in 2005 as Division B of HR 1268 (109th Congress), which was a large appropriations bill. This Title B contains many provisions. Those related to the federalization of state identification systems are found at Title II of Title B, titled "Improved Security for Drivers' Licenses and Personal Identification Cards".

The REAL ID Act imposes mandates upon the states that critics have estimated to run into the tens of billions of dollars. For example, the National Conference of State Legislatures (NCSL) and the National Governor's Association (NGA) estimated that the program would cost states over $11 Billion in the first five years. See, NCSL/NGA report titled "The Real ID Act: National Impact Analysis".

The Act requires that states maintain electronic databases that include "all data fields printed on drivers' licenses and identification cards issued by the State".

It also requires states to "Employ technology to capture digital images of identity source documents so that the images can be retained in electronic storage in a transferable format". It further requires that states "Provide electronic access to all other States to information contained in the motor vehicle database of the State".

The Act provides that "a Federal agency may not accept, for any official purpose, a driver's license or identification card issued by a State to any person unless the State is meeting the requirements of this section".

While the REAL ID Act was enacted as part of an appropriations bill, it appropriated no money to reimburse the states for the cost of implementing the standards contained in the Act.

People and Appointments

3/21. The National Association of Broadcasters (NAB) announced that former Senator Gordon Smith "has agreed to a five-year contract extension that keeps him at the helm of NAB through 2016". See, NAB release.

More News

3/21. The Senate Banking Committee's (SBC) Subcommittee on Securities, Insurance, and Investment cancelled its hearing, scheduled for March 21, 2012, titled "Examining Investor Risks in Crowdfunding".

Go to News from March 16-20, 2012.