Communications Law Bulletin -- June 2005

The Month in Brief

June of 2005 brought new staff appointments at the Federal Communications Commission ("FCC" or "Commission"), a long-awaited Supreme Court decision on the regulatory status of cable modem service, and a number of other developments across the wireline, wireless, and broadcast industries. Those developments are summarized here, along with our usual list of deadlines for your calendar.

Our next issue will be a combined July/August Communications Law Bulletin. We hope all of our readers will have a great summer.

Commissioner Martin has begun appointing new senior staff at the FCC, although some key positions remain open at this time (such as Wireless Telecommunications Bureau Chief and a permanent General Counsel). Commissioner Martin has made the following appointments:

Chief of Staff – Daniel Gonzales
Chief of Staff’s Legal Advisor for Wireline Issues – Michelle Carey
Consumer and Governmental Affairs Bureau Chief – Monica Desai
Enforcement Bureau Chief – Kris Monteith
Media Bureau Chief – Donna Gregg
Media Bureau Senior Deputy Chief – Roy Stewart
Media Bureau Deputy Chief – Deborah Klein
Wireline Competition Bureau Chief – Tom Navin
Acting General Counsel – Samuel Feder

The United States Supreme Court recently issued a decision in the long-anticipated Brand-X case (National Cable & Telecommunications Association et al. v. Brand-X Internet Services, et al., Case No. 04-277) upholding the FCC’s 2002 decision that high-speed cable modem services are "information services" not subject to common carrier regulation under Title II of the Communications Act ("Act"). In a 6-3 vote, the Court reversed and remanded a decision by the U.S. Court of Appeals for the Ninth Circuit that had concluded that the FCC had no basis to construe the Act to exempt cable modem service providers from Title II regulation.

The Court criticized the Ninth Circuit for relying on one of its own previous cases rather than relying on the deferential standard established in the Supreme Court case Chevron USA, Inc. v. Natural Resources Defense Counsel, Inc. According to the Court, the FCC is entitled to "Chevron" deference and the FCC’s statutory interpretation that cable modem services are information services was reasonable.

The Supreme Court’s decision shifts the focus back to the FCC to address a number of open items that had been shelved while the Brand-X case was pending. In particular, the FCC initiated a rulemaking proceeding in 2002 to determine whether and how it should regulate cable modem service under its ancillary Title I jurisdiction given that Title II common carrier regulations do not apply. The FCC also has not reached a final decision on its tentative proposal to classify DSL service offered by incumbent local exchange carriers ("ILECs") as an information service, and the regulatory framework that should apply to DSL under such a classification. Chairman Martin remarked that the Brand-X decision "provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers" and that the FCC "can now move forward quickly to finalize regulations." Resolution could be complicated by the vacancy on the Commission, which leaves only four commissioners, two Republicans and two Democrats, sitting. It is possible that these pending proceedings may not be decided until a fifth Commissioner is appointed.

On June 13, the U.S. Supreme Court placed the controversial issue of media ownership limits back in the hands of the FCC by refusing the request of several media groups to review the media ownership decision of the U.S. Court of Appeals for the Third Circuit. In June 2003, the FCC had issued a set of relaxed rules, which, among other things, permitted television broadcasters to own more stations and allowed newspaper companies to buy broadcast stations in large metropolitan markets. In 2004, the Third Circuit struck down the FCC’s rules and sent them back to the agency to be reevaluated. The Supreme Court’s refusal to hear the case leaves the Third Circuit’s decision intact. FCC Chairman Martin commented: "I am now looking forward to working with all my colleagues as we reevaluate our media ownership rules consistent with the Third Circuit’s guidance and our statutory obligations." Industry observers expect Chairman Martin to support easing media ownership limits, particularly the ban on common ownership of newspapers and broadcast stations. Democratic Commissioners Copps and Adelstein, both of whom voted against the FCC’s relaxed rules, called for public hearings around the country to examine the issues.

The FCC ordered the consumer electronics industry to comply with the FCC’s existing July 1, 2005, deadline to equip new 25-36 inch TV sets with DTV tuners and moved up the deadline, from July 1, 2006 to March 1, 2006, for 100% compliance with the mandate for these mid-sized TV receivers. The CE industry had suggested the acceleration to March 1 for 100% compliance, but had linked that date to elimination of the 50% compliance deadline. The FCC Commissioners disagreed with the industry petition, however, and expressed their intention to keep the transition to digital TV moving forward. The FCC also proposed to move up the deadline for equipping all TV receivers on 13-inch sets and other TV receiving devices with DTV tuners to December 31, 2006, from July 1, 2007.

Currently there is no formal enforcement mechanism for ensuring compliance with the DTV tuner deadlines. Alan Stillwell, Associate Chief of the FCC’s Office of Engineering and Technology, explained that the Commission "look[s] to become pretty aggressive toward enforcing the rules in the coming year." According to Stillwell, the Commission has monitored the compliance process through product availability and other measures and will sanction violators by using the standard options available to the FCC to enforce its rules, including fines and restrictions on sale or import of products.

Meanwhile, in Congress, draft legislation in the House contains language advancing the final DTV tuner mandate by one year, to July 2006. It is not clear whether the Senate version will seek to accelerate the schedule. The House measure also establishes a hard date of December 31, 2008, for cutting off analog TV signals. The Senate bill is expected to contain a similar date.

On June 10, the FCC issued a notice of proposed rulemaking aimed at reducing the backlog in, and streamlining for the future, its FM allotment procedures and certain AM broadcast application procedures. Specifically, the FCC proposes: (1) permitting AM and FM stations to change their communities of license by filing minor modification applications; (2) mandating filing of FCC Form 301 when an applicant seeks to add an FM allotment; (3) limiting the number of channel changes, to five, that may be proposed in one proceeding to amend the Table of Allotments; and (4) permitting electronic filing of petitions for rulemaking to amend the Table of Allotments. The notice also sought comment on the circumstances under which relocation of a community’s sole local transmission service to become the first local transmission service in another community is in the public interest. Lastly, the Commission put a freeze on filing new petitions for rulemaking to amend the table of allotments and announced a one-time settlement window for parties involved in the nearly 300 open commercial FM allotment dockets.

In an unusual move, the FCC Media Bureau rescinded its approval of a deal between two Nebraska broadcasters, in which Lincoln Broadcasting sought to transfer control of its permit for KOWH-TV from World Investments to CFM Communications. After initially approving the transfer, the Bureau found information in a filing regarding an unrelated matter, specifically in a deposition of Carol Miller, principal of CFM, that "raise[s] serious questions regarding the truthfulness of representations made" in CFM’s transfer of control application.

The FCC has issued a declaratory ruling and notice of proposed rulemaking ("NPRM") implementing the Commercial Spectrum Enhancement Act of 2004 ("CSEA"), including the requirement that the cash proceeds from auctions of spectrum reallocated from federal to non-federal use cover 110 percent of the government's relocation costs. The upcoming auction of Advanced Wireless Service spectrum falls within the scope of the CSEA. The FCC’s declaratory ruling and any regulations adopted pursuant to the NPRM could significantly affect wireless carriers’ participation in future auctions.

The CSEA establishes a Spectrum Relocation Fund ("SRF") that reimburses the relocation costs for wireless operations of federal agencies. The CSEA applies to the 216-220, 1432-1435, 1710-1755, and 2385-2390 MHz bands and any other frequencies that are reallocated from federal to non-federal use. The SRF is to be funded from the cash proceeds of the auction of those frequencies, and the FCC is prohibited from auctioning any eligible frequencies if the "total cash proceeds attributable to such spectrum are less than 110 percent of the total estimated relocation costs" of the federal agencies.

The FCC’s declaratory ruling concludes that the phrase "total cash proceeds" under the CSEA refers to an auction’s winning bids net of bidding credits, calculated at the time bidding has ended but before payment for the auction licenses is required. The NPRM seeks comment on other issues associated with implementing the CSEA, including: (1) establishing a reserve/minimum bid price for CSEA-auctioned spectrum that ensures that the auction’s total cash proceeds will equal at least 110 percent of federal relocation costs; (2) clarifying what penalties apply when a winning auction winner defaults or is disqualified after the close of an auction; (3) increasing the payment penalties for withdrawing or defaulting on auction bids; (4) allowing the FCC to apportion combinatorial/package bids among the individual licenses comprising a package in the event that an individual bid amount is needed to administer an FCC rule or procedure; (5) modifying the procedures for using the "consortium exception" to the designated entity and entrepreneur aggregation rule; and (6) modify the FCC’s tribal land bidding credit rules to comport with the CSEA.

Comments and replies to the NPRM are due 30 and 45 days, respectively, after the NPRM is published in the Federal Register.

MCI’s Board of Directors voted last month to accept an $8.44 billion buyout offer from Verizon Communications Inc. (approximately $26 per share) over a $9.74 billion bid from Qwest Communications International Inc. (approximately $30 per share). MCI’s shareholders will have the opportunity to approve or reject the Verizon offer later this year, although the date of the shareholder meeting has not yet been set. Several large MCI shareholders strongly objected to the Board’s rejection of the higher Qwest offer, arguing that the Board failed to maximize shareholder value by accepting the lower Verizon bid. Now one disgruntled MCI shareholder has taken steps to open the door for a new Qwest bid, but it remains to be seen if Qwest will re-enter the fray.

Deephaven Capital Management LLC, a hedge fund that owns 4.96% of MCI’s outstanding common stock and 810,000 shares of Qwest stock, filed a proxy statement with the Securities and Exchange Commission stating that Deephaven would vote its MCI shares against the Verizon merger in the upcoming shareholder vote, and will solicit other MCI shareholders to do the same. In its proxy statement, Deephaven also disclosed that it owns a short position in approximately 4.3 million Verizon shares, so it will stand to profit if MCI or Qwest’s share prices rise with a new Quest offer, or if Verizon share prices fall.

Unless Qwest submits a new bid, it is unlikely that MCI shareholders would rally to reject the certainty of the Verizon offer in favor of waiting for a better offer that may never materialize. Qwest, however, may not be willing to submit a new bid unless it is confident that there will be sufficient shareholder votes to reject the Verizon offer. Qwest has declined to make any statement yet regarding the Deephaven proxy statement.

Deephaven and other MCI shareholders are not the only groups opposed to the Verizon-MCI merger. A group of consumer advocates recently filed briefs with the Justice Department and FCC challenging the pending Verizon-MCI merger, as well as the proposed SBC-AT&T merger. The consumer groups argue these mergers will be a giant step back to the "Ma Bell" monopoly days, as SBC and Verizon, in their respective regions, will control up to 90% of all residential wireless communications, up to 40% of all wireless communications in those regions, and up to 70% of long-distance services. Each merger must be approved by the Justice Department and FCC, regardless of whether MCI’s disgruntled shareholders can muster enough votes to veto the Verizon-MCI merger.

Intel Corp. announced that it would collaborate with ArrayComm LLC, a start-up manufacturer of smart WiMAX antennas, on WiMAX standards. WiMAX is a wireless technology that uses multiple antennas in wireless devices such as cell phones to locate the source of radio signals. This technology can be used to maximize the range of transmitters, thus reducing the number of cell sites required to send and receive wireless transmissions.

Cablevision Systems Corp.’s controlling shareholders announced a $7.9 billion stock buyback of Cablevision’s stock held by public shareholders. The buyback offer, if approved by the Cablevision Board of Directors, would privatize Cablevision, freeing it from the demands of public shareholders and analysts and permitting the company to increase capital investments in the infrastructure required to compete with the high speed voice and data networks being installed by telephone companies. Cox Communications Inc., the third largest U.S. cable television provider in terms of subscribers, took itself private last year for similar reasons, and cable television provider Insight Communications Co. announced earlier this year that it plans to go private as well.

Emirates Telecommunications, known as Etisalat, the state-owned telecommunications company of the United Arab Emirates, recently beat out rivals Singapore Telecommunications Ltd (SingTel) and China Mobile Communications Corp. in a bid to purchase a 26% management stake in Pakistan Telecommunications Co. Ltd. Etisalat bid $2.6 billion for the PTCL stake, which has been called Pakistan’s largest privatization transaction. Following the sale, the government of Pakistan will own a 62% stake in the company. The bidding had been marred by striking labor unions opposed to privatization. Pakistani troops were deployed to guard and monitor Pakistan’s telecommunications systems during the labor strikes.

Although satellite radio subscribers could receive satellite broadcasts in Canada, neither XM Satellite Radio nor Sirius Satellite Radio have been able to legally sell their services there, largely due to Canada’s requirements to use Canadian-generated content and broadcast in the French language. The Canadian Radio-Television and Telecommunications Commission recently granted licenses for both XM and Sirius to sell services in Canada. Each company will be required to produce one of every ten channels in Canada, and 25% of content on the Canadian channels must be broadcast in French. These licenses open up a new market for both providers, although the Canadian market is estimated to be only a tenth of the size of the U.S. market.

At its June 9, 2005, open meeting, the FCC reaffirmed its commitment to assuring that people with hearing loss have access to digital wireless technologies.

Specifically, the FCC ruled on several petitions seeking reconsideration of its 2003 Hearing Aid Compatibility Report and Order ("2003 Order"), which adopted various rules pursuant to the Hearing Aid Compatibility Act of 1988. The 2003 Order adopted certain performance levels in American National Standards Institute technical standard C63.19 as the applicable standard for digital wireless phones and required certain digital phone models to produce less radio interference with hearing aids. The Commission imposed a timetable under which all wireless carriers are required to offer at least two phone models per air interface that are hearing aid-compatible by September 2005, with this threshold increasing to at least 50 percent of phone models offered to consumers being hearing-aid compatible by February 2008. The 2003 Order also required Tier I wireless carriers (meaning the nation’s five largest wireless carriers) to offer by 2005 the greater of at least two handsets or 25 percent of the total number of available handsets that are hearing aid-compatible.

Although the February 2008 deadline for all wireless carriers remains in effect, the Commission accelerated the deadlines for Tier I wireless carriers. The Commission now requires Tier I carriers to make available to consumers at least four hearing aid-compatible models (or 25 percent of all offered models, whichever is greater) by September 16, 2005. Tier I carriers must make available five hearing aid-compatible models by September 16, 2006. CTIA called the FCC’s ruling a "win for consumers" because it "balances the needs of the hearing loss community and what is technically feasible for the industry."

The FCC also reaffirmed measures to ensure accessibility to wireless technologies for the hearing impaired by requiring prominent exterior labeling on handset packaging to help consumers quickly determine if a given model is hearing aid-compatible. Further, all carrier-owned and operated retail stores must offer in-store testing of hearing aid-compatible phones to help consumers to find a model best suited to their needs.

Grokster Decision Upholds Liability for Distribution of File-Swapping Software

In its much-anticipated Grokster decision, the U.S. Supreme Court in June ruled that distributors of "peer-to-peer" software used to share song and video files could be found liable for copyright infringement committed by their users. Metro-Goldwyn-Mayer Studios, Inc. et al. v. Grokster, Ltd., et al., No. 04-480 (U.S. Supreme Court June 27, 2005).

The lower courts had found for the software distributors on the ground that they lacked specific knowledge of, and lacked the ability to control, the infringing acts of people who downloaded and used their products. The lower courts had found that because the file-swapping programs also could be used to share non-copyrighted material, the burden shifted to the plaintiffs to show that the defendants had specific knowledge of individual acts of infringement. In the absence of such evidence, the courts below had granted summary judgment for the defendants.

The Supreme Court, however, held that the lower courts had misapplied Supreme Court precedent – specifically, the Court’s ruling in the Sony case, which had held that a distributor of a product that has a substantial, noninfringing use cannot be liable for acts of infringement committed by buyers or users of the product. In Grokster, a unanimous Court held that Sony applies where a defendant has taken no action beyond distribution of a product, but provides no immunity when the defendant actively induces acts of infringement. In the case before it, the Court found sufficient evidence of such inducement and sent the case back to the trial court for further proceedings.

Grokster is an important decision for all providers of products and services – including Internet access – that can be used for the transmission and duplication of digital content. After Grokster, copyright holders will scrutinize the public statements and marketing strategies of such providers for any evidence that they are "inducing" copyright infringement by their customers.

The Telephone Consumer Protection Act ("TCPA") prohibits the sending of facsimile ("fax") advertisements without the prior consent of the recipient. The FCC’s original rules implementing the TCPA permitted such faxes to be sent to recipients with which the sender had an established business relationship ("EBR"), but new rules adopted in 2003 eliminated the EBR exception and required senders to obtain written permission from consumers before sending such faxes. Because of pending legislation that might restore the EBR exception, however, the Commission extended the effective date of the new requirement until July 1, 2005.

With the new deadline approaching, the Commission decided in the last week of June to extend the EBR exception again, this time until January 9, 2006. In that same week, the House passed and sent to President Bush a bill that will restore the EBR exception permanently, subject to a requirement that senders of fax advertisements accept and honor "opt-out" requests from recipients, asking not to receive further faxes from those senders.

On June 15, 2005, the New York Public Service Commission ("NY PSC") initiated a proceeding to review the rules, practices, and policies governing its regulation of telecommunications services. The intent of the review is to establish a regulatory framework that better reflects the current telecommunications market structure and the way that consumers use telecommunications services. According to the NY PSC, the rapid evolution of technology and the increasing use of wireless, broadband, and Internet Protocol services have significantly changed the way that consumers use the public switched telephone network and other interconnected networks. Furthermore, telecommunications providers currently are regulated differently according to the technology they use, not the services that they offer. The purpose of the proceeding, as expressed by Chairman Flynn, is to re-examine the extent to which the NY PSC’s rules and regulations align with the emerging realities of the telecommunications market in an effort to maximize market efficiencies, maintain high levels of public safety and network reliability, protect consumers from potential market power abuses, and promote economic development.

Once the Order is released interested parties will have 45 days to comment on a wide range of issues, including the level of competition for telecommunications services in New York state (including how that varies across geographic areas), telephone service quality, market power, regulatory flexibility, and infrastructure monitoring. The NY PSC action follows on the heels of an effort by the California PUC to revamp its regulation of telecommunications services (reported in the April edition of the Communications Law Bulletin) and statutory changes in a number of other states that would accomplish similar goals.

FCC Implements SHVERA by Imposing Good Faith Bargaining Obligations Equally Upon MVPDs and TV Broadcasters

As required by the Satellite Home Viewer Extension and Reauthorization Act of 2004 ("SHVERA"), the FCC issued on June 7 an order extending to multichannel video programming distributors ("MVPDs") the good faith bargaining obligations for retransmission consent previously imposed on television broadcasters only. The Commission also determined that the reciprocal bargaining obligation should apply regardless of the market in which the MVPD or broadcaster is located, but noted that the nature of this obligation may vary depending upon the distance between the MVPD and the broadcaster.

Although few expect the pending mergers in the telecommunications industry to be rejected outright, the ongoing review of those mergers by Congress, the FCC and the Department of Justice ("DOJ") hold open the possibility that conditions will be imposed upon some or all of those transactions.

Notably, as pointed out in a previous article, three consumer groups recently urged the FCC and DOJ to reject the mergers between SBC Communications/AT&T Corporation and Verizon/MCI, or at least require those entities to divest overlapping assets in their service regions. In the view of the consumer groups, the acquiring companies in those transactions have a history of anti-competitive behavior, not restrained by FCC enforcement actions, that will be exacerbated when their in-region assets are combined.

Congressional inquiries into the mergers have not concluded, but appear stalled by the coming summer recess and the unavailability of key witnesses. Notably, the Senate Commerce, Science and Transportation Committee had scheduled hearings on the proposed mergers for June 22, 2005, but those hearings now have been postponed until a date to be announced.

A recent report by the FCC’s Office of Inspector General ("OIG") demonstrates that the FCC continues to battle fraud, waste, and abuse in the universal service fund ("USF") program. The OIG report focuses primarily on its continuing audits of the Schools and Libraries (or E-rate) program, although OIG states its intent to assess fraud, waste, and abuse within the other three USF programs (regarding high cost, low income and rural health care) in the future. OIG expressed concern that it does not have adequate resources to thoroughly audit the USF program, but that recent staff additions should help. OIG also noted that will soon select a third party to conduct independent audits of the USF program.

Following closely on the heels of the OIG report, the FCC launched a comprehensive inquiry into the management and oversight of the USF program. The FCC’s notice of proposed rulemaking ("NPRM") specifically seeks comment on procedural and administrative changes to improve the efficiency of the program and does not suggest substantive legal modifications, such as the methodology for contributing to the USF and who is eligible to receive USF support, which are being considered in other pending proceedings.

The NPRM seeks comment on whether it should change the structure, filing and reporting requirements, and administrative procedures of the Universal Service Administrative Company, which administers the USF program. The NPRM also considers adopting performance measures to improve the program’s efficiency, modifying the administrative process by which USF support is applied and disbursed, and improving the contribution process. In addition, the NPRM seeks ways in which to improve review and oversight of the USF program.

Congress also continues to consider ways to modify the USF program to increase efficiency and decrease instances of fraud, waste, and abuse. However, many industry sources believe that Congress will not overhaul the USF this year. Rather, some speculate that Congress will not tee-up comprehensive USF reform until after it resolves other issues, such as the DTV transition, which appear to be a higher policy priority. Congress may feel a little less pressure to overhaul the program this year because the USF contribution factor for the third quarter of 2005 has been set at 10.2 percent, down from 11.1 percent for the second quarter of 2005.

To the extent Congress does address USF issues this term, it will likely do so on a smaller scale. In particular, two bills are currently pending (H.2533 and S.241) that would extend permanently the USF program’s one-year exemption from the Anti-Deficiency Act ("ADA"). Chairman Martin, however, recently stated at a Supercomm conference that the USF accounting procedures do not violate the ADA, in direct conflict with the FCC’s conclusion last year. It is uncertain whether and how the Chairman’s pronouncement will impact USF reform on the hill or before the agency.

The FCC recently released the text of its Order and Notice of Proposed Rulemaking ("Order" and "NPRM") that imposes E911 obligations on providers of voice-over-Internet-protocol ("VoIP") services, which was adopted at last month’s open meeting (see May 2005 edition of the Communications Law Bulletin). The FCC’s broad but stringent mandates have prompted at least one industry player to consider seeking reconsideration of the decision.

The Order requires providers of "interconnected VoIP" service to supply E911 capabilities to their customers. The Order generally encompasses "any IP-enabled services offering real-time, multidirectional voice functionality, including, but not limited to, services that mimic traditional telephony." By "interconnected," the FCC generally refers to VoIP services that connect to the public switched telephone network ("PSTN") and are reasonably expected by consumers to function like a traditional telephone service. The FCC specifically defines the VoIP services that must provide E911 capabilities as those that: (1) enable real-time, two-way voice communications; (2) require a broadband connection from the user’s location; (3) require IP-compatible customer premises equipment; and (4) permit users generally to receive PSTN-originated calls and to terminate calls to the PSTN.

Within 120 days of the effective date of the Order (i.e., by November 28, 2005), providers of VoIP services with these characteristics must transmit all 911 calls, including call back numbers and callers’ locations, to designated public safety answering points ("PSAPs") or other appropriate local emergency authorities. VoIP providers also must offer customers a way to "register" their location so that the information can be transmitted with a 911 call and must notify customers of any limitations of their 911 service offerings, including warning labels that customers can affix to their phones or computers. VoIP providers also must notify the FCC within the 120-day deadline that they are compliant with the FCC’s E911 mandate. The FCC also declined to exempt VoIP providers from liability under state laws relating to their E911 services.

The NPRM seeks comment on whether E911 obligations should be extended to other VoIP services and asks whether VoIP services that may not be fully interconnected to the PSTN should be subject to E911. The NPRM also questions whether it should require VoIP providers to automatically identify the geographic location of a VoIP user and whether this is technologically possible. In addition, the NPRM seeks comment on the states’ role in implementing E911, whether the FCC should adopt rules to protect the privacy of VoIP users, and whether persons with disabilities can use VoIP services to contact a PSAT via TTY equipment.

Pulver.com president and CEO Jeff Pulver has stated that he will seek reconsideration of the FCC’s Order. Although Pulver.com’s service is likely not considered an "interconnected VoIP" service and thus not subject to the FCC’s E911 mandate, Pulver stated that the Order will negatively impact new IP technologies and create uncertainty in the market. In contrast, Vonage has stated that the Order levels the playing field between VoIP providers and traditional carriers, but Vonage may need to seek a waiver of the 120-day deadline because it may be difficult to implement E911 services in less-populous areas.

Several Congress members also sent Chairman Martin a letter expressing doubt that VoIP providers will be able to meet the FCC’s short 120-day deadline due to operational reasons. The Senate and House have proposed identical bills – S.1063 and H.R.2418 – that would extend the compliance deadline, give VoIP providers direct access to incumbent carriers’ 911 networks, and afford VoIP providers the same liability protections that traditional carriers receive for providing 911 services.

SBC Communications Inc. ("SBC") has appealed the FCC’s order rejecting on procedural grounds its petition that the FCC forbear from applying Title II common carrier regulations under the Communications Act to SBC’s Internet Protocol ("IP") platform services (reported in the May 2005 edition of the Communications Law Bulletin). SBC claims that the FCC’s decision exceeds its jurisdiction and authority, is contrary to the Telecommunications Act of 1996, and is arbitrary, capricious, and an abuse of agency discretion. SBC objects to the FCC’s conclusion that SBC sought forbearance from statutory provisions and agency regulations that "may or may not" apply to SBC’s IP platform services and that to rule on SBC’s petition before the FCC decided whether those statutes and rules applied in the first place did not serve the public interest.

The Wireless Association® ("CTIA") and the Mobile Marketing Association recently released industry guidelines for mobile advertising. In addition to requiring all mobile advertising programs to comply with federal and state laws, the "Consumer Best Practices Guidelines For Cross-Carrier Mobile Content Services" establish a set of principles that serve as standards for industry members. Among other things, the Guidelines recognize that wireless subscribers have a right to privacy and that affirmative subscriber approval must be obtained prior to sending various forms of mobile advertising. The Guidelines also set forth certain disclosure requirements for subscription and promotional advertising, including clear and conspicuous communication of all material terms and conditions, pricing information, and charge notices, among other things. The Guidelines also establish "opt-in" and "opt-out" rules for various types of messages.

Although these strong guidelines do not address sexual, violent or adult content, CTIA continues to develop best practices and guidelines for identification and handling of these types of downloadable content, as well as educational programs and other leadership initiatives. The wireless industry is developing a ratings system to classify content and tools to protect children from inappropriate content. A CTIA spokesperson has said that its Downloadable Content Action Team is working on the offensive content issue and will address the issue "as a whole" later this year. The FCC is monitoring these industry efforts and "encourage[s] the industry to educate parents about the content available on mobile phones/devices and the ways they can limit access to that content."

FCC Chairman Kevin Martin has adopted a wait-and-see approach to FCC regulation of carrier-controlled adult content delivered over mobile devices while the wireless industry seeks to develop a ratings system to classify content. Sam Feder, Chairman Martin’s wireless legal advisor, recently said that the FCC’s involvement "depends in part on what the industry ends up doing." "The Chairman," Mr. Feder said, "believes very strongly that parents need to have the tools that they can use to keep indecent or obscene material out of the hands of children, and the family groups share those concerns." Mr. Feder’s remarks followed a recent meeting between family advocacy groups and the Chairman. "It remains to be seen," Mr. Feder added, "how the wireless industry steps up to this, but I think they have an opportunity here to do this right and if they can work with the family groups to try to address their concerns, it makes our job easier." Separately, Barry Ohlson, Senior Legal Advisor to Commissioner Adelstein, raised questions about the FCC’s jurisdiction to regulate content of subscription-based services.

Over the coming months, wireless providers will want to closely monitor the FCC’s reaction to industry efforts to create adult-content guidelines for further signals that the FCC might regulate delivery of wireless adult content.

Upcoming Deadlines for Your Calendar in PDF Format

Note: Although the dates listed in the PDF document are accurate as of the day this edition goes to press, please be aware that these deadlines are subject to frequent change. If there is a proceeding in which you are particularly interested, we suggest that you confirm the applicable deadline.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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