Tech Law Journal Daily E-Mail Alert
August 22, 2001, 9:00 AM ET, Alert No. 254.
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FCC Receives Comments on Intercarrier Compensation Regime
8/21. August 21 was the deadline to submit comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) regarding the concept of a unified intercarrier compensation regime. Intercarrier compensation includes both reciprocal compensation and access charges. The FCC specifically sought comments on alternative approaches, such as "bill and keep." The FCC published in its web site 34 comments received on or before August 21. Several of these comments are summarized below. Reply comments are due by October 5, 2001.
The FCC stated in its NPRM that "we begin a fundamental re-examination of all currently regulated forms of intercarrier compensation. We intend to test the concept of a unified regime for the flows of payments among telecommunications carriers that result from the interconnection of telecommunications networks under current systems of regulation. Specifically, we seek comment on the feasibility of a bill-and-keep approach for such a unified regime. We also seek alternative comment on modifications to existing intercarrier compensation regimes. In sum, we seek to move forward from the transitional intercarrier compensation regimes to a more permanent regime that consummates the pro-competitive vision of the Telecommunications Act of 1996 ..." See, NPRM [PDF], which was adopted on April 18, 2001, and released to the public on April 27. See also, notice in Federal Register, May 23, 2001, Vol. 66, No. 100, at Pages 28410 - 28418, regarding this NPRM.
BellSouth, a large Bell company, submitted a comment [PDF] in which it endorsed bill and keep. In contrast, the National Telephone Cooperative Association (NTCA), which represents small rural phone companies, submitted a comment [PDF] in which it said the "NPRM is premature and should be set aside". It wrote that bill and keep would raise rates in rural areas, and impact universal service, among other things. It also raised several legal obstacles to the NPRM. Other comments from rural telephone interests expressed similar objections to bill and keep.
Sprint submitted a comment in which it which it gave qualified support for a bill and keep regime. It wrote that "a bill and keep intercarrier compensation regime offers substantial public interest benefits, and that concerns raised in the NPRM regarding the potential economic inefficiencies associated with a bill and keep plan are exaggerated ... . We further believe that the Commission has legal authority to adopt a bill and keep regime ... . Therefore, Sprint supports the prompt implementation of bill and keep as regards local traffic (both CMRS and wireline) and interconnected local calls to ISPs. However, it is premature to adopt a bill and keep regime for long distance access traffic at this time ..."
The Personal Communications Industry Association (PCIA) submitted a comment [PDF] in which it argued that the FCC "should not adopt mandatory bill and keep for paging-LEC interconnection, but rather should implement bill-and-keep, if at all, as another option for interconnection for paging-LEC interconnection."
The Information Technology Association of American (ITAA) submitted a comment [PDF] to urge the FCC "to make clear that it does not intent to re-visit the question of whether ESPs should continue to be allowed to obtain service from local exchange carriers ("LECs") on the same terms as other business users, rather than being subject to carrier access charges." The ITAA also urged the FCC "not to adopt any intercarrier compensation regime that would treat ISP-bound traffic in a different manner than local voice traffic."
Global Crossing submitted a comment [PDF] which focused on packet voice traffic. It wants the FCC to "declare carriers rights to route packetized voice traffic through existing and future, private and public, peering and transit arrangements", "Prohibit any carrier from refusing to accept packetized voice traffic through existing and future, private and public, peering and transit arrangements", "Allow carriers to negotiate the termination of packetized voice traffic through peering and transit arrangements without regard to the traditional access charge and reciprocal compensation regimes", and "Prohibit carriers from imposing usage- sensitive charges unless mutually agreed to by the parties."
For further background on intercarrier compensation, and bill and keep proposals, see two working papers published by the FCC's Office of Plans and Policy. One is Bill and Keep at the Central Office as the Efficient Interconnection Regime [PDF], by Patrick DeGraba. It proposes "a unified approach to interconnection pricing called Central Office Bill and Keep ("COBAK"), which provides that a called party's carrier cannot charge an interconnecting carrier to terminate a call. Rather, each carrier recovers the cost of the loop and local switch from its own end-user customers). The second is A Competitively Neutral Approach to Network Interconnection [PDF], by Jay Atkinson and Christopher Barnekov. It proposes "a default bill and keep solution under which carriers split equally those costs that are solely incremental to interconnection, and recover all remaining costs from their own customers."
GAO Issues Report on Use of DOD Spectrum for 3G
8/21. The GAO released a report [PDF] titled "Defense Spectrum Management: More Analysis Needed to Support Spectrum Use Decisions for the 1755-1850 MHz Band." It concluded that studies already conducted by the NTIA and DOD, and by industry, are inadequate, and that more study is needed before spectrum allocation decisions can be made.
The 1755 - 1850 MHz band, which is currently used by the Department of Defense (DOD) for satellite systems, mobile tactical communications, precision guided munitions, combat training, and other systems, is one of several bands identified for possible reallocation for use by Third Generation (3G) wireless systems. 3G is intended to bring broadband Internet access to mobile devices, among other things. Incumbent users of these identified spectrum bands, including the DOD, oppose reallocation of their spectrum for 3G services.
The DOD concluded that vacating the 1755 - 1850 MHz band could not be accomplished for satellite systems until at least 2017, and for most other systems until at least 2010. Its report added that the DOD could face significant operational restrictions in any frequency sharing situation. In addition, it stated that operationally suitable spectrum for reallocation of DOD systems may not be available. The NTIA's report in March 2001 incorporated the DOD's results and concluded that unrestricted sharing of the 1755 - 1850 MHz band is not feasible and any other sharing option would require considerable coordination. See, NTIA report [1.8 MB in PDF], the companion assessment by the DOD [12 MB in PDF], and a U.S. Air Force case study [.3 MB in PDF]. See, also, the NTIA's web page on 3G systems.
The GAO report concluded that "Spectrum decisions based on either the DOD or the industry study of the 1755 to 1850 MHz band would be premature at this time. Neither study contains adequate information to make reallocation decisions. In particular, we found that neither the DOD model nor the industry model is mature enough to calculate spectrum interference to satellites, and, therefore, cannot support a near-term decision."
The GAO recommended that "Before making reallocation decisions with a significant impact on national security and the economic welfare of the nation, the federal government should approach the alternatives with knowledge gained from a sound and complete analysis." The report made many recommendations for further areas of study.
The report was prepared at the request of Sen. James Inhofe (R-OK), the ranking Republican on the Senate Armed Services Committee's Subcommittee on Readiness and Management Support.
2nd Circuit Reverses in Goldberg v. Cablevision
8/16. The U.S. Court of Appeals (2ndCir) issued its opinion in Goldberg v. Cablevision, a case regarding cable public access channels. Cablevision is a franchised cable TV provider in Oyster Bay, New York. Cablevision's franchise agreement with the town requires it to maintain two public, educational, and governmental (PEG) access channels. Goldberg, a resident of Oyster Bay, offered a program to Cablevision for cablecasting pursuant to its PEG obligation. The program also included an advertisement for sales of copies of the program. Cablevision refused. Goldberg filed a complaint in U.S. District Court (EDNY) against Cablevision alleging violation of both New York law, and the Communications Act of 1934. The District Court granted summary judgment to Cablevision on the grounds that the program was commercial. The Appeals Court vacated and remanded.
FCC Seeks Comments on SBC Long Distance Requests
8/21. The FCC requested public comment on SBC's Section 271 application to provide interLATA service in the states of Arkansas and Missouri. The deadline to file comments is September 10, 2001. Reply comments are due by October 4. The deadline for the Department of Justice Evaluation is September 24. (CC Docket No. 01-194.) See, FCC notice.
NextWave Obtains Financing from UBS Warburg
8/21. NextWave Telecom announced that "UBS Warburg has committed to provide the company with $2.5 billion in debt financing to fund the construction of its nationwide 3G wireless network. UBS Warburg has also been engaged by NextWave to serve as the company's financial advisor and will assist the company in consummating its plan of reorganization." See, NextWave release.
NextWave obtained spectrum licenses at FCC auctions in 1996, under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments, and filed a Chapter 11 bankruptcy petition. The FCC cancelled the licenses. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by  525 of the Bankruptcy Code. The FCC has indicated that it may petition the Supreme Court for writ of certiorari. NextWave filed a plan of reorganization with the bankruptcy court on August 6.
CD Sales Drop as Consumers Get Music On Line
8/20. The Recording Industry Association of America (RIAA) stated that number of full length CDs sold during the first half of 2001 dropped 5.3% from the same period last year. Hillary Rosen, P/CEO of the RIAA stated in the same release that "more consumers are looking to get music on-line and are experimenting with a number of approaches, including legitimate subscription services." She added that "Many in the music community are concerned about the continued use of CD-Rs (compact disc recordables) and we believe this issue deserves further analysis. A preliminary survey of tech savvy online music enthusiasts recently conducted for the RIAA showed that nearly one out of two consumers surveyed downloaded in the past month and nearly 70 percent burned the music they downloaded. All of this activity continues to show the passion of the consumer for music and the need for both legal protection and legitimate alternatives."
FTC Sues Web Based Quacks
8/20. The FTC filed a complaint in U.S. District Court (CDCal) against Liverite Products Inc., several of its principals, and others, alleging violation of the Federal Trade Commission Act (FTCA). Defendants advertised and sold an alleged liver treatment through web sites, and by other means. Defendants made unsubstantiated claims about their treatment in violation of Section 5(a) of the FTCA, 15 U.S.C. 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC and defendants simultaneously filed a stipulated final order which requires defendants to pay $60,000 in redress, and enjoins the defendants from making false claims. See also, FTC release.
DC Circuit Affirms in Global Crossing v. FCC
8/21. The U.S. Court of Appeals (DCCir) issued its opinion in Global Crossing v. FCC. Global Crossing petitioned for review of an order of the FCC requiring Global Crossing to pay Verizon compensation for payphone calls originating from Verizon payphones and routed over Global Crossing's network. The Court of Appeals denied the petition for review.
GAO Releases Report on L&E Cases Under NAFTA
8/21. The GAO released a report [PDF] titled "North American Free Trade Agreement: U.S. Experience With Environment, Labor, and Investment Dispute Settlement Cases."
Ashcroft Picks Wainstein for EOUSA
8/20. Attorney General John Ashcroft named Ken Wainstein as Director of the Executive Office for United States Attorneys (EOUSA) at the Department of Justice. The EOUSA provides administrative support to the 94 U.S. Attorneys' offices. Wainstein has previously worked as interim U.S. Attorney for the District of Columbia, Principal Assistant U.S. Attorney, Deputy Chief of the Superior Court Division, and Deputy Chief of the Homicide Section. See, DOJ release.
Verizon Wants Regulatory Relief for Bells
8/21. Tom Tauke gave a speech titled "Delaying the Last Mile" at a Progress and Freedom Foundation conference in Aspen, Colorado. He advocated changes in the regulatory environment in which the regional Bell monopolies operate. Tauke is SVP for Public Policy and External Affairs at Verizon.
Wednesday, August 22
Deadline to submit comments to the Copyright Office (CO) in response to its notice of proposed rule making regarding rates and terms for the digital performance of sound recordings. The CO requests comment on proposed regulations that will govern the RIAA collective when it functions as the designated agent receiving royalty payments and statements of accounts from nonexempt, subscription digital transmission services which make digital transmissions of sound recordings under the provisions of Section 114 of the Copyright Act. See, Federal Register, July 23, 2001, Vol. 66, No. 141, at Pages 38226 - 38229.
New Documents
GAO: report re reallocation of DOD spectrum for 3G, 8/21 (PDF, GAO).
USCA: opinion in Goldberg v. Cablevision, 8/16 (HTML, USCA).
USCA: opinion in Global Crossing v. FCC, 8/21 (HTML, USCA).
FTC: complaint and stipulated final order re web based deceptive liver treatment, 8/20 (HTML, FTC).
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