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May 20, 2005, Alert No. 1,139.
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FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers

5/19. The Federal Communications Commission (FCC) adopted, but did not release, a First Report and Order and Notice of Proposed Rulemaking in its proceeding titled "In the Matter of IP-Enabled Services" at its event titled "Open Meeting". This item requires "interconnected VOIP service providers" to comply with 911/E911 rules within 120 of publication of this item in the Federal Register.

The FCC commenced this proceeding on February 12, 2004, by adopting its Notice of Proposed Rulemaking (NPRM) [97 pages in PDF] regarding regulation of internet protocol (IP) enabled services. See also, story titled "FCC Adopts NPRM Regarding Regulation of Internet Protocol Services" in TLJ Daily E-Mail Alert No. 837, February 16, 2004.

While the 2004 NPRM addressed a wide range of IP enabled services and categories of regulation, the just adopted order only addresses the application of 911 and E911 telecom regulation to voice over internet protocol (VOIP) service providers. This item includes new rules, as well as a further notice of proposed rule making (NPRM). The original proceeding bears the docket number 04-36. This item assigns an additional docket number, 05-196, and a new title, "E911 Requirements for IP-Enabled Service Providers".

Other issues raised by the 2004 NPRM, but not addressed by the present order, include expanding the Communications Assistance for Law Enforcement Act (CALEA) to cover IP enabled service providers, compensation issues, taxing IP enabled services to support the Universal Service Fund, consumer protection, and disability access regulation.

The order extends the FCC's regulations pertaining to 911 and E911 service to "interconnected VOIP service providers". The FCC release [PDF] states, and the Commissioners reiterated, that this term encompasses VOIP service that facilitates calls that originate or terminate on the public switch telephone network (PSTN). The FCC has not yet elaborated with any precision the scope of this concept. Also, some used the phrase, "touches the PSTN", to describe the scope of the order. See, related story in this issue titled "Summary of the FCC's 911 VOIP Order".

The order imposes many obligations on these interconnected VOIP service providers with respect to providing 911 service. However, the order gives these entities no new rights to facilitate their compliance. There is no requirement that local exchange carriers interconnect with VOIP service providers. There is no ban on port blocking. ILECs have no obligations to VOIP service providers. VOIP service providers have no right of access to emergency facilities such as 911/E911 call centers. Most of these facilities are owned by incumbent local exchange carriers (ILECs).

This order is a victory for the ILECs. It is a defeat for supporters of an unregulated and innovative information technology sector. If it withstands judicial review, it will set a precedent for FCC authority to impose telecom regulatory regimes upon internet services, and for FCC authority to plan and direct the use of information technology.

Involved parties debate the question of whether consumers will benefit from this order. The four Commissioners, all of whom voted for this item, argue that consumers will benefit. The Commission also took the unusual step of turning the meeting into forum for advocates of the consumer and public safety benefits of the order. The Commission reduced the agenda to only this item. Most of the meeting was devoted to speeches by public safety officials, and VOIP customers who told stories of being unable to reach emergency call centers. Opponents have argued throughout this proceeding that consumers will benefit if the FCC allows information technology innovators to develop new and expanded public safety solutions without government interference.

The order is vulnerable to being vacated upon judicial review on any of several legal grounds. The primary basis for challenging the order will be the argument that the FCC lacks statutory authority to impose telecommunications regulations upon providers of information services that are not communications carriers, and that Title I, the authority relied upon by the FCC, provides no such authority. See, related story in this issue titled "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority".

This item is FCC 05-116 in WC Docket Nos. 04-36 and 05-196. The 2004 NPRM is FCC 04-28.

Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority

5/19. The Federal Communications Commission (FCC) First Report and Order and Notice of Proposed Rulemaking adopted on May 19 that requires "interconnected VOIP service providers" to comply with 911/E911 rules may be vulnerable to legal challenge, opponents of the item state.

The FCC has not released the text of this item. Moreover, the FCC's news release describing the item says nothing about the statutory authority. However, Tom Navin, the acting Chief of the FCC's Wireline Competition Bureau, stated at the news conference after the meeting that the authority is Title I of the Communications Act.

Also, FCC Chairman Kevin Martin, who spoke briefly with reporters after the meeting, was asked "are we now saying that VOIP providers are telecom". Martin said "no".

Title I is a reference to Title I of the original Communications Act of 1934. It is in the nature of a preamble. It  recites the purposes for creating the FCC. It is codified at 47 U.S.C. § 151.

It provides that "For the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, for the purpose of promoting safety of life and property through the use of wire and radio communications, and for the purpose of securing a more effective execution of this policy by centralizing authority heretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is created a commission to be known as the ``Federal Communications Commission´´, which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this chapter."

It may be pertinent to the FCC's legal authority that the 1996 Act added the phrase about race, color, and so forth, but made no other changes. In contrast, the 1996 Act amended the Communications Act of 1934 to provide that "The Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation" and that "It is the policy of the United States ... to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services." These provisions are codified at 47 U.S.C. § 230.

It may also be significant that on May 6, 2005 the U.S.Court of Appeals (DCCir) issued its opinion [34 pages in PDF] in American Library Association v. FCC overturning the FCC's broadcast flag rules. The FCC has statutory authority to license and regulate the use of electromagnetic spectrum, including devices that transmit and receive radio frequency signals. However, there is no express grant of authority to protect copyrights, or to regulate consumer electronic equipment for the purpose of protecting copyrights. The FCC nevertheless argued that it had authority under Title I. The Court rejected the FCC's argument.

The Court of Appeals also found it important that "the FCC has never before asserted such sweeping authority". The FCC has not before asserted that it has authority to impose telecommunications regulations upon information service providers.

However, in the case of 911 rules, but not in the case of broadcast flag rules, the FCC can cite the phrase in Title I that one of the purposes in creating the FCC was "promoting safety of life and property".

The FCC received comments from information technology companies in this proceeding that argue that the FCC lacks statutory authority to do what it has now done.

Also, after the FCC adopted its order, Harris Miller, President of the Information Technology Association of America (ITAA), stated in a release that "However well intentioned, today's FCC ruling seems to test the outer limits of the FCC's jurisdiction ... Just two weeks ago the DC Circuit ruled regarding the broadcast flag that the Commission had overstepped its authority. Now that seems to be happening again. Congress never intended the FCC to be the 'Federal Technology Commission,' with broad authority over technology applications and services."

This ITAA release further states that "While Title I allows the Commission to adopt rules governing common carriers' participation in the information services market, it does not provide the Commission with general authority to regulate information services."

TLJ spoke with Mark Uncapher of the ITAA. He said that ITAA is not planning to file a petition for review, "at this point".

The supporters of the FCC's order have filed numerous comments with the FCC that have articulated various authorities. For example, the U.S. Telecom Association (USTA) filed a comment [PDF] on May 28, 2004 in which it wrote that Title I is "certainly broad enough to permit the Commission to impose the same obligations to preserve social priorities, including universal service, E911, disabilities access, consumer protection and assistance to law enforcement on IP-enabled information services as are applied to the telecommunications services that the IP based services are replacing and with which they compete. It is necessarily ``reasonably ancillary´´ to the Commission’s authority over those telecommunications services to impose analogous obligations on competing services to ensure a competitive level playing field and the preservation of congressional priorities."

However, some have argued that the FCC can rely on Title II telecommunications authority, or even theWireless Communications and Public Safety Act of 1999. Some have argued non-statutory principles such as "consumer expectation" and "solemn obligation".

More Reaction to the FCC's 911 VOIP Order

5/19. The incumbent local exchange carriers (ILECs) are pleased with the Federal Communications Commission (FCC) First Report and Order and Notice of Proposed Rulemaking adopted on May 19 that requires "interconnected VOIP service providers" to comply with 911/E911 rules.

Ed Merlis of the U.S. Telecom Association (USTA), a group that represents the interests of ILECs, stated in a release that "We applaud the Commission’s quick action to ensure that all service providers offer consumers access to emergency services."

Glenn Reynolds of BellSouth, an ILEC, praised the FCC's order. He stated in a release that "The FCC's action seems fair and demonstrates a willingness to make tough calls quickly ..."

Gary Lytle of Qwest, another ILEC, stated in a release that "We commend Chairman Martin for his leadership role ... VoIP providers must treat 911 access as integral to the service they provide, and as a necessary cost of doing business".

In addition, Kyle McSlarrow of the National Cable Telecommunications Association (NCTA) stated in a release that "We applaud Chairman Martin and the FCC for taking action on this important public safety issue which is of critical importance for every telephone customer, no matter what technology is used. Every customer expects 911 to be part of their basic voice service and the cable industry has and will continue to provide this essential service to our VoIP customers."

Level 3's CEO, James Crowe, stated in a release that it "welcomes and applauds" the FCC's order.

In contrast, Mark Cooper, of the Consumer Federation of America, wrote in a release that "public safety and security require that the FCC ensure that E-911 be effectively and ubiquitously deployed for all communications services, including Internet phone service."

"In its Order to this effect, however, the FCC must also meaningfully and enforceably mandate access by competitive companies providing Internet phone service to the underlying facilities and databases controlled by incumbent providers, on a competitively neutral and non-discriminatory basis."

“The incumbent track record of thwarting competition at consumers’ expense is too blatant to ignore. Requiring universal E-911 deployment in order to protect citizens’ lives, while leaving the door open for incumbents to raise consumer prices by blocking access by competitors would be robbing Peter to pay Paul.

Jeff Pulver, of, attacked the FCC's order. He wrote that "The FCC had a golden opportunity to take one positive steps to promote IP-based communications. The FCC could have prohibited ``port blocking´´ and compelled direct access to the ILEC-controlled emergency response infrastructure. Instead, the FCC chose to regulate the previously unregulated, and declined to regulate those that it has obvious authority to regulate -- the traditional telecom carriers.  As it stands, unaffiliated VoIP providers are left to the mercy or goodwill of their retail rivals. -- the telecom carriers that control access to the emergency response network."

"IP technology could allow for functions far beyond the capabilities of traditional communications networks, but it requires farsighted regulators to look at the technology with a fresh eye and a commitment not to stifle the potential and allow innovators to experiment and push the limits of IP technology.  Today, the FCC caved to the shortsighted vision and sacrificed our long-term emergency response capabilities and America’s role as a leader in communications, the Internet and innovation."

He also wrote that "What seems most bizarre to me is that the regulators don't even seem willing to give the unaffiliated VoIP providers the minimum set of tools necessary to accomplish their objective for a guaranteed nationwide E911 network that would allow anyone, anywhere to pick up any device, dial 911 and have an emergency responder find that caller. If regulators tell the industry to provide nationwide E911 for nomadic VoIP services, without simultaneously compelling fair access by unaffiliated VoIP providers to selective routers and prohibiting port blocking, how can they expect us to accomplish their mission? Make excessive demands on the never before regulated and most-vulnerable new start-ups, but don't dare impose any access obligation on the traditionally regulated entities, the only ones with the essential infrastructure? I don't get it."

While Pulver has had few kind words for the FCC's order, his VOIP service may grow more rapidly. That is, provides the Free World Dialup (FWD) service. FWD is a peer to peer (P2P) service. It does not appear to be subject to the regulatory requirements imposed by the FCC's order.

To the extent that the FCC's order has the effect of driving out of the market some independent VOIP providers that fall in the class of "interconnected VOIP service providers", and to the extent that the FCC's order results in higher prices for services provided by "interconnected VOIP service providers", some customers may migrate to unregulated P2P services. But then, FWD is a free service.

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There was no issue of the TLJ Daily E-Mail Alert on Thursday, May 19, 2005.
Summary of the FCC's 911 VOIP Order

5/19. The Federal Communications Commission (FCC) has not yet released the text of its First Report and Order and Notice of Proposed Rulemaking that requires "interconnected VOIP service providers" to comply with 911/E911 rules within 120 days of publication of this item in the Federal Register.

The FCC has not released the order. This is the standard procedure followed by the FCC for items adopted at Commission meetings. The FCC issued a brief release [PDF] that describes the content of this item. This release is short and vague, even by FCC standards. The four FCC Commissioners spoke at this event about this item, but said little about its content. Chairman Kevin Martin also spoke briefly with reporters after the meeting, and Tom Navin, the acting Chief of the FCC's Wireline Competition Bureau (WCB) conducted a brief news conference after the meeting.

VOIP Provider Obligations. The FCC release states that "The Order places obligations on interconnected VoIP service providers that are similar to traditional telephone providers in that they enable customers to receive calls from and terminate calls to the public switched telephone network (PSTN). It does not place obligations on other IP-based service providers, such as those that provide instant messaging or Internet gaming services, because although these services may contain a voice component, customers of these services cannot receive calls from and place calls to the PSTN."

Nothing disclosed at the meeting provides further clarification of, or a definition of, the class, "interconnected VoIP service providers". Navin did state that "Xbox would not covered". He also stated that "interconnectedness can be either direct or indirect". He added that "We do have a further notice with this item. We have solved as many of the problems as we possible could in a very quick period of time".

The FCC's release recited several obligations imposed upon "interconnected VoIP service providers". First, they "must deliver all 911 calls to the customer's local emergency operator. This must be a standard, rather than optional, feature of the service."

Second, they "must provide emergency operators with the call back number and location information of their customers (i.e., E911) where the emergency operator is capable of receiving it. Although the customer must provide the location information, the VoIP provider must provide the customer a means of updating this information, whether he or she is at home or away from home." (Parentheses in original.)

Third, "By the effective date, interconnected VoIP providers must inform their customers, both new and existing, of the E911 capabilities and limitations of their service."

ILEC Obligations. The FCC release includes only one obligation for the ILECs, which control most of the facilities of the 911 networks. It states that ILECs "are required to provide access to their E911 networks to any requesting telecommunications carrier. They must continue to provide access to trunks, selective routers, and E911 databases to competing carriers."

Notably, there is no requirement that ILECs provide any kind or access, or even interconnection, to "interconnected VoIP service providers". Moreover, the order does not ban port blocking.

Reporters asked FCC Chairman Kevin Martin about this after the hearing. He stated that "the incumbents, you know, continue to end up being required to provide access to the 911 elements of their networks to any other carrier when they request it. What is new about what we did today is that we are requiring VOIP providers to buy it."

He added that the ILECs' obligations are only "to any other carrier".

He was also asked about whether the order provides for regulation of rates. He said that rates would be "under the same rules that we have now". He made a reference to tariffs, but stopped when his press secretary ended the brief session.

Finally, the FCC release states that "The Commission will closely monitor this obligation. Interconnected VoIP providers must comply with these requirements, and submit to the Commission a letter detailing such compliance, no later than 120 days after the effective date of the Order."

Effective Date and Deadlines. Tom Navin said that 120 days means 120 after publication of a notice in the Federal Register. He said that this will likely occur in 30 to 45 days. Thus, interconnected VoIP service providers will be required to provide their customers 911/E911 services by about November 1.

However, this is largely an illusory transition deadline. First, the order itself contemplates that interconnected VoIP service providers will not be in compliance by this date. That is, it requires interconnected VoIP service providers to provide notice to their customers, not now, but on the effective date of the order, of VOIP services that are not compliant. However, if these service providers were compliant by the effective date, there would be no reason for giving such notices. The order therefore contemplates that services providers will not be fully compliant by the effective date, and further proceedings will continue.

Second, based on the notices of ex parte communications filed in recent weeks with the FCC, neither the VOIP industry nor the ILECs believe that compliance is possible by the effective date of the order.

For example, BellSouth, an ILEC, wrote in a notice [7 pages in PDF] of ex parte communication dated May 12 about the state of non-native and nomadic uses of VOIP. It wrote that "It is unrealistic to expect that these challenges will be solved and that E-9-1-1 and 9-1-1 functionality will be fully implemented for nomadic VoIP purposes by the end of the year."

An example of nomadic use of VOIP would be a customer of an interconnected VoIP service provider who travels with a laptop, and then uses that laptop, combined with broadband internet access services provided at hotels, coffee shops and other locations, to use VOIP services. Non-native refers to customers who obtain numbers that do not correspond to the place where they use the VOIP service.

Similarly, the VON Coalition wrote in an attachment to a  notice [9 pages in PDF] of ex parte communication dated May 12 that "it is not technically feasible for VoIP providers to provide nationwide E9-1-1 access for all nomadic customers -- which is not surprising since not all PSAPs can process E9-1-1 calls."

A PSAP is a "public safety answering point". It is a "facility that has been designated to receive 9-1-1 calls and route them to emergency service personnel". (See, definitions of the Wireless Communications and Public Safety Act of 1999).

Immunity. The FCC disclosed nothing at the meeting regarding immunity for interconnected VOIP service providers.

That is Section 4 of the Wireless Communications and Public Safety Act of 1999 enumerates several grants of protection from liability for various entities, including communications carriers. Section 4 is codified at 47 U.S.C. § 615a.

VOIP providers argued in comments filed with the FCC in this proceeding, essentially, that if they are to be subjected to the regulatory regime imposed upon communications carriers, then they should also enjoy the associated limitations of liability extended to communications carriers.

The 1999 Act is Public Law No. 106-81. Various provisions of the Act are now codified in various sections of the U.S. Code, including 47 U.S.C. § 222, 47 U.S.C. §251(e), 47 U.S.C. § 615, and 47 U.S.C. § 615a. This Act was S 800, sponsored by Sen. Conrad Burns (R-MT).

Navin said that this item will be released in "a matter of days rather than weeks".

Washington Tech Calendar
New items are highlighted in red.
Friday, May 20

The House will not meet.

The Senate will meet at 9:30 AM. It will resume its consideration of the nomination of Judge Priscilla Owen to be a Judge of the U.S. Court of Appeals for the Fifth Circuit.

12:00 NOON - 2:00 PM. The Progress and Freedom Foundation (PFF) will host a panel discussion titled "The Future of The Broadcast Flag: Implications for Congress, the FCC and the DTV Transition". The speakers will be John Rogovin (former FCC General Counsel), Fritz Attaway (MPAA), James Burger (Dow Lohnes), Mike Godwin (Public Knowledge) and Lawrence Sidman (Paul Hastings). See, notice. Location: Room 1537, Longworth Building, Capitol Hill.

12:15 PM. Federal Communications Bar Association's (FCBA) Wireless Telecommunications Practice Committee will host a luncheon titled "Hot Topics in Wireless". The speakers will be Sam Feder (assistant to FCC Chairman Kevin Martin), John Branscome (assistant to FCC Commissioner Kathleen Abernathy), Paul Margie (assistant to FCC Commissioner Michael Copps), and Barry Ohlson (assistant to FCC Commissioner Jonathan Adelstein). The price to attend is $15.00. RSVP by 5:00 PM on Tuesday, May 17th to Location: Sidley Austin, 6th Floor conference room, 1501 K Street, NW.

1:00 PM. Attorney General Alberto Gonzales will give a luncheon speech. For more information, call 202 514-2008. Location: Ballroom, National Press Club, 529 14th Street, NW.

Monday, May 23

The House will meet at 12:30 PM.

TIME CHANGE. 12:30 PM. The Senate Finance Committee's Subcommittee on Taxation and IRS Oversight will hold a hearing titled "Blowing the Cover on the Stealth Tax: Exposing the Individual AMT". There are many pending bills to modify or repeal the Alternative Minimum Tax (AMT). See for example, HR 703, the "AMT Middle Class Fairness Act of 2005" and HR 1186, the "Alternative Minimum Tax Repeal Act of 2005". Location: Room 628, Dirksen Building.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rulemaking (FNPRM) regarding its intercarrier compensation system. This FNPRM is FCC 05-33 in CC Docket No. 01-92. The FCC adopted this FNPRM at its meeting of February 10, 2005, and released it on March 3, 2005. See, notice in the Federal Register, March 24, 2005, Vol. 70, No. 56, at Pages 15030 - 15044. See also, story titled "FCC Adopts FNPRM in Intercarrier Compensation Proceeding" in TLJ Daily E-Mail Alert No. 1,076, February 14, 2005.

Tuesday, May 24

9:30 AM. The Senate Judiciary Committee has scheduled an executive business meeting. The SJC frequently cancels meetings without notice. The SJC rarely follows its agenda. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.

10:00 AM. The House Ways and Means Committee will meet to mark up HJRes 27, a joint resolution withdrawing the approval of the U.S. from the Agreement establishing the World Trade Organization (WTO).Location: Room 1100, Longworth Building.

10:00 The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2006 for the Department of Justice. Location: Room 192, Dirksen Building.

10:00 AM. The Senate Finance Committee will hold a hearing on numerous pending nominations, including Shara Aranoff (to be a Member of the International Trade Commission) and Timothy Adams to be Under Secretary for International Affairs at the Department of the Treasury. Location: Room 628, Dirksen Building.

10:00 AM - 2:00 PM. The Federal Communications Commission (FCC) will hold a pre-auction seminar for the Lower 700 MHz Band Auction (Auction No. 60). Pre-register by May 20. See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW.

POSTPONED. The Federal Communications Bar Association's (FCBA) will host a seminar on enforcement.

Deadline to submit to the Federal Communications Commission (FCC) reply comments and oppositions to petitions to deny in its antitrust merger review proceeding (transfer of control of licenses) associated with the acquisition of MCI by Verizon. See, FCC Public Notice DA 05-762 in WC Docket No. 05-75.

Wednesday, May 25

9:30 AM. The Senate Homeland Security and Governmental Affairs Committee will hold a hearings titled "How Counterfeit Goods Provide Easy Cash for Criminals and Terrorists". See, notice. Location: Room 562, Dirksen Building.

10:00 AM. The Senate Banking Committee will hold a hearing on pending nominations, including that of Ben Bernanke to be a Member of the President's Council of Economic Advisers. Location: Room 538, Dirksen Building.

TENTATIVE. 12:00 NOON. The Federal Communications Bar Association's (FCBA) State and Local Practice Committee will host a seminar regarding telecommunications industry mergers. For more information, contact Enrico (Erick) Soriano at esoriano at fw-law dot com, J.G. Harrington at jharringto at dlalaw dot com, or Brad Ramsay at jramsay at naruc dot org. Location:?

2:30 PM. The Senate Judiciary Committee's Intellectual Property Subcommittee has scheduled a hearing on piracy of intellectual property. The SJC frequently cancels meetings without notice. The SJC rarely follows its agenda. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.

Thursday, May 26

2:00 PM. The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2006 for the Department of Commerce. Location: Room S-146, Capitol Building.

Friday, May 27

Deadline to submit comments to the Bureau of Industry and Security (BIS) in response to its notice in the Federal Register pertaining to deemed exports. The BIS seeks comments regarding the report [64 pages in PDF] written by the Department of Commerce's (DOC) Office of Inspector General (OIG) titled "Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S.". See, Federal Register, March 28, 2005, Vol. 70, No. 58, at Pages 15607 - 15609.

Deadline to submit comments to the Copyright Office in response to its notice of proposed rulemaking (NPRM) regarding requiring eligible digital audio services availing themselves of the statutory licenses set forth in 17 U.S.C. §§ 112 and 114 to report their usage of sound recordings. See, notice in the Federal Register, April 27, 2005, Vol. 70, No. 80, at Pages 21704-21711.