Legislative Activity

House Commerce Committee Leaders Press FCC to Delay Vote on Incentive Auction Procedures

On July 14, Rep. Fred Upton (R-MI), Chairman of the House Committee on Energy and Commerce (House Commerce Committee), and Rep. Greg Walden (R-OR), Chairman of the Subcommittee on Communications and Technology (Communications Subcommittee) of the House Commerce Committee, wrote a letter to Federal Communications Commission (FCC) Chairman Tom Wheeler asking the FCC to postpone a vote on a Public Notice regarding the Broadcast Incentive Auction (Incentive Auction) procedures, which was set to be considered at the FCC’s July 16 Open Meeting. Citing new simulation data (available here and here) released by the FCC’s Incentive Auction Task Force on July 10, the House Commerce Committee leadership urged the FCC to remove that item from consideration at the July Open Meeting in order to allow interested parties, including FCC staff, sufficient time to analyze the data. After receiving the letter, the FCC removed the Public Notice from consideration at the July Open Meeting. FCC Commissioner Ajit Pai echoed the sentiments of the House Commerce Committee leadership in a statement that called for the FCC to release all relevant simulation data and applauded the postponement of the item. The FCC has rescheduled the vote on the Incentive Auction procedures for the FCC’s next open meeting on Thursday, August 6.

Anti-Spoofing Act Introduced in Senate Following Introduction in House

On July 14, Sen. Bill Nelson (D-FL) introduced S.1759, a bill to prevent caller identification (Caller ID) “spoofing,” which is a technique that allows a caller to change the phone number that appears on the called party’s caller ID. The technique is frequently used to trick consumers or law enforcement officials. This issue has now received consideration by both the Senate and the House of Representatives (House). On June 4, Rep. Grace Meng (D-NY) introduced a similar bill, H.R. 2669, in the House. The Senate bill has been referred to the Senate Committee on Commerce, Science, and Transportation.

This Week’s Hearings:

• Wednesday, July 22:  The Communications Subcommittee of the House Commerce Committee will hold a hearing entitled “Promoting Broadband Infrastructure Investment.” This is the rescheduled date for this hearing, which was originally supposed to take place on July 14.

Regulatory Activity

FCC Announces Tentative Agenda for August Open Meeting

On July 16, the FCC announced that the following items are tentatively on the agenda for the FCC’s Open Meeting scheduled for Thursday, August 6:

• Emerging Wireline Networks and Services. The FCC will consider a Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking that, according to the Open Meeting announcement, “will advance longstanding competition and consumer protection policies on a technologically-neutral basis” and “further the technology transitions underway in our Nation’s fixed communications networks.” This item and the item immediately below are discussed in our post here.
• Ensuring Continuity of 911 Communications. The FCC will consider a Report and Order that “would protect consumers through the transitions from legacy copper networks by adopting rules to ensure that consumers have options . . . to maintain 911 communications at home during power outages.”
• Mobile Spectrum Holdings. The FCC will consider an Order on Reconsideration addressing petitions for reconsideration of “certain aspects of the Mobile Spectrum Holdings Report and Order” issued by the FCC June 2, 2014. In that Order, the FCC updated its “spectrum screen” – a gauge for spectrum holdings that the agency uses to determine whether a spectrum transaction warrants increased scrutiny – to reflect changes in spectrum bands used by wireless providers. This item and the item regarding Incentive Auction Procedures were originally on the FCC’s July 16 Open Meeting agenda, but were removed. Chairman Wheeler discussed these items in a June 25 FCC Blog post.
• Incentive Auction Procedures. As the “next step” to commencing the Broadcast Incentive Auction in the first quarter of 2016, the FCC will consider the Incentive Auction Procedures Public Notice. The FCC stated that this item “adopts a balanced set of auction procedures that will ensure an effective, efficient, and timely auction [and] establishes final procedures for setting the initial spectrum clearing target, qualifying to bid, and bidding in the reverse and forward auctions.”
• Unlicensed Operations in TV Bands and 600 MHz Band. The FCC will consider a Report and Order adopting rules for unlicensed services in the “broadcast television bands and in the post-incentive auction 600 MHz band” that are “intended to maximize unlicensed access to spectrum while ensuring that licensed services are protected from harmful interference.” Chairman Wheeler posted to the FCC Blog on July 16 discussing this item and the item regarding Wireless Microphones. Chairman Wheeler’s post stated the item will “assure unlicensed spectrum is available in every market” – thus providing consumers with the “benefit . . . of increased investment and innovation in unlicensed products and services” – and proposes technical standards for unlicensed operations that aim to reduce the risk of interference to licensed users and “create certainty for unlicensed device users and manufacturers.”
• Wireless Microphones. The FCC will consider a Report and Order that “adopts a plan to accommodate the long-term needs of wireless microphone users by providing new opportunities for their use in the broadcast television bands and in several other frequency bands.” Chairman Wheeler’s post stated that the item will “address the long term needs of wireless microphone users” by “altering operational parameters and expanding access to spectrum.”

The FCC’s Open Meeting will be held Thursday, August 6 at 10:30 a.m. in Room TW-C305 of the FCC”s headquarters and will be streamed live at fcc.gov/live.

FCC Revises Competitive Bidding Rules for Spectrum Auctions

On July 16, the FCC adopted a Report and Order, Order on Reconsideration, Third Order on Reconsideration, and Order revising the FCC’s “Designated Entity Rules,” as noted in a News Release and a Fact Sheet accompanying the vote to adopt the item (the text of which has not yet been released). “Designated entities” or “DEs” include certain small businesses, rural service providers, and businesses owned by members of minority groups and women. The FCC’s DE Rules are “designed to facilitate [DEs’] ability to participate in spectrum auctions and the wireless marketplace” by offering “bidding credits” to DEs. A “bidding credit” is a percentage discount on the winning bid amount of a DE in a spectrum auction.

According to the News Release, the FCC has: (1) eliminated the “attributable material relationship rule” that limited the amount of spectrum a small business could lease “in order to provide small businesses the flexibility to leverage leasing and other spectrum use agreements to gain access to capital and operational experience”; (2) adopted a 15 percent bidding credit for “qualifying service providers that provide commercial communications service to a customer base of fewer than 250,000”; (3) established a cap on the total amount of bidding credits that a “small business or rural service provider” can receive in any particular auction, which will vary by auction (in the Broadcast Incentive Auction, the cap will be $150 million); (4) modified the FCC’s attribution rules by limiting the amount of spectrum that “non-controlling disclosable interest holders of a [DE] – such as investors – can use” in the five years after the spectrum is obtained by the DE; and (5) prohibited “joint bidding and multiple applications by one party as well as parties with common controlling interests except in limited circumstances.”

D.C. Circuit Upholds FCC Justification for Applying Nielsen Market Contours in Allowing Cumulus to Purchase Licenses for Florida, Alabama Radio Stations

On July 17, the Court of Appeals for the District of Columbia Circuit (D.C. Circuit) affirmed the FCC’s decision to allow Cumulus – a radio broadcasting company – to acquire radio licenses in the Pensacola, Florida and Mobile, Alabama markets over an objection from Cumulus’ competitor ADX Communications. FCC rules cap the number of radio stations that one entity can own in a radio market; the FCC defines a “radio market” according to contours set by The Nielsen Company (Nielsen).

When Cumulus proposed to purchase the Pensacola and Mobile radio licenses at issue in the case, ADX petitioned the FCC objecting to the transaction. ADX’s principal argument was that although Nielsen treated the Pensacola and Mobile markets separately, because the markets were served by 14 radio stations in common, the FCC should deviate from the Nielsen markets and treat the region as one market. The FCC dismissed ADX’s objection, finding that there was nothing “new or unique” about adjacent Nielsen markets sharing “numerous stations” and that the Media Bureau had conducted a “full public interest analysis” and concluded that post-transaction competition in the market would be preserved.

ADX appealed the FCC’s decision to the D.C. Circuit, arguing that the FCC’s “robotic” application of its rules did not adequately consider the competitive realities of the market and was therefore arbitrary and capricious. The D.C. Circuit disagreed, finding the agency’s application of the Nielsen market system rational as the FCC had found that the previous market definition system – the “contour-overlap methodology” – was flawed in that it created “perverse incentives” to consolidate ownership and “often did not meaningfully capture the actual state of competition in a given area.” The D.C. Circuit also reasoned that although the transaction would result in an increase in market concentration, the FCC’s reliance on the public interest analysis was rational as the transaction would preserve the diversity of media ownership in the market by holding constant the number of owners.

FCC Reaches $17.5 Million Settlement with T-Mobile for Nationwide 911 Outages

On July 17, the FCC announced that the agency’s Enforcement Bureau (EB) had reached a $17.5 million settlement with T-Mobile to resolve EB’s investigation into two 911 service outages that occurred on the company’s national network on August 8, 2014. According to an FCC News Release, the outages together prevented T-Mobile customers from reaching 911 services for “approximately three hours.” To resolve EB’s investigation, T-Mobile will pay a $17.5 million fine and has agreed to implement a “compliance program” that will “strengthen its 911 resilience and its 911 risk management processes” including filing “detailed compliance reports” with EB. Rear Admiral (ret.) David Simpson, Chief of the FCC’s Public Safety and Homeland Security Bureau, stated that the settlement will “not only . . . address risk of 911 service failure, but also [] improve [T-Mobile’s] 911 call center reporting and its ability to recognize, respond to, and rapidly recover from 911 disruptions.”

FCC Adopts Order to “Modernize” Field Operations

On July 16, the FCC adopted and released an Order to “modernize” the agency’s field operations within the FCC’s EB. In the Order, the FCC states that “technological changes and increasingly limited resources” necessitated the agency taking a “fresh look” at the field office model first established in 1996. Specifically, the FCC has: (1) closed 11 field offices around the country (fewer than the 16 field offices the FCC originally proposed to close, as discussed in our post here) and relocated three others to nearby FCC-owned properties; (2) required that all EB field agents have “electrical engineering backgrounds”; (3) “devote[d] resources” to provide field staff with “training and [portable, cost-effective devices as well as remotely-operated spectrum monitoring equipment deployable on a permanent or temporary basis] to address new interference threats”; (4) directed EB to establish procedures for “industry and public safety complainants to escalate their complaints within the [field office] organization”; (5) committed to “work[ing] with outside stakeholders to develop a comprehensive policy and enforcement approach to the issue of unlicensed radio broadcasting” (i.e., pirate radio); and (6) implemented a “nationwide outplacement effort” to help the displaced field office employees find other positions.

Finally, a News Release accompanying the Order stated that the FCC will be stationing “rapid deployment teams” in Columbia, Maryland and Denver, Colorado to “supplement the enforcement efforts of other field offices when necessary and support high-priority enforcement actions nationwide.”

Comments Due August 17 in Lifeline Reform Proceeding

As discussed in our post here, the FCC has issued a Second Further Notice of Proposed Rulemaking (SFNPRM) seeking comment on various proposals to “modernize and restructure” the Lifeline program. Per the SFNPRM, the FCC is seeking comment on proposals to: (1) establish minimum service levels for voice and broadband Lifeline service to “ensure value for our [Universal Service Fund] dollars and more robust services for low-income Americans,” (2) “reset” the Lifeline eligibility rules, (3) “ensur[e] the effectiveness of [the FCC’s Lifeline] administrative rules while also ensuring that they are not unnecessarily burdensome”, (4) “enhance consumer protection”, and (5) “improve administration and ensure efficiency and accountability in the program.”

According to the SFNPRM’s publication in the Federal Register, comments are due August 17, and reply comments are due September 15.