The 3GPP Organizational Partners are in agreement that the Project’s name and logos may be made available for use by manufacturers and service providers on a purely voluntary basis to declare that their products are based on the Project’s specifications. In conjunction with release of the logo, 3GPP provides the terms of use and how to apply for permission to use its 5G logo: http://www.3gpp.org/about-3gpp/legal-matters/logo-use.

Implementers of the 5G specification will have the chance to mark their equipment and documentation with the 5G logo and self-declare conformity to the 3GPP specifications. The 3GPP partners plan to monitor any possible misuse of the logo through reports by members of the 3GPP community and underscore that the grant of permission to use the 3GPP 5G logo “does not involve or imply any certification by the partners in 3GPP or the 3GPP community that the products or services of manufacturers or service providers actually comply with the 3GPP specifications.” Rather, the 3GPP partners intend that the use of the logo simply provides “a basis of reference for users, network operators and other manufacturers and service providers.”

3GPP has a pending checkpoint in March 2017, when the organization will assess progress on various items, including forward compatibility between existing radio access networks and 5G New Radio systems. New Radio is a wireless standard which encodes data across multiple carrier frequencies.

In its petition, TextMe requests that the Commission: (1) clarify the meaning of the term "capacity" as used in the TCPA’s definition of "automatic telephone dialing system" ("ATDS") and (2) clarify that users of TextMe’s service, instead of TextMe itself, make or send calls or text messages for purposes of the TCPA. Alternatively, TextMe requests that the Commission clarify that third-party consent obtained through an intermediary satisfies the TCPA’s “prior express consent” requirement for calls and texts to wireless numbers.

This petition marks the latest effort from entities seeking clarification on the definition of an ATDS. And while the Commission has begun to address some of the nearly two dozen TCPA petitions remaining on its docket, it has yet to resolve many critical questions that could provide much needed clarity for telemarketers and class action plaintiffs alike. One such question is the applicability of the TCPA to text messaging. FCC Commissioner Michael O’Rielly recently expressed hesitation in applying the TCPA to text messaging, since Congress enacted the TCPA before the first text message was ever sent. The TextMe case provides the Commission with an opportunity to consider the issue anew, so interested parties may consider addressing it in their comments.

Comments are due May 7, 2014, while replies are due May 22, 2014.

The FCC has an inconsistent history in addressing cramming -- it still does not have any required verification rules for placing charges on telephone bills, for example. Yet the FCC has taken occasional enforcement actions, proposing significant fines or settling cases for significant amounts. This public notice provides an opportunity for the FCC to clarify, for carriers and third-party providers alike, the extent of a service provider's duties with respect to charges billed on telephone invoices.

The FCC's action comes after its April 2012 Further Notice of Proposed Rulemaking in the cramming docket. In that FNPRM, the FCC sought comment on two primary issues: (1) whether to require consumer "opt-in" to permit third party charges on telephone bills, and (2) whether to adopt rules to address cramming on wireless bills. Comments were received last summer on these two issues.

In April and May of this year, both the FCC and the FTC held workshops to discuss cramming issues. In addition, Vermont commissioned a study of wireless charges that it claims indicate the problem of cramming is widespread on wireless invoices. (Wireless carriers, not surprisingly, do not agree).

The FCC's public notice seeks comment on the Vermont study and other recent developments. The public notice asks for additional comment on the "extent to which consumers may continue to be unaware that third-party charges can appear on their wireline and CMRS bills and about their ability to successfully resolve disputes regarding unauthorized third-party charges." The comment date will be set after publication of the notice in the Federal Register. Most likely, comments will be due in late October, by which time most observers expect Chairman Wheeler to have assumed office.

For wireless carriers and app developers using carrier billing, this proceeding could be very important. Check back here for updates on this proceeding.

Although the ruling is an important victory, the FCC's rationale for permitting the messages is relatively narrow and not all confirmatory messages will be permitted. Moreover, the FCC's ruling in effect imposes a requirement that confirmatory texts be sent within five minutes of the consumer's opt-out request. Companies engaging in mobile marketing should review their practices carefully before sending additional confirmatory text messages in reliance on the FCC's ruling.

Background

The TCPA and the Commission's implementing rules prohibit the use of autodialers to make non-emergency calls to mobile phones without the "prior express consent" of the recipient. These restrictions have been applied to new "call" technologies, including SMS and MMS text messages. The SoundBite petition concerned a practice by marketers to send a confirmation by text messages to consumers that request to opt-out of receiving future text messages. The confirmatory text messages at issue were one-time notifications, sent within minutes of the consumer's opt-out request, that did not contain any marketing information. The sending of such confirmatory text messages is recommended by the guidelines of the Mobile Marketing Association ("MMA"), an influential set of guidelines for mobile marketing companies. (CTIA member wireless carriers, for example, require marketers to follow the MMA guidelines in their mobile marketing campaigns).

Consent-Based Approval

In the SoundBite ruling, the FCC reasoned that opt-out confirmation messages fall with a consumer's initial consent to receive marketing text messages. That is, the FCC found that "a consumer's prior express consent to receive text messages from an entity can be reasonably construed to include consent to receive a final, one-time text message confirming that such consent is being revoked at the request of the consumer."

The Order emphasized, however, that consumer consent to receive such messages is not unlimited. Specifically, the FCC concluded that a consumer's consent is limited to one additional message sent after receipt of the opt-out request, and that the consent does not extend to the receipt of a confirmatory text that contains marketing or promotional information. The confirmatory message also may not attempt to convince the consumer to reconsider his or her opt-out decision.

In addition, in a requirement that was unexpected, the FCC found that while confirmation messages sent within five minutes of receiving an opt-out request are presumptively within the recipient's original consent, there is a "strong likelihood" that messages sent outside of the five-minute window are not within the consumer's consent. As such, messages sent after the five-minute mark will require a sender to make a showing that the delay was reasonable.

Other Confirmatory Texts May Still Violate the TCPA

Because the FCC based its decision on the consent rationale, it did not address SoundBite's arguments that (a) SoundBite does not use an autodialer to send such messages because the software used to send text messages does not have the capacity to store or produce telephone numbers using a random or sequential number generator, and (b) confirmatory texts fall within the 30 day grace period to effectuate opt-out requests received from consumers. Moreover, because the FCC's rationale is based on the consumer's initial consent to receive text messages, the permissibility of the confirmatory text message will depend upon whether the consumer in fact provided consent in the first place. Text messages to consumers who did not provide consent -- or did not properly provide consent -- are not covered by this ruling. As a result, the FCC ruling is narrower than some headlines may suggest.

Finally, it is important to note that the FCC still has not addressed several petitions that seek to classify text messaging under the FCC's rules. Those pending classification decisions have important implications for both the rights and obligations of entities that provide text messages or send text messages in mobile marketing campaigns.

For all its significance in the broadcast world, the decision is equally significant for non-broadcasters. In Fox Television, the Supreme Court sets a high bar for FCC enforcement of general obligations under the Communications Act, not just the FCC’s indecency standard. As a result, Fox Television will constrain the FCC’s enforcement abilities in several prominent areas of common carrier regulation as well. Most significantly, we believe that Fox Television limits the FCC's ability to impose fines for violations of Section 201(b)'s prohibition on unjust and unreasonable practices. Unless the FCC has provided fair notice to common carriers of the conduct required under Section 201(b), it may not impose sanctions in the enforcement context.

FCC v. Fox Television. These cases arise from three well-publicized incidents in broadcast television. Two incidents involve Fox’s live broadcasts of awards shows in which Cher and Nicole Richie, respectively, uttered fleeting expletives during unscripted portions of the shows. In the third incident, an ABC broadcast of NYPD Blue included brief female nudity. The history of the FCC’s actions with respect to these incidents is complicated, but in each instance, the FCC found the broadcasts indecent. After the Supreme Court held that the FCC’s so-called “fleeting expletive” rule was not arbitrary and capricious, the 3rd Circuit reviewed the constitutionality of the FCC action. The court reversed the FCC’s action, and the FCC sought review before the Supreme Court.

The Court upheld the 3rd Circuit’s outcome. The Court ruled (8-0) that the FCC failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives or brief nudity could be the basis for enforcement of the indecency prohibition. The Court found that the FCC enforcement actions therefore violated the Due Process Clause of the Fifth Amendment. Importantly, the Court did not reach the First Amendment implications of the FCC’s enforcement action. The Court also was careful to note that it was not addressing the constitutionality of the FCC’s current indecency policy (i.e., as adopted after the Fox and ABC broadcasts, but before enforcement action was taken against the networks)., nor was it limiting the FCC’s ability to modify that policy in light of the public interest and applicable legal requirements.

Implications for non-broadcast cases. Although the factual context involves television broadcasts and the FCC’s “fleeting expletives” policy, the Court’s decision is much broader in its impact. The Court’s “fair notice” holding is not limited to broadcast indecency. As the Court explained,

A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required.

The Court held that this principle results from two related due process concerns: (1) regulated parties “should know what is required of them so they may act accordingly,” and (2) the rules must be precise enough “so that those enforcing the law do not act in an arbitrary or discriminatory way.”

These principles will have an impact on a wide range of FCC enforcement activities. In particular, we’ve noted in this blog the recent trend of FCC cases relying upon Section 201(b) to impose fines for cramming, prepaid card marketing and other carrier practices found to violate the requirement that all practices for and in connection with telecommunications service be “just and reasonable.” Fox Television will significantly constrain the FCC’s ability to impose fines in 201(b) cases, at least in the absence of clear FCC rules defining the conduct required or prohibited. This decision will place over $35 million in forfeitures proposed in 2011 in doubt.

Second, Fox Television takes a broad view of what FCC enforcement actions implicate this principle. The Court rejected an FCC claim that it did not impose a sanction where, in one of the incidents, the FCC found the broadcast indecent but declined to impose a fine for the broadcast. The Court found the possibility of increased penalties for future violations to render the FCC’s action sufficiently punitive to implicate the Due Process clause. The FCC has a similar authority in non-broadcast cases to consider a carrier’s “history of compliance” in setting a penalty. As a result, non-broadcast enforcement actions will be impacted, even if they do not impose monetary forfeitures.

Collectively, the releases demonstrate that the FCC will continue to work cooperatively with the FTC and the Administration (including the NTIA) to address privacy issues in the mobile market. The FCC appears to believe it has sufficient statutory authority to act on mobile and device privacy, with its emphasis being on its jurisdiction over carrier practices in connection with both services and devices.

Public Notice Seeking Comments. While the FCC has been active in protecting CPNI both from a rulemaking and enforcement perspective, it has not taken significant action on the policy/rulemaking front since its 2007 rule changes to address pretexting (pretending to be a customer or other authorized person to obtain access to that customer’s private communication records). At that time, the FCC adopted a Further Notice of Proposed Rulemaking to address the obligations of mobile carriers to secure the privacy of customer information stored on mobile devices. At the time, most carriers indicated that consumers control the information residing on their devices. However, late last year several large wireless carriers responded to inquiries from Senator Al Franken and acknowledged using software embedded or pre-installed on wireless devices to collect information about the performance of the devices and the provider’s network.

Although several large wireless carriers have stated that the information gathering is used to collect information about their networks from the perspective of users’ devices, the FCC is concerned about whether consumers are given meaningful notice and choice with respect to the collection of this data. In the Public Notice, the FCC is seeking input from industry and consumers on a series of questions designed to refresh the record for the purpose of potentially issuing a declaratory ruling clarifying carriers’ obligations with respect to information collected from and stored on mobile devices. The specific questions the FCC on which the FCC seeks comment include a set of broad questions that carry themes reflective of recent Administration and FTC activity with respect to mobile applications privacy. These themes, include transparency, notice and consent, data security, as well as “privacy by design”. The FCC also asks for comment on how the following factors, if at all, impact a mobile carrier’s obligations under the CPNI rules to protect the privacy of customer information:

• Whether the device is sold by the service provider;
• Whether the device is locked to the service provider’s network;
• The degree of control that the service provider exercises over the software that collects or stores information from the device;
• The service provider’s role in connection with the device’s operating system, pre-installed software or security capabilities;
• The manner in which the information is used;
• Whether the information pertains to voice service, data service, or both; and
• The role of third parties in collecting and storing data.

Comments will be due 30 days after publication in the Federal Register and replies will be due 15 days later.

FCC Staff Report on Location-Based Services. On Friday, the FCC also released its long-anticipated report on LBS. The Staff Report notes that the FCC has decades of experience in protecting consumer privacy, and that, as the expert agency on communications and broadband networks, the agency in conjunction with its federal partners in the Executive Branch and at other independent agencies, has an important role in protecting consumer privacy in the future. LBS offer many conveniences to consumers and are gaining in popularity. However, it cautions that LBS “have the inherent ability to create accurate snapshots of their users’ activities that can contain very personal information.” As such, the Staff Report expresses caution in the use and monitoring of LBS. It identifies the FCC’s goals in monitoring LBS to be three-fold: ensuring that personal information is protected from misuse and mishandling, requiring providers to be transparent about their practices, and enabling consumer control and choice.

The Staff Report does not make any specific recommendations or propose best practices for carriers. Instead, it offers a useful overview of the FCC’s role in privacy regulation and enforcement, the LBS market, the FCC’s June 2011 Forum on LBS, and privacy issues for LBS, and provides commentary on issues it will be monitoring:

• Consideration of Privacy Issues at Earliest Stages of Product Development. What are the most effective means to ensure privacy considerations become an integral part of the product design and development process for all players in the LBS industry? What should consumers be told?
• Security of data. What are the rights, duties, and obligations of the parties that generate, aggregate, or hold LBS-related data to secure such data from unauthorized disclosure or access? Do they vary as a result of a party’s relationship with the customer?
• Timing and sufficiency of notice. How much information should be pushed to consumers at different points in their interaction with an LBS, mobile, application or other provider and how should it be presented? Must the information be provided each time an application or service is used? Should there always be an opt out?
• Data Minimization. Should parties be encouraged to collect the minimal amount of data technically required to provide a location-based service and retain that data for the minimum amount of time necessary?

The Staff Report concludes with the admonishment that the FCC may take action, “if privacy issues are not met as effectively and comprehensively as possible or within reasonable time frames.”

Peter Swire, a professor at The Ohio State University Michael E. Moritz College of Law and a Senior Fellow with the Center for American Progress, opened the seminar with a keynote address that gave historical context to the most recent regulatory efforts addressing consumer privacy. Professor Swire’s remarks were followed by two panel sessions that included six experts representing key industry representatives and the federal agencies integral to recent privacy initiatives. The first panel discussed children's online privacy and the Federal Trade Commission’s proposed revisions to the Children's Online Privacy Protection Rule. The second panel discussed various consumer privacy enforcement and regulatory initiatives relating to mobile apps.

For more on the seminar, including a synopsis of key takeaways, see the Kelley Drye client advisory. An audio recording of the full program is also available.

Not surprisingly, the FCC Commissioners have praised the industry for these new "voluntary" measures. Statements from Chairman Genachowski, and Commissioners Copps and Clyburn have already been released.

This agreement likely will allow the FCC to close its "bill shock" rulemaking proceeding without adopting formal rules. The new Guidelines will have to be reviewed carefully, however, particularly since Commissioner Clyburn's statement asserts that the guidelines contain a mechanism to assist the FCC's enforcement of them. That sounds more like a mandate than voluntary guidelines.

In a Public Notice released yesterday, the FCC sought comment on a Guidance Request from USAC concerning the reporting of revenues from text messaging services (which is most commonly provided via short message service (SMS) technology). In the Guidance Request, USAC stated that audits of the Form 499-As of "multiple contributors" have identified a disparity in the reporting of text messaging revenues. According to USAC, some providers report the revenue as non-telecom revenue on line 418.3 of the Form, while others report it as mobile service revenue on line 409 of the Form.

USAC notes that the Commission "has not determined the regulatory classification of text messaging" and, as a result, USAC "is unable to determine the proper classification of text messaging revenues." Based on this assertion, it is safe to assume that USAC either has placed on hold the audits it referenced, or it shied away from reclassifying text messaging revenues in the interim.

This, of course, is not the first time that parties have been faced with the classification of text messaging. As we've covered before, blocking of SMS and "short codes" has led to litigation in the past, as have text-based marketing campaigns. These proceedings typically have drawn little outside interest. Most directly, in December 2007, Public Knowledge and several other consumer organizations asked the FCC to classify text messaging as a Title II service, or alternatively, to apply non-discrimination obligations to text messaging if it is governed by Title I. The FCC received comment on the Public Knowledge petition, but it has not taken further action. It is hard to see how the USAC Guidance Request will fare any better.

A few weeks ago, Verizon announced $50 million in customer credits related to the "mystery fee" charges. At the time, the FCC confirmed it was investigating, but it withheld its powder about its own enforcement action. Today, the FCC announced a settlement and the $25 million "voluntary payment" by Verizon Wireless. Click here for the press release and text of the consent decree.

The FCC highlighted the following provisions in its press release:

• $25 million voluntary contribution to the federal treasury;
• minimum $52 million in consumer refunds;
• cessation of billing for "unauthorized charges";
• revised consumer disclosures and a "data block" service option.

In addition, the consent decree contains training and compliance monitoring provisions over two years.

The latest example of this trend is a complaint brought in US District Court by text broadcaster EZ Texting, Inc. against T-Mobile USA. In the complaint, EZ Texting alleges that T-Mobile unlawfully blocked EZ Texting's "short code" (a six digit number to which consumers may direct text messages) on T-Mobile's network. The reason, as alleged by EZ Texting, was that T-Mobile "did not approve" of an EZ Texting customer that provided information concerning the location of legal medical marijuana dispensaries in California.

EZ Texting alleges that text messages are "calls" and that Title II's common carrier obligations apply, most notably, Section 201's prohibition on unjust and unreasonable practices and Section 202(a)'s non-discrimination requirement. EZ Texting also seeks a temporary restraining order and a preliminary injunction. The court set a hearing on the request for September 30.

The complaint already has garnered a fair amount of attention from others. Public Knowledge posted on its blog about the case, arguing that the case illustrates the need for the FCC to act on Public Knowledge's 2007 Petition for Declaratory ruling seeking classification of text messaging as a Title II service. About 75 parties filed comments or replies in response to that petition.

Read the Ad Law Access story here.

With the FTC active in enforcement on prepaid card and mobile marketing matters, and with the FTC seeking an end to the "common carrier exception" to its jurisdiction, it is worth monitoring activities at the FTC.

The FCC sought public comment on Club Texting's petition, but the only comment was filed by another text broadcaster. Not surprisingly, the commenter also supported a ruling that the FCC will apply the same standard to text broadcasters that it applies to fax broadcasting. No consumers, class action plaintiffs or public interest groups filed in response to the petition.

With such little comment, it is unlikely the FCC will rule on the petition any time soon, if at all. This issue most likely will be addressed initially in litigation challenging a mobile marketing campaign.

Background on the Case

Laci Satterfield became a registered user of Nextones in order to receive a free ring tone. During the registration process, Ms. Satterfield checked a box which read, in part: "I would like to receive promotions from Nextones affiliates and brands." On January 18, 2006, Ms. Satterfield received a text message from Simon & Schuster advertising a novel by Stephen King. Shortly thereafter, Ms. Satterfield filed a class action lawsuit alleging that Simon & Schuster's text message campaign violated the TCPA.

In June 2007, the Federal Court for the Northern District of California granted summary judgment to Simon & Schuster holding that the company did not violate the TCPA. Specifically, the court determined that the text message campaign did not violate the TCPA's prohibition against using an automatic telephone dialing system (an "ATDS") because the device used to send the messages did not fall within the statutory definition of an ATDS. Moreover, the court found that Ms. Satterfield had agreed to receive text messages when she registered for Nextones.

Ninth Circuit Opinion

On Friday, June 19, 2009, the Ninth Circuit Court of Appeals reversed the district court decision and remanded the case for further proceedings. The Ninth Circuit held that the district court had erred because (1) the text message was a "call" within the meaning of the TCPA, (2) there was a disputed issue of material fact as to whether the system Simon & Schuster used was an ATDS, and that (3) Ms. Satterfield did not consent to receive messages from Simon & Schuster because Simon & Schuster is not an affiliate or brand of Nextones.

The TCPA applies to certain types of "calls." Simon & Schuster had argued that the sending of text messages did not constitute a "call" under the TCPA. Although the district court did not rule on that point, the Ninth Circuit disagreed with Simon & Schuster's argument. The term "call" is not defined by the TCPA. However, the Federal Communications Commission has noted that the statute

encompasses both "voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls, provided the call is made to a telephone number assigned to such service." The Ninth Circuit found this interpretation to be reasonable and, therefore, that the text message campaign was subject to the TCPA.

The TCPA generally prohibits the use of an ATDS to place "calls" to a mobile number without the "prior express consent of the called party." An ATDS is equipment that has "the capacity to store or produce telephone numbers to be called, using a random or sequential number generator and to dial such numbers." The district court had held that the system used to send the messages was not an ATDS because the system did not actually store, produce, or call numbers using a random or sequential number generator. The Ninth Circuit, however, held that the proper question was whether the system had the capacity to do those things. There was no evidence in the record on that point.

Simon & Schuster had argued, and the district court agreed, that Ms. Satterfield had consented to receive text messages when she signed up for Nextones. The Ninth Circuit noted, however, that the term to which Ms. Satterfield had agreed specifically referred to promotions from Nextones "affiliates" and "brands." The Ninth Circuit found that Simon & Schuster was not an affiliate of Nextones because Nextones neither owns nor controls Simon & Schuster. Moreover, Simon & Schuster was not a brand of Nextones. Therefore, the consent that Ms. Satterfield provided on the registration form did not apply to the messages sent by Simon & Schuster.
It's important to note that the Ninth Circuit didn't decide that Simon & Schuster violated any law. Instead, it decided that the district court should not have granted summary judgment in the company's favor because of various outstanding factual issues. Nevertheless, this decision — along with whatever the district court decides on remand — is likely to affect every company that sends text messages to consumers.

What This Means for Marketers

Consumers are showing a greater willingness to interact with companies on their mobile devices. However, consumers are only willing to interact on their own terms, and they don't want to receive unsolicited messages. If a consumer gets a text message he didn't want, that consumer is likely to complain. Moreover, those complaints are likely to lead to lawsuits and regulatory actions. In recent years, many companies have paid high prices — up to $7 million — for failing to get adequate consent in mobile promotions. Those types of challenges are likely to continue, so companies need to make sure they comply with relevant laws.

The key lesson for mobile marketers is that they should not send text messages to any consumer unless the consumer has provided express consent to receive messages from the sender. When seeking consent from consumers, it's important to make sure that the consumer understands the terms to which he is being asked to agree. Marketers have little to gain and a lot to lose from sending messages that consumers did not specifically want. Therefore, it is important to clearly disclose what types of messages a consumer can expect to receive and which company will send the messages.

Kelley Drye Client Advisory: Ninth Circuit Issues Opinion on a Mobile Marketing Campaign