You will find more details about these items on the May meeting agenda after the break.

Reducing Interstate Rates and Charges for Incarcerated People – The Third Report and Order, Order on Reconsideration, and Fifth FNPRM all have different purposes related to reducing the telephone service rates for inmate phone calls. The Third Report and Order would lower the interstate interim rate caps to $0.12 per minute for prisons and $0.14 per minute for jails with populations of 1,000 or more. It would permit an additional allowance of $0.02 for negotiated site commission payments, and eliminate the separate interstate collect calling rate cap. The Report and Order would cap international calling rates, change ancillary service charge rules for third-party financial transaction fees, and adopt a new mandatory data collection to gather data and set permanent rates. The Report and Order would also reaffirm providers’ obligations regarding access for incarcerated people with disabilities. The Order on Reconsideration would reaffirm the FCC’s findings in the 2020 Inmate Calling Services Order that the jurisdictional nature of a telephone call for purposes of charging consumers depends on the physical location of the originating and terminating endpoints of the call. The FNPRM seeks comment on the provision of communications services to incarcerated individuals with disabilities, permanent interstate and international rate caps, and reforms to site commission payments and rules regarding ancillary service charges.

Strengthening Support for Video Relay Service – The NPRM suggests a continued use of a tiered rate structure for the next VRS compensation plan. It also seeks comment on whether to adjust tiered rate levels, bring average provider compensation closer to allowable costs, or defer rate changes for two years while waiting for a resolution of uncertainty about post-pandemic changes in VRS costs and demands. The Order would extend current VRS compensation rates through December 31, 2021, or the effective date of compensation rates adopted by the NPRM, whichever is earlier.

Shortening STIR/SHAKEN Extension for Small Providers Likely to Originate Robocalls – The Third FNPRM proposes to shorten the extension for small voice service providers that are most likely to originate illegal robocalls. These small providers would have to implement STIR/SHAKEN in the IP portions of their networks by June 30, 2022—shortening the extension by one year. The FNPRM seeks comment regarding the best methods to identify and define the small voice service providers that are at a heightened risk or originating an especially large amount of illegal robocall traffic. It proposes three measures to identify such providers that would be subject to a shortened implementation deadline:

• small voice service providers that originate more than 500 calls per day for any single line in the normal course of business;
• small voice service providers that receive more than half their revenue from customers purchasing services that are not mass market services; or
• small voice service providers that offer certain service features to customers commonly used for unlawful robocalls, such as the ability to display any number in the called party’s caller ID, or to upload and broadcast a prerecorded message.

Section 214 Petition for Partial Reconsideration for Mixed USF Support Companies – The Order on Reconsideration addresses a request related to a transaction involving a Section 214 transfer of control. The Order would grant the petition and exclude the petitioner from the mixed support condition because the cost shifting harm that the mixed support condition was designated to address is not present in the current case. The Order would also reaffirm the FCC’s delegation of authority to the Wireline Competition Bureau to continue applying the mixed merger condition where it is deemed necessary to remedy a potential public interest harm.

You will find more details on the most significant August meeting items after the break:

C-Band Auction Procedures: The draft Public Notice would establish the procedures for Auction 107, the auction of new flexible-use overlay licenses in the 3.7-3.98 GHz band. It will be the FCC’s second auction of mid-band spectrum and is scheduled to begin on December 8, 2020. Auction 107 will offer 5,684 new licenses in the C-band, and the 280 MHz of spectrum available will be licensed on an unpaired basis in three blocks divided into 20 MHz sub-blocks by partial economic area (“PEA”) in the contiguous states and in D.C. The Commission would use an ascending clock auction format for bidding for each PEA, with an initial clock phase for bidding on generic blocks in successive rounds and a subsequent assignment phase for bidding on frequency-specific license assignments. The draft Notice details the FCC’s procedures, terms, conditions, dates, and deadlines for Auction 107, as well as the post-auction application and payment processes. Notably, the FCC would open the application filing window for auction participation on September 9, 2020 and close the window on September 22, 2020.

Inmate Calling Services Reform: The draft Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking (“FNPRM”) would respond to remands from the U.S. Court of Appeals for the D.C. Circuit on inmate calling services reform and propose further rate reforms. The Order would find that ancillary service charges, or separate fees that are not included in per-minute rates assessed for individual inmate calling services calls, cannot be segregated between interstate and intrastate jurisdictions, except in a limited number of cases. This determination would prohibit inmate calling service providers from imposing any charges for ancillary services, other than those charges permitted by the FCC’s rules, and would prohibit providers from imposing such charges that exceed the FCC’s ancillary service fee caps. The FNPRM would seek comment on further rate reforms of inmate calling services, proposing to lower the interstate rate caps to $0.14 per minute for calls from prisons and $.16 for calls from jails, and proposing to cap rates for international inmate calling services, which are currently uncapped. Comments on the FNPRM would be due 30 days after publication in the Federal Register, with reply comments due 60 days following publication.

Stressing the importance of receiving truthful and accurate information, the Federal Communications Commission (“FCC”) reached a $1.7 million settlement with inmate calling services provider Securus Technologies, Inc. and related entities (“Securus”) to resolve allegations that Securus submitted misleading information to the FCC in support of a pending transfer of control. Although the settlement cleared the way for the transfer’s approval, the FCC held up the deal for months while it investigated statements made by Securus representatives. As a result, the FCC’s action supports the adage that “haste often makes waste” in telecommunications-related deals and that submitting misleading information to the FCC can come with significant consequences.

Federal regulations prohibit FCC regulatees from submitting misleading material information or omitting material information in order to mislead the FCC. In addition, transfer of control applicants must ensure the continuing accuracy and completeness of their FCC filings. In support of an application to transfer control of licenses as part of a planned acquisition, Securus’s CEO and other executives submitted a letter to FCC Chairman Pai requesting his help in expediting approval for the deal. The letter indicated that Securus already had received all necessary approvals from state regulators for the transaction. However, the FCC subsequently determined that a number of state regulators had not yet approved the transfer when Securus submitted the letter. Although Securus argued that it meant to limit its statements to certain state regulators specified in its acquisition agreement, the FCC found the letter facially inaccurate and misleading.

In addition to paying $1.7 million to resolve the investigation, Securus agreed to a number of boilerplate settlement compliance conditions, including appointing a compliance officer, developing compliance procedures/training programs, and submitting periodic compliance reports. The FCC also required Securus to ensure that its future FCC filings are reviewed and approved by internal legal counsel before submission, a somewhat rare settlement condition. The compliance conditions will apply not only to Securus, but also to any successor company following the transfer of control. Importantly, despite finding the Securus letter facially inaccurate, the settlement did not contain an admission of liability, which was often a requirement for settlements under prior FCC leadership.

Chairman Pai stated that the fine reflected the seriousness of candor when dealing with the FCC and should serve as a strong deterrent. The Chairman further noted that the misrepresentations submitted by Securus in order to expedite approval of the deal ended up having the opposite effect by resulting in months of investigation and delays. Meanwhile, Commissioner Clyburn and Commissioner Rosenworcel filed a joint dissent criticizing the settlement and fine as negligible compared to the deal’s value and setting a dangerous precedent of approving a transaction where an applicant misled the FCC. Consequently, even if a lack of candor does not completely derail a transaction, submitting misleading information to the FCC may result in significant delays and enforcement penalties. FCC regulatees therefore should seek legal counsel when necessary to ensure the truthfulness and accuracy of their agency filings.