Members of Kelley Drye’s Communications Group have prepared a document answering Frequently Asked Questions regarding the Order. If you have a question not addressed in this document, please do not hesitate to reach out to one of the attorneys of the Kelley Drye Communications Group.

Read more here.

Click here to listen and subscribe for ongoing coverage of these topics and future meetings.

What the FTC will do with the staff report is less clear. The Commission voted unanimously to release the report, which does not make any specific policy recommendations. Members of the Commission, however, drew their own conclusions and articulated starkly different outlooks on the report’s implications. Chair Lina Khan and Commissioner Rebecca Kelly Slaughter declared that the FCC should play a leading role in overseeing ISPs’ data practices, citing the FCC’s industry expertise and legal authority. Commissioner Christine Wilson, however, stated that “oversight of ISPs for privacy and data security issues should remain at the FTC.” ISPs’ data practices – and the broader question of whether the FCC should reclassify broadband service back to a Title II telecommunications service and re-impose strict broadband privacy rules – are likely to be prominent issues as the Biden FCC takes shape in the months ahead.

The FTC Staff Report’s Findings

The staff report is based on information the FTC obtained from the country’s six largest ISPs and three of their adtech companies. The FTC compelled the companies to provide information about their data collection and use practices through orders issued under FTC Act Section 6(b) in March and August of 2019. While this group of ISPs “represents a broad swath of the internet services offered” to U.S. consumers, their practices are not necessarily representative of ISPs in general.

The staff report raises several concerns about ISPs’ practices, beyond generally equating ISPs with large advertising platforms, which include the following examples.

• Scope and Scale of Data Collection. The staff report finds that “many” of the ISPs in the FTC’s study “have access to 100% of consumers’ unencrypted internet traffic,” potentially allowing the ISPs to obtain information about sensitive web browsing behavior. In addition, FTC staff determined that several ISPs in the study collect and use potentially sensitive, real-time location information for advertising. They are also collecting customer information from other products and services they offer—such as voice, content, smart devices, advertising, and analytics—as well as purchasing information about consumers from data brokers. According to the report, several ISPs combine data from across their product lines, though the report did not reach a conclusion about how extensively ISPs combine this data.
• Opacity and Consumer Choices. The staff report concludes that ISPs collect and use personal data more extensively than consumers expect, do not provide clear disclosures about their practices, and generally provide opt-out choices that are difficult to use.
• Potential Consumer Harm. Finally, FTC staff conclude that some of the practices observed among these ISPs could cause harm to consumers. These practices include combining data from distinct services (e.g., video, web browsing, location, and connected devices) in a manner that consumers do not expect, as well as enabling third-party data uses that could harm consumers (e.g., targeting ads in a discriminatory manner, or making location data available to third parties “without reasonable protections”).

The unanimous vote to approve and issue the FTC staff report—an increasingly rare instance of bipartisan agreement on a major issue—does not necessarily signal consensus on further steps the FTC should take on the basis of the report. Chair Khan’s remarks highlight ISPs’ practices as an example of more general problems with the privacy framework the FTC was instrumental in establishing. In her view, the report’s findings “underscore deficiencies of the ‘notice-and-consent’ framework for privacy” and that “[a] new paradigm that moves beyond procedural requirements and instead considers substantive limits increasingly seems worth considering.”

Commissioner Slaughter expressed similar sentiments in her remarks, echoing some of her previous statements calling for “clear rules on data abuses” in general, and FCC-led regulation of ISPs, specifically.

The ISP disclosure practices described by the FTC staff report are subject to the FCC’s Transparency Rule. In 2017, although the Trump FCC classified commercial ISP services as subject to FTC jurisdiction, the FCC retained a transparency rule that, among other things, requires disclosure of “accurate information” regarding commercial terms of broadband internet access services. The FCC stated that disclosure of “commercial terms” included disclosure of information collection practices and privacy policies. If ISPs failed to adequately disclose their practices, as alleged in the FTC Report, the FCC retains jurisdiction to enforce that failure to comply with the transparency rule.

Further oversight by the FTC may not be necessary in the long term if oversight of ISP data practices is moved back under the FCC’s jurisdiction, and they once again become subject to Section 222 of the Communications Act. That statute places privacy restrictions on the use of customer proprietary network information ("CPNI") by telecommunications service providers. (The Obama FCC reclassified broadband as a telecommunications service under Title II of the Communications Act and imposed net neutrality regulations as well as broadband privacy rules. The Trump FCC largely reversed the net neutrality rules, and Congress nullified the broadband privacy rules.)

Commissioner Slaughter and Chair Khan may get their wish to have the FCC jump back into the fray. The White House announced on October 26 that President Biden will nominate Jessica Rosenworcel for another term as FCC Commissioner (and named her as the permanent FCC Chair) and Gigi Sohn as the third Democratic commissioner. Both Rosenworcel and current Democratic Commissioner Geoffrey Starks have expressed support for reclassifying broadband back to Title II, and Sohn was instrumental in orchestrating Title II reclassification in 2015 under former FCC Chairman Tom Wheeler. While Title II reclassification would subject ISPs to Section 222 of the Communications Act, the FCC’s authority to create broadband-specific rules remains unclear because Congress’ repeal of the FCC’s 2016 broadband privacy rules under the Congressional Review Act prohibits the agency from adopting substantially similar rules.

In the meantime, ISPs should be prepared to entertain further oversight activity by the FTC or potential FCC examination of the adequacy of ISP disclosures under its transparency rule.

To start, here is the first resolution we suggested for the industry:

Resolution for Voice Service Providers: Resolve to reduce illegal robocalls. Voice service providers long have supported the FCC’s ongoing efforts to target bad actors sending illegal and fraudulent robocalls, but in 2021, each carrier should resolve to do its part individually in the battle to stop illegal calls. All voice service providers must implement the STIR/SHAKEN call authentication framework by June 30, 2021 and should develop an effective robocall mitigation program to prevent their customers from originating illegal robocalls. These changes are necessary to stay on the right side of the anti-robocall battle. Each voice service provider should resolve to make reducing illegal robocalls a top priority.

Background: 2020 marked a turning point in the number of requirements that voice service providers have in the battle against illegal robocalls. These include:

• STIR/SHAKEN Implementation Mandate

STIR/SHAKEN is an industry-developed framework designed to allow communications service providers to distinguish legitimate calls from illegally spoofed calls so that they can take steps to mitigate the illegal calls. STIR/SHAKEN utilizes an encrypted authentication and verification process that establishes a chain of trust between the calling party and the called party. In March 2020, the FCC required “voice service providers” (including intermediate providers) to implement STIR/SHAKEN in the IP portions of their network by June 30, 2021, while in October creating with some exceptions, most notably for small carriers (fewer than 100,000 voice lines), who receive a two-year extension of the deadline.

• Call Blocking Order

On December 30, the FCC released an Order requiring voice service providers to meet certain affirmative obligations and to better police their networks against illegal calls. These requirements include an obligation to notify callers when calls are blocked, to provide customers upon request with a list of calls that were blocked, and to implement processes for addressing claims that calls were improperly blocked. Further, regardless of whether a provider blocks calls, every provider has certain obligations to “prevent and avoid” originating illegal robocalls, including an obligation to conduct due diligence on new and renewing customers.

• Reassigned number database deadline

On February 8, the FCC announced via Public Notice the compliance date for the remaining rule requiring service providers to report information to the Reassigned Numbers Database Administrator. Beginning April 15, 2021 and recurring on the 15th day of each month thereafter, service providers must report permanent disconnections of their subscribers.

• Development and submission of Robocall Mitigation Plans

The FCC will soon require voice service providers that have not fully implemented STIR/SHAKEN in their networks to submit a Robocall Mitigation Plan detailing their efforts to prevent and avoid originating illegal robocalls. A provider must include three things in its robocall mitigation program:

• • the provider must take reasonable steps to avoid originating illegal robocall traffic (the FCC recommends the use of reasonable analytics);
  • the provider must commit to respond to requests from the Industry Traceback Group to trace suspect calls for mitigation efforts; and
  • the provider must cooperate in investigating and stopping any illegal robocallers (meaning that the provider must block calls or callers that are believed to be illegal).

Keeping the Resolution

So how can a voice service provider keep this resolution? We have several suggestions.

First, if it has not already begun the work, a provider should begin ASAP to implement STIR/SHAKEN in the IP portions of its network. For the time being, implementation requires a provider to have direct access to telephone numbers or else it cannot obtain an SPC token from the STIR/SHAKEN Governance Authority. (Sometime later in the year, merely filing a Robocall Mitigation Plan will be sufficient.) Those that have direct access to numbers should obtain their token authority and obtain a technological solution for implementing STIR/SHAKEN. Those that do not, including resellers, should work with their underlying carriers to determine how STIR/SHAKEN will be implemented and, most importantly, what attestation level will be assigned to the provider’s outbound calls.

Second, every provider should begin to develop its Robocall Mitigation Plan. These plans will be highly individualized, depending on the service provider’s customer base, technologies, and position in the call flow. Nevertheless, we expect the FCC to hold providers to their stated plans, so both an insufficient plan and an overly ambitious plan pose risks to the service provider. KDW is working with several providers already to develop their plans.

Third, service providers must develop compliance mechanisms to address the new anti-robocall obligations that have been implemented. These include processes for receiving and promptly responding to Industry Traceback Group requests, processes for responding to Enforcement Bureau notices of customers that are violating the robocall rules, and “know your customer” due diligence when provisioning or renewing service to a customer. Finally, compliance will also include reporting service reassignments to fuel the FCC’s new Reassigned Number Database. These are not the only requirements that will be adopted, so we recommend that a service provider implement a process for receiving compliance updates regularly as well.

2021 will be a big year for anti-robocall efforts. Voice service providers will want to keep this resolution in order to stay on the right side of the illegal robocall battle.

Follow the Communications group for ongoing coverage of TCPA/Robocall news, including:

• Kelley Drye at the 2021 INCOMPAS Policy Summit On February 9, Partner Steve Augustino moderated a two-part Robocall Compliance panel at the 2021 INCOMPAS Summit. Watch both panels here.
• Effectively Mitigating Illegal Robocalls: What Service Providers Need to Do On March 3, join Partner Steve Augustino for a Telestrategies webinar that will help service providers understand the STIR/SHAKEN framework, informing service providers of their new obligations, how to respond to investigation requests, and how to develop an effective robocall mitigation program.
• TCPA Tracker The TCPA Tracker Newsletter is produced as a collaborative effort between Kelley Drye’s Litigation, Advertising/Privacy, and Communications practices to help you stay current on TCPA (and related) matters, including case developments, and provide an updated comprehensive summary of TCPA petitions pending before the FCC. Subscribe here.
• Kelley Drye’s Full Spectrum Kelley Drye’s Full Spectrum podcast features smart, informative conversations about the latest issues in the technology, telecommunications, and media industries. Bringing together thought leaders in business, government, and enterprise, Full Spectrum offers an in-depth exploration of current legal, regulatory, and business issues. Our “Inside the TCPA” series offers a deeper focus on TCPA issues and petitions pending before the FCC.

Kelley Drye’s Full Spectrum podcast regularly features Enforcement Bureau actions and trends in its FCC Enforcement Update series. Subscribe here.

This event will present an in-depth discussion of key trends in these reform efforts, including the growing role of consumer data rights, increasing platform regulation, and ongoing debates over the efficacy of enforcement efforts.

Communications Practice Chair John Heitmann, co-chair of the FCBA’s Privacy and Data Security Committee, will moderate the Enforcement session, and host the keynote Q&A with FCC Commissioner Geoffrey Starks.

Click here for more information.

Click here to listen and subscribe.

If you have any urgent questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on other aspects of the federal and state response to the COVID-19 pandemic, as well as labor and employment and other issues, please visit Kelley Drye’s COVID-19 Response Resource Center.

FCC Approves Seventh Set of COVID-19 Telehealth Applications, Surpasses $50 Million in Funding

On May 20, 2020, the FCC’s Wireline Competition Bureau (“WCB”) approved 43 funding applications for the COVID-19 Telehealth Program. Under the latest funding round, $16.87 million in funding will go to health care providers across 20 states. This includes Children’s National Hospital, the first Washington, D.C. provider to receive funding. With this latest set of approvals, the FCC’s COVID-19 Telehealth Program has funded 132 health care providers in 33 states, plus D.C., for a total of just over $50 million in funding awarded.

Congress appropriated $200 million for the Program and the FCC continues to evaluate applications and distribute funding on a rolling basis. Providers therefore should take action now to assess their interest and ability to participate in the Program, if they have not already done so. On May 21, 2020, the senior counsel for the WCB’s Telecommunications Access Policy Division encouraged providers to apply as soon as possible. "Don't let the perfect be the enemy of the good" he said. “Bureau staff will work with applicants and seek clarification as needed.”

FCC, FTC Demand More Gateway Providers Cut Off Robocallers to Stop Coronavirus-Related Scams

On May 20, 2020, the FCC demanded that service providers take action to stop coronavirus-related scam robocalls from bombarding American consumers. The agency warned a number of “gateway” communications providers allegedly facilitating COVID-19-related scam robocalls originating overseas that they must stop carrying these calls or face serious consequences. Specifically, if the providers do not take action to address the scam robocalls, the FCC will allow other providers to block all traffic from these gateway providers’ networks.

This is the second such action taken by the agencies, following a similar demand in in April, when three gateway providers stopped carrying COVID-19-related scam robocalls within 24 hours of receiving the warning. The FCC and FTC have been working closely with the Department of Justice on these efforts to stop scammers from reaching American consumers. The warning shows that the FCC, FTC, and other agencies plan to aggressively address consumer protection-related issues during the crisis and will target service providers in addition to the underlying scammers to resolve problems quickly.

FCC and IMLS Partner to Keep Libraries and Communities Connected

On May 21, 2020, the FCC announced that it is partnering with the Institute of Museum and Library Services (“IMLS”) to promote use of $50 million in CARES Act funding to help address the digital divide. The CARES Act allocated $50 million in funding to IMLS, the primary source of federal funding for the nation’s museums and libraries, to enable these institutions, as well as organizations serving Tribal communities, to respond to the pandemic. This includes work to expand network access, purchase Internet accessible devices, and provide technical support services to communities. States and territories may use the funds to expand broadband access and prioritize their efforts to high-need communities. $15 million in funding will be awarded through grants to libraries and museums, as well as Tribes and organizations serving and representing Native Hawaiians. Applications are due June 12, 2020 with award announcements anticipated in August 2020.

As part of the FCC’s collaboration with IMLS, the FCC will publicize these CARES Act resources, help conduct outreach to libraries and organizations serving Tribal Communities, and provide information on broadband service providers that may be able to help. The agencies will also work together to ensure that libraries are aware that community use of Wi-Fi networks supported by the FCC’s E-Rate program is permitted during library closures.

If you have any urgent questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on other aspects of the federal and state response to the COVID-19 pandemic, as well as labor and employment and other issues, please visit Kelley Drye’s COVID-19 Response Resource Center.

FCC Approves More COVID-19 Telehealth Program Applications, Waives Red Light Rule for Program Applicants

On April 23, 2020, the FCC’s Wireline Competition Bureau (“WCB”) approved six more funding applications for the COVID-19 Telehealth Program. The $2.56 million in funding will go to health care providers in hard-hit areas like New York, California, and Maryland. Days earlier, the WCB approved five other funding applications, including $3.71 million to providers in California and Michigan. To date, the Telehealth Program has funded 17 health care providers in 10 states for a total of $9.5 million in funding. Congress appropriated $200 million to the FCC for the Telehealth Program as part of the recently-enacted CARES Act. The FCC is continuing to evaluate Telehealth Program applications at a rapid pace and distribute additional funding on a rolling basis.

The FCC’s Office of Managing Director and WCB also decided to waive the FCC’s “red light” rule for Telehealth Program applicants to facilitate prompt review and processing of the maximum number of applications to the Program. The “red light” rule normally prevents the FCC from taking action on applications and other requests by entities with delinquent debts with the agency. While the FCC found good cause existed to waive the “red light” rule, the agency was clear that the waiver only applied to the Telehealth Program and did not affect the agency’s ability to take collection action against delinquent debtors.

Join us for a webinar on April 28, 2020, as we discuss these issues and other details of the Telehealth Program, including healthcare provider eligibility criteria, funding coverage, and key application considerations. Register here.

FCC Joins Department of Education to Promote $16 Billion in Funding for Remote Learning

On April 27, 2020, the FCC and the Department of Education announced joint efforts to promote remote learning funding opportunities to school and state officials under the recently-enacted CARES Act. Specifically, the CARES Act established an Education Stabilization Fund with approximately $16 billion currently available in grants to schools and state governors to purchase devices and services to facilitate remote learning while educational institutions remain closed due to the pandemic. While the Department of Education will handle the actual funding disbursements, the FCC will identify local service providers for participating schools and governors that may be able to provide devices and broadband connectivity to support remote learning. Like the Telehealth Program, the Education Stabilization Fund is another example of the multi-prong approach taken by the federal government to spur broadband deployment and adoption during the pandemic to assist social distancing and stay-at-home orders.

FCC Grants Additional Temporary Spectrum Access Requests

On April 23, 2020, the FCC’s Wireless Telecommunications Bureau (“WTB”) granted NTUA Wireless, LLC’s emergency Special Temporary Authority (“STA”) request to operate in certain 700 MHz band spectrum in Arizona and Utah. The WTB also granted STA requests from T-Mobile License LLC and Medicine Wheel Website Design as part of the FCC’s continued effort to improve communications and broadband service in rural and other hard-to-serve areas during the crisis. The STA grants show that the FCC is open to requests to use otherwise fallow spectrum to improve communications and broadband services in the near-term.

Comments on TRS Emergency Waiver Petition Due May 4

On April 20, 2020, the FCC’s Consumer and Governmental Affairs Bureau announced via Public Notice that it is seeking comment on a Petition for Emergency Waiver and Declaratory Ruling filed by Telecommunications for the Deaf and Hard of Hearing, Inc. and other consumer advocacy groups. The groups ask the Commission to (1) temporarily waive the Telecommunications Relay Services (“TRS”) user registration and per-call validation rules to increase TRS access for persons with hearing and speech disabilities during the COVID-19 pandemic and (2) issue a declaratory ruling that TRS providers can receive compensation from the TRS Fund for the distribution of software used for TRS access by deafblind individuals, including those who do not qualify as low-income individuals under the National DeafBlind Equipment Distribution Program. Comments on the petition are due May 4, 2020, and may be filed electronically at https://www.fcc.gov/ecfs/.

Click here to register.

The Warning Letters

The agencies identified the three VoIP gateway providers as the sources of the illegal calls through the efforts of the USTelecom Industry Traceback Group, a consortium of phone companies that help officials identify potentially unlawful calls. The phone companies used a process known as “traceback,” in which they share information to trace unlawful spoofed robocalls to their origination.

In the letters, the agencies reminded the companies that the COVID-19 scam robocalls are in fact illegal and directed them to cease transmitting the traffic immediately, as the calls have “the potential to inflict severe harm on consumers.” The letters warned the companies that if they did not stop transmitting the identified traffic within 48 hours, the FCC would authorize other U.S. voice providers to block all calls from the companies and take any other steps necessary to prevent transmission of the calls. The agencies also sent a separate letter to USTelecom advising the trade association that, if the VoIP providers do not block the traffic, the FCC will authorize other U.S. service providers to block all calls coming from that gateway and will take other actions as necessary to authorize U.S. service providers to block traffic from the originating entities. In addition, the FCC encouraged other service providers to take immediate action to block unlawful calls pursuant to existing legal authority.

This action is a significant – and significantly aggressive – new approach by the agencies. While both agencies have taken actions to prevent and deter unlawful robocalls, the threat to block traffic from the originating carrier is a new tactic in the fight against unlawful calls. Notably, it is not clear under what authority the FCC can or would order the blocking of all traffic from the subject VoIP gateway providers if they failed to block the allegedly unlawful robocalls. The letter does not cite any provision of the Communications Act that would authorize such blocking. Moreover, existing FCC orders relating to call blocking have authorized only limited call blocking practices that were optional for the carriers. Were the FCC to order such blocking (and to make it mandatory), it appears that such action would be the first of its kind by the agency.

Briefly, we will review the agencies’ recent history with anti-robocall activities.

The Educare Services Enforcement Action and Prior FTC Warning Letters

In the three letters to the VoIP gateway providers, the FCC and FTC reference the FTC’s recent enforcement action against VoIP provider Globex Telecom. This action relied upon provisions of the FTC’s Telemarketing Sales Rule ("TSR"), which addresses calls made for a telemarketing purpose. In December 2019, the FTC obtained a preliminary injunction against Educare Services and Globex Telecom Inc. for robocalling consumers to promote allegedly fraudulent credit card interest rate reduction services. The FTC complaint alleges that Globex played a key role in “assisting and facilitating” the illegal credit card interest rate reduction services Educare promoted by providing Educare with the means to call consumers via interconnected VoIP communication services and facilities. For a VoIP company to be liable under a TSR “assisting and facilitating” theory, the FTC must prove that the company “knew or consciously avoided knowing” the robocall campaigns violated the TSR.

A week before the joint letters, the FTC sent letters to nine VoIP service providers and other companies warning them that “assisting and facilitating” in the transmission of illegal COVID-19-related telemarketing or robocalls is unlawful. The agency also sent letters to nineteen VoIP service providers in January with a similar warning about all illegal robocalls.

FCC TRACED Act Implementation and the STIR/SHAKEN Mandate

Like the FTC, the FCC recently shifted its focus in robocall enforcement towards the originating carriers. On February 4, 2020, the FCC’s Enforcement Bureau sent letters to seven VoIP gateway service providers, notifying them that unlawful robocalls had been traced to their networks and asking for their assistance in tracking down the originators of the calls. Although no enforcement action was threatened at the time, the FCC also asked each provider to detail their anti-robocall efforts to the Commission.

More recently, the FCC took several steps in implementing the TRACED Act, which requires the FCC to initiate several near-term rulemakings and other actions aimed at addressing unlawful spoofing and robocalling operations. On March 27, the agency adopted a Report and Order and Further Notice of Proposed Rulemaking establishing rules for the registration of a single consortium to conduct private-led “traceback” efforts, which is expected to formalize the relationship with the USTelecom Industry Traceback Group. Additionally, on March 31, the FCC adopted a separate Report and Order and Further Notice of Proposed Rulemaking mandating that originating and terminating voice service providers implement the STIR/SHAKEN framework in the IP portions of their networks by June 30, 2021. STIR/SHAKEN—the technology framework behind the “traceback” process—allows providers to verify that the caller ID information transmitted with a particular call matches the caller’s number as the calls are passed from carrier to carrier. FCC Chairman Pai previously urged major providers to adopt STIR/SHAKEN technology voluntarily and warned that the voluntary approach would become a mandate if the providers did not move fast enough. Still to come are comments on a “know your customer” obligation for service providers and rules to deny access to numbering resources to originators of unlawful calls.

As we have previously noted, the TRACED Act also requires the implementation of an alternative call authentication framework in non-IP networks, extends the FCC’s statute of limitations for bringing some illegal robocall enforcement actions, and eliminates the requirement to give warnings before issuing certain filings.

Takeaways

These letters, coupled with the recent activity by the FTC and FCC to combat illegal robocalls, signal the agencies’ desire to cause a meaningful reduction in unlawful calling, and in particular, demonstrate a desire to prevent scammers from taking advantage of the COVID-19 crisis to carry out their deceptions. Both agencies can seek civil penalties and take other actions necessary to prevent the proliferation of these calls.

Importantly, the targets of agency action are not necessarily limited to the entities that place the unlawful calls. These federal actions are a good reminder for VoIP and other service providers to assess whether their customers’ practices may indicate unlawful use of VoIP or other services. With the warning letters, and now these blocking letters, the FCC and FTC increasingly are showing an openness to pursuing penalties under vicarious liability theories. If there are facts that support knowledge of the unlawful activity or “red flag” type practices (such as a customer being the target of multiple third party government subpoenas, among other facts), that’s a good indication that further steps by the VoIP provider may be warranted to mitigate the risk of facing an enforcement action by the FTC or FCC. If you have questions about how these enforcement trends and related risk factors are relevant to your business, please contact your Kelley Drye counsel.

If you have any urgent questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on other aspects of the federal and state response to the COVID-19 pandemic, as well as labor and employment and other issues, please visit Kelley Drye’s COVID-19 Response Resource Center.

FCC Establishes the COVID-19 Telehealth Program

On April 2, 2020, the FCC issued a Report and Order (FCC-20-44) establishing the COVID-19 Telehealth Program. The COVID-19 Telehealth Program will provide $200 million in funding, appropriated by Congress as part of the CARES Act, to help health care providers provide connected care services to patients at their homes or mobile locations. The COVID-19 Telehealth Program will provide immediate support to eligible health care providers responding to the COVID-19 pandemic by fully funding telecommunications services, information services, and devices purchased on or after March 13, 2020 until the program’s funds have been expended or the COVID-19 pandemic has ended. The COVID-19 Telehealth Program represents the FCC’s most significant action yet to ensure telehealth services remain affordable and available during the crisis.

On April 8, 2020, the Wireline Competition Bureau (“WCB”) released guidance on the COVID-19 Telehealth applications process. The barriers to funding are relatively low. There are three steps interested providers should take immediately to prepare to apply for the COVID-19 Telehealth Program: (1) obtain an eligibility determination from the Universal Service Administrative Company (“USAC”); (2) obtain an FCC Registration Number (“FRN”); and (3) register with the System for Award Management. The WCB recommends that potential applicants undertake these steps now to apply for the early stages of funding.

On April 10, 2020, the WCB announced via Public Notice (DA 20-403) that it will begin to accept applications for the COVID-19 Telehealth Program beginning today, April 13, 2020 at 12:00 PM ET. Applications for the program may be filed through a dedicated application portal, available on the COVID-19 Telehealth Program page: www.fcc.gov/covid19telehealth. The WCB will accept applications on a rolling basis. To assist applicants in preparing their applications, the WCB will hold a webinar today, April 13, 2020 at 11:00 AM ET, which also will be available on the COVID-19 Telehealth Program page: www.fcc.gov/covid19telehealth. The presentation will assist interested parties in navigating the application portal and provide answers to frequently asked questions regarding the COVID-19 Telehealth Program’s application process. The webinar will remain publicly available for viewing.

FCC Adopts Connected Care Pilot Program

On April 2, 2020, in the same Report and Order (FCC 20-44) establishing the COVID-19 Telehealth program, the FCC adopted the Connected Care Pilot program. This three-year Pilot Program will provide universal service support to help defray certain health care provider costs incurred in delivering connected care services, with a primary focus on services aimed at low-income or veteran patients. The FCC will support selected pilot projects to help health care providers improve health outcomes and reduce health care costs, thereby supporting efforts to advance connected care initiatives. The Pilot Program also would study how connected care could become a permanent part of the Universal Service Fund. All eligible nonprofit and public health care providers that fall within the statutory categories under section 254(h)(7)(B) of the Communications Act, regardless of whether they are non-rural or rural, can apply for funding under the Pilot Program.

FCC Extends E-Rate Program Deadlines

On April 1, 2020, the WCB granted extensions of key deadlines for participants in the Schools and Libraries (or E-Rate) program (DA 20-364). Specifically, the Bureau waived the service implementation deadline for special construction projects for all funding year 2019 applicants and extended the deadline for funding year 2020 applicants by one year (from June 30, 2020 to June 30, 2021). Under the FCC’s rules, applicants normally must complete special construction projects and the network must be in use by June 30th of the applicable funding year. With schools and libraries closed for lengthy periods of time, the Bureau recognized that service providers may not be allowed on the premises and may experience significant challenges in meeting this construction deadline. The Bureau also (1) extended the service delivery deadline for nonrecurring services for funding year 2019 by one year (from September 30, 2020 to September 30, 2021); (2) granted schools and libraries an automatic 60-day extension to file requests for review or waiver of decisions by USAC; (3) provided applicants and service providers an automatic 120-day extension of the invoice filing deadline; and (4) gave all program participants an additional 30-day extension to respond to certain information requests from USAC.

FCC, FTC Demand Gateway Providers Cut Off Robocallers

On April 3, 2020, the FCC and the Federal Trade Commission (“FTC”) demanded that service providers take action to stop coronavirus-related scam robocalls from bombarding American consumers. They specifically warned three gateway communications providers allegedly facilitating COVID-19-related scam robocalls originating overseas that they must take action to stop carrying these calls or face serious consequences. Specifically, if the providers do not take action to address the scam robocalls, the FCC will allow other providers to block all traffic from these gateway providers’ networks. The FCC and FTC have been working closely with the Department of Justice (“DOJ”) on this first-of-its-kind effort to stop scammers from reaching American consumers. The warning shows that the FCC, FTC, and other agencies plan to aggressively address consumer protection-related issues during the crisis. Click here to read more about the FCC and FTC actions.

Chairman Pai Announces More Keep Americans Connected Signatories

On March 25, 2020, Chairman Pai announced that additional service providers have signed the Keep Americans Connected Pledge (see our coverage of the pledge here). Under the pledge, service providers agree to forgo service terminations due to inability to pay, waive late fees, and open Wi-Fi hotspots for those who need them for a 60-day period. There are now 626 service providers and 14 trade associations that have signed the Chairman’s pledge.

FCC Enables Rural Broadband Providers to Waive Certain Consumer Fees

On April 1, 2020, the WCB approved waiver requests from the National Exchange Carrier Association (“NECA”) and John Staurulakis, Inc. (“JSI”) to allow the two organizations to quickly implement tariff changes to ensure that NECA and JSI participant companies have the flexibility to meet the Keep Americans Connected pledge during the COVID-19 pandemic. The WCB’s action immediately permitted waivers of late payment penalties as well as installation and early cancellation fees that the providers normally would be required to assess in accordance with their tariffs. The WCB’s waiver deserves close attention by tariffed service providers and signals the agency’s openness to regulatory relief benefitting consumers.

FCC Waives Restrictions on Hiring Contractors for ASL Interpretation Services

On April 3, 2020, the Consumer and Government Affairs Bureau granted a temporary, limited waiver of the Commission’s rule restricting providers of video relay service (“VRS”) from contracting for video interpretation services with an entity that is not itself an eligible provider (DA 20-378). With increased VRS traffic levels and employee absences due to health concerns, school closures, and other restrictions imposed by state and local authorities, VRS providers continue to face a shortage of interpreters able to work as communications assistants. By allowing VRS providers additional flexibility to contract for qualified American Sign Language (“ASL”) interpreting from other entities, such as providers of video remote interpreting, the FCC hopes to alleviate this shortage.

FCC Postponing 3.5 GHz Auction on Account of COVID-19

On March 25, 2020, the FCC announced a one-month postponement of the 3.5 GHz auction (3550-3650 GHz) in the Citizen’s Broadband Radio Service (“CBRS”), a.k.a. Auction 105 (DA 20-330). The Commission cited the need to protect the health and safety of Commission staff during the auction and the ancillary benefit that parties would have additional time to prepare to participate. FCC Chairman Ajit Pai reiterated the agency’s commitment to hold the auction this summer. The auction is the first in the so-called mid-band, a range of spectrum seen as critical to the rollout of 5G wireless applications. Commissioner Michael O’Rielly tweeted that a further delay would be unlikely absent absolutely compelling circumstances. The start of the auction has been postponed to July 23, 2020 (from June 25, 2020), and the new short-form application filing window is April 23 through May 7, 2020. For more information on the postponement and the auction, please see our blog post.

Wireline Competition Bureau Extends Mozilla Remand Comment Cycle

On March 25, 2020, in response to a March 11, 2020, petition asking for a 30-day extension, the WCB issued a Public Notice (DA 20-331) granting a 21-day extension of the comment and reply comment cycle for the proceeding in the wake of the D.C. Circuit’s remand in Mozilla v. FCC (2018). Comments are due on April 20, 2020 (from March 30, 2020), and reply comments are due on May 20, 2020 (from April 29, 2020).

In issuing the extension, the WCB agreed with the petitioners’ argument that individuals, organizations, and state and local governments whose work is dedicated to public safety are increasingly focused on managing the COVID-19 pandemic and may be unable to submit comments on the public safety issues discussed in the remand proceeding. However, the FCC cited the need for expediency in remand proceedings as the reason for granting a 21-day extension instead of the petition’s request for a 30-day extension.

In addition, the FCC took the following actions in response to the pandemic:

• On March 25, 2020, the Office of Engineering and Technology issued a Public Notice (DA 20-334) granting a 21-day extension of the reply comment deadline in the 5.9 GHz proceeding. Reply comments are now due on April 27, 2020 (from April 6, 2020). Initial comments were due on March 9, 2020. The entire 75 megahertz of the 5.850-5.925 GHz Band is allocated for connected car intelligent transportation systems using dedicated short-range communications ("DSRC") technology. Under pressure to allocate more spectrum for Wi-Fi operations and dissatisfied with the pace of DSRC development and deployment, the Commission has proposed reallocating 45 megahertz of the Band for unlicensed use and 20 megahertz to cellular vehicle-to-everything intelligent transportation system technology, while preserving only 10 megahertz for DSRC.
• On April 10, 2020, the FCC’s Office of Economics and Analytics (“OEA”) extended via Public Notice (DA 20-401) the comment and reply comment deadlines for its Public Notice, released on February 27, 2020, which sought input on the state of the communications marketplace to inform the Commission’s required assessment of competition within the communications industry in its second Communications Marketplace Report to Congress. The Report provides an opportunity for stakeholders to evaluate competitive barriers to wireless and fixed broadband deployment, as well as international services. With this extension, comments are now due April 27, 2020 and reply comments are due May 28, 2020.
• On April 1, 2020, the Wireless Telecommunications Bureau (“WTB”) announced (DA 20-365) a compilation of instructions for filing Special Temporary Authority (“STA”) and waiver requests in response to the declaration of national emergency due to COVID-19 issued on March 13, 2020. The WTB STA and Wavier Filing Guide can be found online here. On April 10, 2020, the Public Safety and Homeland Security Bureau provided guidance to public safety entities on requesting STA and waivers (DA 20-404). All providers should consider whether an STA is appropriate to provide additional flexibility and improve service.
• ​On March 27, 2020, the FCC granted​ STA for 33 wireless Internet service providers (“WISPs”) to use the lower 45 megahertz in the 5.850-5.925 GHz Band for 60 days to address the increase in consumer demand because of the COVID-19 pandemic. Participating WISPs are required to file FCC Form 601 (application for an STA) within 10 days to access the full 60-day STA, and are required to operate in the band on a secondary, non-interference basis so as not to interrupt existing DSRC and federal radiolocation operations.
• ​On March 26, 2020, the FCC's WTB granted AT&T Special Temporary Authority (“STA”) to utilize additional spectrum in Puerto Rico and the U.S. Virgin Islands for 60 days to handle increased network traffic as a result of the COVID-19 pandemic. On March 30, 2020, the WTB granted A:shiwi College & Career Readiness Center an STA to utilize unassigned Educational Broadband Service(“EBS”) spectrum for 60 days in the eligible rural tribal land on the Zuni Reservation in New Mexico for similar reasons. These STAs are in addition to the ones previously granted by the Commission. ​
• On April 10, 2020, the FCC’s WTB enabled AT&T to deploy two cell sites in Wisconsin to support wireless service for a critical medical facility. That facility is being constructed by the U.S. Army Corps of Engineers at the Wisconsin State Fair Park in Milwaukee, Wisconsin to care for COVID-19 patients. The WTB granted AT&T’s request to expedite environmental review of the two proposed wireless tower sites, which will also serve first responders as part of AT&T’s FirstNet public safety broadband network. It is likely that the FCC will grant similar requests to expand communications infrastructure during the crisis.
• On April 2, 2020, the Public Safety and Homeland Security Bureau released a Public Notice (DA 20-367) reminding authorized alert originators, including state and local governments, that the Wireless Emergency Alert (“WEA”) system is available as a tool to provide life-saving information to the public during the coronavirus COVID-19 pandemic. In recent years, the FCC, together with the Federal Emergency Management Agency (“FEMA”) and participating wireless service providers, have taken important measures to promote the effectiveness of WEA, and to make such messages more accessible, including the capability to send more detailed alerts of up to 360 characters for 4G-LTE networks, the option to convey recommended actions for saving lives or property for use in connection with Imminent Threat Messages, and the ability to send alerts in Spanish.
• On March 26, 2020, the WCB waived a number of rules in its Rural Healthcare Program affecting existing users of the support programs. Most importantly, the Bureau’s order (DA 20-345) permits RHC applicants to extend existing evergreen arrangements with service providers by one year, without conducting an additional competitive bidding process, thereby ensuring continuity of service during the crisis. This builds on the Commission's previous waiver of rules for both the Rural Healthcare Program and the E-Rate program.
• On March 30, 2020, the FCC's WCB issued an order (DA 20-354) waiving certain rules requiring involuntary de-enrollment of Lifeline subscribers, including for non-usage of the service, until May 29, 2020. The Bureau also extended the previous waivers​ of the annual recertification and National Verifier reverification process de-enrollments to May 29 so that all of the waivers will expire at the same time.

This enforcement action marks a series of firsts. It is the first CPNI enforcement action since the pre-2016 CPNI regulations were reinstated following the repeal of the broadband privacy rules by Congress in 2017. This is also the first large consumer protection enforcement action under Chairman Pai’s leadership—up to now, Chairman Pai has eschewed the principle-based enforcement of his predecessor in favor of more clear-cut rules violations. The action also generated criticism both for being too soft (and too late) and for potentially being beyond the Commission’s jurisdiction.

Section 222 of the Communications Act requires carriers to protect the confidentiality of CPNI, which consists of specific customer data carriers get from consumers simply by providing them telecommunications service—or in statutory terms, “solely by virtue of the carrier-customer relationship.” This includes location information that carriers receive from wireless phones almost constantly so that calls and data can be routed to a customer both when the customer is using the phone and when the phone is in standby mode. Except for certain defined uses, carriers can only use, disclose, or permit access to CPNI with customer approval. But the FCC has also found that approval requirements alone are not enough, so the CPNI rules specify that carriers must employ “reasonable measures to discover and protect against attempts to gain unauthorized access to CPNI,” such as when a person pretends to be a particular customer or authorized person to obtain access to CPNI—a practice known as “pretexting.”

The FCC alleges that each of the four carriers failed to take reasonable measures to prevent unauthorized access to location information by third parties that improperly disclosed that information without customer approval. Specifically, each carrier sold access to location information to “aggregators,” who then resold access to third-party location-based service providers, who in turn allegedly sold or provided access to individualized location information to unauthorized parties. Each carrier relied on contracts that obligated aggregators to require third-party location-based service providers to obtain customer consent before accessing a customer’s location information from the aggregators. However, the carriers did not independently verify that consent was actually being obtained. In the FCC’s view, the contracts did not amount to reasonable measures to protect CPNI and held the carriers responsible for the failure to obtain customer consent on the basis that the third-party service providers were acting on the carriers’ behalf. The FCC was unconvinced by arguments that the information was primarily for non-common carrier data services, instead of telecommunications services, and that the location information obtained when the phone is on standby mode is materially different than information obtained when a customer is on a call.

Based on these apparent violations, the FCC proposed fines of $57 million for AT&T, $48 million for Verizon, $91 million for T-Mobile, and $12 million for Sprint. The FCC calculated these proposed fines based on four factors:

• First, the FCC determined the number of aggregators and third-party service providers that had access the information at any given time by looking at the contracts—the more entities that received the information, the greater the proposed fine.
• Second, the FCC relied on a continuing violation theory, concluding that each day the contracts were in place was an additional violation of the CPNI rules. As a result, the size of the fine increased for each successive day a carrier allegedly continued to allow third-party service providers to access customer location information without reasonable safeguards.
• Third, the FCC calculated the continuing violation from June 9, 2018—or 30 days after publication of a New York Times article that first brought the location sharing to light—on the basis that the article’s publication was the first time the carriers were put on notice about the inadequacy of their practices and because a carrier cannot be “expected to fully investigate and take remedial actions on the same day it learns that its safeguards are inadequate.” This approach also marks a departure from prior enforcement actions, which had not included a “cure” period previously.
• Fourth, the FCC upwardly adjusted the proposed fine by amounts ranging from 25-100 percent to reflect the apparent seriousness of the violations and the remediation efforts undertaken by each carrier.

The FCC’s actions are proposed fines. As the Commission customarily notes, neither the allegations nor the proposed sanctions in the Notices of Apparent Liability are final Commission actions. The parties will be given an opportunity to respond and the Commission will consider the carriers’ responses before taking any final action to resolve the matters.

Despite moving forward on the proposed fines, the FCC Commissioners appear split on the specifics of the enforcement approach. Commissioner O’Rielly expressed serious reservations even as he voted in support of the action, citing a concern that the FCC does not have all the relevant facts and expressing interest in the carriers’ argument that their practices are outside FCC jurisdiction. Conversely, Commissioner Rosenworcel dissented, not because she sides with the carriers, but because she believes the proposed fines should be higher. She particularly expressed disdain for the 30-day curing period and the reduction in the fine proposed for each successive day of continuing violation. Commissioner Starks supported the action overall, but dissented entirely on the forfeiture calculation approach, arguing the FCC should have based the fine on the number of consumers actually harmed and not on the number of contracts the carriers entered into.

Each carrier will have the opportunity to respond to the proposed fines in approximately 30 days. The responses typically are not made public but we will continue to monitor the proceedings for developments and will provide updates as they occur.

The 11th Annual Update will address the following, among other topics:

• The Rural Digital Opportunity Fund ("RDOF");
• Significant modifications to the Rural Healthcare and Lifeline programs;
• The proposal by the state members of the Joint Board to modify the contributions mechanism; and
• The FCC’s proposed new suspension and debarment rules.

CLE credit is available for this webinar.

Click here to listen and subscribe.

The proposed rules also would impose new disclosure obligations on support recipients and require them to verify that they do not work with suspended/debarred entities. In addition, the proposed rules would create a federal reciprocity system, in which entities suspended/debarred from participating in funding programs administered by other agencies similarly would be prevented from participating in the FCC’s programs (and vice versa). The proposed rules would impact nearly every USF participant and warrant close attention. The FCC has not announced comment deadlines on its proposals, but they will likely occur in early 2020. While the FCC’s proposals are just the first step towards actual rule changes, the agency has shown every indication that it will continue moving full speed ahead on USF reform in the coming year.

Expansion of the Suspension and Debarment Conditions

The FCC’s current suspension/debarment rules only apply to its USF programs and only allow for suspension/debarment following a conviction or civil judgment involving fraud or certain criminal offenses. In the past, the FCC backed off on attempts to withhold USF funding while it conducted enforcement proceedings, in the face of claims that the only trigger in its rules involved convictions or civil judgments. Under the proposed rules – which follow guidelines adopted by other federal agencies – the FCC now would be empowered to suspend/debar entities without a conviction or final judgment and for a broader array of alleged bad behavior. In particular:

• Entities could be suspended/debarred for repeat violations of FCC rules (whether or not related to USF), submitting false documentation for support, failing to pay FCC regulatory fees, refusing to cooperate with FCC investigations, or any other conduct deemed by the agency to indicate “a lack of business integrity.”
• Suspensions would require “adequate evidence,” meaning the FCC has a “reasonable belief” that the alleged misconduct occurred, and would take effect immediately and prospectively. The proposed rulemaking suggests that allegations contained in a Notice of Apparent Liability (“NAL”) may be enough to warrant a suspension, even though Section 504(c) of the Communications Act says that the FCC may not use the fact of an NAL to the party’s detriment.
• Debarments would require a “preponderance of evidence,” meaning the FCC finds that it is more likely than not that the alleged misconduct occurred.
• Entities would have 30 days to challenge a suspension/debarment and the FCC would be required to render a decision within 45 days of receiving such a challenge. In addition, the FCC seeks comment on establishing an expedited, “limited” debarment mechanism subject to its own challenge process that would allow it to prohibit an entity from participating in a particular USF, TRS, or NDBEP program for a limited time for an even broader list of issues, including concerns that the entity has “documented deficiencies” or “irregularities” in past program participation or that the entity’s future participation poses “an unsatisfactory risk.”

The proposed rules would impose new disclosure obligations on USF support recipients, requiring them to inform the FCC not only if they are suspended, debarred, or otherwise disqualified from federal funding programs, but also whether any of their contractors, subcontractors, suppliers, consultants, agents, or representatives are similarly banned. While use of personnel disqualified from a federal funding program would not automatically prevent an entity from participating in an FCC program, the FCC would take a closer look at all individuals playing a significant role relating to or affecting USF disbursement claims. The FCC further expects to adopt a reciprocity system that would exclude entities barred from participating in funding programs administered by other agencies from its funding programs (and vice versa), and seeks public input on how best to share suspension/debarment information with other federal regulators. Suspended or debarred entities also would be prohibited from serving on FCC advisory committees and task forces.

Open Questions

Although the proposed rulemaking provides some detail on how the new suspension/debarment process would work, it still leaves key questions unanswered. For example, the proposed rulemaking does not designate who would investigate and prosecute suspension/debarment cases and who would render decisions in such cases. Such duties currently reside within the FCC’s Enforcement Bureau, but the proposed rulemaking hints that the Office of Inspector General, Office of Managing Director, and/or the rulemaking bureaus could play significant, to-be-determined roles. It is undetermined how a beneficiary of a USF benefit through an entity that is suspended/debarred (e.g., a school that receives E-Rate benefits) could continue to receive benefits if its service provider is suspended. Moreover, the proposed rulemaking indicates that the FCC may apply the new suspension/debarment rules retroactively to cover conduct occurring before their adoption, although prior settlements generally would be left undisturbed. This significant (and legally-suspect) proposed expansion of liability is sure to draw opposition. With their broad scope as well as complex procedures, the proposed suspension/debarment rules will generate significant comment and could ultimately transform how the FCC approaches enforcement involving its major funding programs.

You will find more information on the most significant proposed December meeting items after the break:

998 Crisis Hotline: The draft Notice of Proposed Rulemaking would seek comment on designating 988 as the dialing code for a national suicide and mental health crisis hotline. The proposed rules would require telecommunications carriers and interconnected VoIP service providers (including one-way interconnected VoIP service providers) to transmit all 988 calls to the hotline. If adopted, the proposed rules would give service providers 18 months to complete any necessary equipment upgrades/replacements to enable 988 hotline dialing. The FCC would note that 988 currently is not assigned as an area code and presents fewer hotline implementation issues when compared to other potential three-digit codes. However, the FCC would request input on whether other hotline codes should be considered as well as the costs, timeframe, and technical challenges presented by its proposal.

Unlicensed Use of Mid-Band Spectrum: The draft Notice of Proposed Rulemaking would request input on repurposing the lower 45 megahertz of the 5.850-5.925 GHz band, which currently is reserved for short-range vehicle-related communications, for unlicensed operations like Wi-Fi. The FCC would argue that much of this band has gone unused since it adopted service rules over 20 years ago and that other vehicle-related communications technologies have been deployed in other frequencies in the interim. The FCC also would observe that unlicensed operations already are permitted in adjacent frequency bands and throughout the 5 GHz band, creating potential spectrum harmonization benefits. The proposed rulemaking would reserve the upper 30 megahertz of the band for vehicle-related communications and would ask whether a portion of this band segment should be allocated to newer Cellular Vehicle to Everything (“C-V2X”) operations, which enable a broad range of vehicle safety services over drivers’ mobile broadband networks such as automated driving applications. The item also would ask for comment on transition and protection mechanisms for incumbent operations should the FCC designate certain spectrum for unlicensed and/or C-V2X uses.

Shared Use of Mid-Band Spectrum: The draft Notice of Proposed Rulemaking would propose to remove existing non-federal radiolocation and amateur allocations in the 3.30-3.55 GHz band and relocate such operations to the 3.1-3.3 GHz band or other frequencies. Current non-federal uses in the 3.30-3.55 GHz band include commercial weather tracking operations and numerous temporary authorizations to provide supplemental wireless capacity during sporting events. The band also is used for federal defense radar systems and aeronautical radionavigation services on a primary basis. The proposal implements provisions of the MOBILE NOW Act, which required the FCC to identify spectrum bands for commercial wireless operations to share with federal users. The item would seek comment on the appropriate transition process for non-federal users, transition costs, and protection mechanisms for federal incumbents.

VoIP Symmetry Rule: The draft Order on Remand and Declaratory Ruling would significantly narrow the application of the so-called VoIP Symmetry Rule, which allows carriers that partner with VoIP providers to recover intercarrier switched access charges under certain circumstances. The proposed action comes in response to a 2016 D.C. Circuit remand.

As we covered extensively in several previous blog posts, one of the primary consequences of the case were questions about the limits of the FTC’s jurisdiction. The case mirrored a time when the Federal Communications Commission (“FCC”) took opposing positions in successive administrations regarding whether mobile data services and other Broadband Internet Access Services (“BIAS”) were subject to FCC regulation. One of the central questions underlying the case was which agency, the FCC or the FTC, could regulate AT&T’s mobile data practices. After the FTC won a Ninth Circuit decision that its jurisdiction reaches to non-common carrier activities of common carriers (and the FCC concluded that mobile BIAS was not a common carrier service), AT&T agreed to settle the FTC case. However, so long as the jurisdiction of particular services remains in doubt, or is subject to changing FCC positions, service providers will face potential overlapping enforcement activities by the two agencies.

The path to determining the FTC’s jurisdiction was long. In response to the FTC’s 2014 complaint, AT&T moved to dismiss the case, arguing that, because it is a common carrier, the Company is exempt from FTC regulation under Section 5 of the FTC Act. AT&T argued that the exemption in Section 5 for common carriers was “status based” – that is, that the FTC could not regulate any activities of a common carrier, even activities the FCC had subjected to limited or no regulation. The FTC responded by asserting that Section 5 of the FTC Act exempts only the common carrier activities of common carriers from FTC regulation.

Agreeing with the FTC, the district court denied AT&T’s motion to dismiss on March 31, 2015. The Company then appealed that decision to the Ninth Circuit Court of Appeals (“Ninth Circuit”). On August 29, 2016, a three-judge panel issued an opinion that reversed the district court’s decision and dismissed the case. The FTC then requested a rehearing en banc, which the Ninth Circuit granted on May 9, 2017. On February 26, 2018, the Ninth Circuit, sitting en banc, issued an opinion reversing its previous decision and giving the FTC broad authority to regulate practices not classified by the FCC as telecommunications services. It then remanded the case to the district court for further proceedings. AT&T settled the case before the District Court addressed the merits of the allegations.

Notably, AT&T commits to making refunds within 90 days to eligible customers without requiring a claims process. AT&T agreed to issue bill credits to current customers and to issue refunds to former customers. Any remainder not distributed will be deposited into a redress fund maintained by the FTC. Commissioner Rohit Chopra of the FTC issued a statement accompanying the settlement, in which he urged the FTC to pursue fraudulent practices by large and small firms alike, asserting that “scammers come in all sizes.”

Having settled with the FTC, AT&T is not necessarily out of hot water for alleged data throttling during this time period. In 2015, the FCC issued a $100 million Notice of Apparent Liability for Forfeiture (NAL) to AT&T over its mobile broadband data services and practices. The FCC also reached a $48 million settlement with T-Mobile on October 20, 2016 concerning a similar data throttling allegation regarding mobile data services. However, since the FCC’s leadership changed hands in early 2017, the Commission has not taken any action to finalize (or settle) the AT&T NAL. It remains pending, four years after its issuance.

The draft items cover the gamut of telecommunications issues, affecting everything from the construction of next-generation 5G networks to legacy intercarrier competition rules, and should be closely watched. You will find more details on the most significant November FCC meeting items after the break:

USF National Security Ban: The draft Order and Further Notice of Proposed Rulemaking seeks to fortify the United States’ communications infrastructure from potential foreign surveillance and denial of service attack and would prohibit the use of USF support to purchase any equipment or services provided by a “covered company” that the FCC determines poses a national security threat to the integrity of domestic communications networks. The initial ban only would apply prospectively, but would include spending related to any maintenance or upgrades to existing equipment and services. The FCC would preliminarily designate Chinese equipment manufactures Huawei Technologies Company and ZTE Corporation as covered companies and seek comment on whether the designation should be made permanent. The FCC also would establish a process to designate other covered companies in the future. In addition, the FCC would propose: (1) requiring all USF recipients to stop using existing equipment and services provided by covered companies and (2) creating a reimbursement program to offset the “reasonable” transition costs associated with this requirement. In order to determine the scope of this potential “rip and replace” project, USF recipients would be required to report to the FCC on whether they use equipment and services from covered companies and the estimated costs of transitioning to new suppliers.

E911 Vertical Location Accuracy Requirements: The draft Order and Further Notice of Proposed Rulemaking is designed to push carriers to better identify 911 callers’ locations within buildings and would adopt an E911 vertical location accuracy standard of +/- 3 meters for 80 percent of E911 calls from z-axis location capable handsets. The nationwide wireless carriers would be required to deploy z-axis location capable technology that meets the new standard in the 25 largest markets by April 3, 2021, and in the 50 largest markets by April 3, 2023. Non-nationwide wireless carriers would have an extra year to meet each of these deadlines. The FCC also would seek comment on tightening the E911 vertical location accuracy standard over time and whether carriers eventually should be obligated to report a caller’s floor number.

New Suspension and Debarment Rules: The draft Notice of Proposed Rulemaking would request input on whether the FCC should adopt new suspension and debarment rules to cover a wider range of misconduct, in accordance with federal guidelines adopted by many other federal agencies. The FCC’s current rules generally only allow the FCC to suspend and/or debar individuals from the USF programs after they are convicted or receive a civil judgment involving fraud or certain criminal offenses. The proposed rules would allow the FCC to suspend and/or debar individuals without a conviction or final judgment and for repeat violations of FCC rules, failures to pay regulatory fees, or other offenses “indicating a lack of business integrity.” The proposed rules would apply not only to USF participants, but also to participants in the Telecommunications Relay Service and National Deaf-Blind Equipment Distribution programs. Participants in these programs would be subject to new disclosure obligations and would be required to verify that they do not work with suspended or debarred entities. The FCC also plans to establish a system of reciprocity, in which entities suspended or debarred from participation in funding programs administered by other agencies would be similarly suspended or debarred from participating in the FCC programs. The FCC further asks whether it should be able to apply the new suspension and debarment rules retroactively to cover conduct occurring before their adoption, significantly increasing the potential liability for program participants.

Eliminating Unbundling/Resale Obligations: The draft Notice of Proposed Rulemaking proposes relieving incumbent local exchange carriers of their longstanding obligations to make certain network elements available on an unbundled basis and offer certain telecommunications services on a wholesale basis to competitive carriers. The draft item would address the few remaining unbundling and resale obligations left over from the Commission’s broad forbearance order adopted earlier this year. Specifically, the FCC would propose removing the unbundling requirements for: (1) DS1 and DS3 loops in competitive areas, with an exemption for DS1 loops providing residential broadband and telecommunications services in rural areas; (2) DS0 loops in urban census blocks; (3) narrowband voice-grade loops; and (4) dark fiber transport for wire centers within a half mile of alternative fiber. The FCC also would propose eliminating resale obligations for services offered in non-price cap incumbent carrier service areas. The FCC would argue that such unbundling and resale obligations are no longer necessary in light of increased competition. The FCC anticipates phasing in the reforms over a three-year period.

Expanding IP CTS Contribution Base: The draft Order would expand the contribution base for IP CTS, which provides call captioning for individuals who are deaf or hard of hearing, to include intrastate end-user revenues from contributing telecommunications carriers and VoIP providers. When the FCC initially authorized support for IP CTS, it decided as an “interim” measure to cover the service’s costs based only on interstate telecommunications revenues. The draft item would find that the interim funding mechanism unfairly burdens providers and users of interstate telecommunications services and is insufficient to address the overall decline in contributions. The FCC would note that the statute governing IP CTS provides it with broad authority to support captioning on intrastate as well as interstate calls and the Communication Act’s general reservation of state authority over intrastate communications does not apply in this instance. The FCC also would note that it does not expect the reforms to increase or otherwise affect the total contributions needed to support IP CTS.