Telecom Law Monitor

Mobile Content Providers Settle Unauthorized Billing Class Action

Steve Augustino — Thu, 02 Sep 2010 12:00:00 -0500

While the FCC has taken an interest in mobile marketing by carriers -- most notably with investigations of carrier early termination fees and proceedings examining wireless consumer "bill shock" -- it also is helpful to remember that the mobile content providers are subject to enforcement for deceptive marketing practices. Our colleagues at the Ad Law Access blog covered a recent settlement of a class action lawsuit by several mobile marketers. They remind marketers to clearly and conspicuously disclose costs so that consumers know what they are obligated to pay. Mobile service providers should ensure that their billing and collection agreements impose such an obligation on the content provider and that the carrier properly polices compliance.

Read the Ad Law Access story here.

Late-Filed Forms Update: Airband Seeks Review of FCC Denial

Steve Augustino — Wed, 01 Sep 2010 08:15:32 -0500

Last week, we posted an entry about the tough stance the FCC's Wireline Competition Bureau is taking on late-filed Universal Service Forms submitted by contributors. One of the parties whose USF appeal was denied, Airband Communications, has filed an application for review of the Bureau decision. The Commission yesterday asked for comment on the request. Comments are due September 30 and October 15.

The FCC's quick action is unusual in one sense: the deadline for petitions for reconsideration or applications for review of the Denial Order is not until September 14. Other parties to the same order may file additional petitions on the same issue.

FCC Preparing Multiple "Junk Fax" Enforcement Actions

Steve Augustino — Sun, 29 Aug 2010 18:28:31 -0500

There has not been an official announcement, but indications are strong that the FCC is planning soon to issue a number of forfeitures and proposed forfeitures for the sending of so-called "junk faxes." Under the Telephone Consumers Protection Act of 1991 ("TCPA"), it is unlawful to send "unsolicited advertisements" via facsimile. In the past two weeks, the Enforcement Bureau has begun "circulating" 11 new orders that appear to be junk fax enforcement orders. (Circulation is the process of submitting an order for a vote by the Commission.)

The Commission, rather than the Bureau, must vote on all proposed fines above $100,000, so one may presume that each item involves a significant fine. Significant fines also are likely because several of the subjects of the draft enforcement orders have histories of prior FCC enforcement actions. One company -- The Hot Lead LLC -- received a fine of $2.5 million in 2008 for junk faxes. Pending against it are four proposed fines, of $739,500, $695,000, $47,000 and $51,500. Another company -- Sunstar Travel and Tours -- received a fine of $169,500 in 2008 and has a proposed fine of $136,000 pending now.

In addition, one potential action appears to be against an alleged "fax broadcaster." If issued, it would be the first proposed forfeiture issued under the Commission's "high degree of involvement" standard for fax broadcaster liability.

Caveat: Circulation of an item does not necessarily indicate impending action by the FCC. Four apparent "junk fax" orders began circulating in June 2009. 14 months later, those orders remain under consideration.

UPDATE 9/3/10: The FCC is beginning to release the orders. On Thursday, it released a Notice of Apparent Liability against Clean Credit, Inc. in the amount of $528,000. The Commission imposed the statutory maximum penalty of $16,000 per violation because

"Clean Credit has exhibited a flagrant disregard for the TCPA and the Commission’s rules and orders, with a lengthy history of violations, and an ongoing pattern of violations extending to as recently as a few months ago."

If the Commission similarly applies the $16,000 maximum forfeiture to the remaining investigations, multi-million dollar forfeitures are on the way.

Filer Beware: FCC Affirms Tough Stance on Late-Filed Universal Service Forms

Steve Augustino — Thu, 26 Aug 2010 07:37:22 -0500

In stark contrast to the Bureau's more liberal waiver policy for recipients of Universal Service Funds, the Wireline Competition Bureau recently released orders affirming a tough stance for contributors who miss USF filing deadlines. In the Waiver Order, the Bureau granted two waviers of the deadline to file 499-A revisions. In the Denial Order, the Bureau denied ten requests for similar waivers. The difference? In the Waiver Order, the Bureau found "special circumstances" -- complex revisions undertaken after a merger and late-filing due to the 9/11 terrorist attacks. By contrast, in the Denial Order, the Bureau characterized the reasons for late-filing as "simple negligence."

The Bureau's stance is summarized with this quote from the Denial Order:

We reaffirm the importance of filing revisions to FCC Forms 499 promptly and within the windows established by the Commission's rules and requirements. In order for USAC to process the thousands of forms it receives each year and for contributors to know that their contributions will not dramatically change each year on account of late-filed revisions, filers must comply with the deadlines we have established for filing and revising FCC Forms 499.

As a public service, we remind readers: Corrections to the quarterly estimates (499-Q) are due within 45 days of the due date. Revisions that reduce USF liability for a year (499-A) are due within one year of the April 1 499-A filing date.

Overlooked Elements of the Verizon-Google Net Neutrality Proposal

Steve Augustino — Tue, 24 Aug 2010 08:29:16 -0500

Earlier this month, Verizon and Google announced an agreement on the vexing issue of net neutrality. The agreement has been criticized by net neutrality advocates for allegedly permitting a "private Internet," and for excluding wireless services, among other things. Until recently, the provisions in the Verizon-Google "Legislative Framework" that radically alter FCC enforcement have been overlooked.

Four elements of the Legislative Framework are described in detail in this post. These elements would restrict the tools available to the FCC and would raise the standard for FCC fines. In addition, one provision strips the Federal Trade Commission of any potential jurisdiction over broadband Internet access service.

Limiting the FCC to Case by Case Enforcement. First, Verizon and Google propose that the FCC "would enforce the consumer protection and nondiscrimination requirements through case-by-case enforcement, but would have no rulemaking authority with respect to those provisions." This provision would significantly alter enforcement practice today -- where it is well settled that, absent explicit statutory instruction, an agency may choose whether to enforce through adjudication or through rulemaking. Verizon and Google propose that in this instance rulemaking authority be denied.

Substituting Private Arbitration of Disputes. Verizon and Google also propose that another entity assume the FCC's primary role in adjudicating alleged violations. Specifically, Verizon and Google propose that parties be "encouraged" to use "non-governmental dispute resolution processes established by independent, widely-recognized Internet community governance initiatives," with the FCC granting "appropriate deference" to such opinions. Verizon and Google don't say that parties will be forced to use this alternative, but the clear hope is that the primary enforcement capability will be shifted away from the FCC to this private group. It is not clear whether Verizon and Google contend that the private group will have more expertise than the FCC, that it is quicker or less expensive than FCC formal complaints, or that some other reason makes this desirable.

"Knowing Violation" Standard of Liability. The Verizon-Google proposal preserves FCC forfeiture authority, but it appears to substitute a stricter standard than applies to other forfeitures. Under the Verizon-Google proposal, the FCC could impose fines for "knowing violations" of the consumer protection and nondiscrimination standards. This contrasts with Section 503's current standard of "willful and repeated" violations. The FCC has interpreted the "willful" standard to require only that the party knew it was committing the act (or omission), not that it had any intent to violate the Communications Act.

Exclusive FCC authority. Verizon and Google propose that the FCC have "exclusive authority to oversee broadband Internet access service." This provision apparently would preempt any jurisdiction by the Federal Trade Commission, which has asserted that it may apply its consumer protection standards to information services (which include Internet access services). But it is not clear what the FCC's "oversight" authority encompasses, since all regulatory authorities would be precluded from "regulating" broadband Internet access services.

Until last Thursday, these provisions seemed to be overlooked in the proposal. However, two FCC Commissioners made comments at the "Future of the Internet" hearing in Minnesota sponsored by the Free Press Foundation. Commissioner Clyburn declared that "any proposal that favors the FCC being stripped of the rulemaking authority regarding consumer protection and non-discrimination requirements, and any proposal that would advocate that no agency will have authority over Internet access would be impossible for me to embrace." Commissioner Copps expressed similar concerns, warning that the Verizon-Google proposal "would eliminate any meaningful, effective FCC oversight of the open Internet [including] such critically-important responsibilities as the setting of standards and the swift resolution of controversies." I'm sure we will see more discussion of these proposals as we move forward in this debate.

2010 Regulatory Fee Update -- FCC Begins Accepting Payments

Steve Augustino — Tue, 10 Aug 2010 07:56:34 -0500

It's official -- FCC regulatory fees are due on August 31. Here are the links you will need to make payment by the deadline:

FCC announcement of the August 31 deadline

FCC public notice -- Payment methods and procedures

FCC public notice - Fee filer system

FCC public notice -- ITSP fees (with payment code)

FCC public notice -- Commercial wireless fees (with payment code)

FCC Regulatory Fee website

FCC Picking Up the Pace on Omnibus CPNI NALs

Steve Augustino — Wed, 04 Aug 2010 14:04:07 -0500

In February 2009, the FCC proposed $20,000 fines against 600 carriers for failing to file their annual CPNI certifications. The problem with issuing 600 fines of $20,000 each? The FCC actually has to issue orders in all 600 cases. That process has turned into a bureaucratic quagmire, but -- finally -- there are signs that the FCC is making progress toward resolving the cases.

The Commission got off to a good start: In the summer of 2009, it released 58 orders canceling forfeitures (based on proof that the entity either filed on time or was not required to file) or settling cases against, primarily, very small telcos. After September 1, 2009, however, the FCC did not release another order resolving the Omnibus CPNI forfeitures for almost a year.

Beginning in June of this year, the pace picked up again. Since June 11, the FCC has issued over 40 orders resolving the Omnibus CPNI NALs. One order canceled 15 NALs, again because the entities provided sufficient proof of timely filing. The rest have been settlements of the NALs. They follow essentially the same form: (1) the carrier agrees to implement a Compliance Plan; (2) for two years, the carrier agrees to provide a copy of its CPNI certifications to the Enforcement Bureau; and (3) the carrier pays a small settlement amount. Thus far, the settlements have ranged from a few hundred dollars to a few thousand dollars -- far below the $20,000 proposed.

By my count, the FCC has resolved about 110 cases. It has just under 500 left to go.

FCC Regulatory Fees Likely Due in August

Steve Augustino — Sun, 01 Aug 2010 13:16:15 -0500

In July, we reported that the FCC had adopted its FY 2010 regulatory fee schedule. In past years, regulatory fees were due in September, usually in the third week of the month. However, it looks like this year's fee will be due significantly earlier -- by August 31, 2010.

The first hint of an earlier due date appears in the FCC Regulatory Fee Order released on July 9. The order did not establish a due date for regulatory fees, but the Commission stated that it intended to collect fees "during an August 2010 filing window." (see paragraph 1). That made us curious, but not convinced. Last week, however, the FCC released a public notice concerning fees for its radio and TV licensees. That public notice states that the media services fee is "due no later than 11:59 PM, ET, on August 31, 2010." This seems a pretty good indication that fees for all filers will be due earlier than in years past.

Given that late-paid regulatory fees are subject to a mandatory, non-waivable 25% late payment penalty, carriers should plan accordingly.

Final 2010 FCC Regulatory Fees Released

Steve Augustino — Fri, 09 Jul 2010 13:20:47 -0500

Following on the release of the 2010-11 TRS Fund contribution factor, the Commission today released its final regulatory fee schedule for FY 2010. The Commission adopted a telecommunications provider fee that is slightly lower than it proposed in April. The regulatory fee for telecommunications providers (including audio bridging providers) is $0.00349 per revenue dollar reported on the April 1, 2010 Form 499-A.

The Commission acknowledged that telecommunications providers pay 46% of all regulatory fees, which several carriers had argued is a disproportionately large percentage of the total amount collected by the FCC. (And I agree.) Recognizing these concerns, the Commission announced that it would be releasing a Further Notice of Proposed Rulemaking to "rebalance" its regulatory fees in the future.

Regulatory fee payments will be due by the end of September and are subject to a 25% late payment penalty if not paid on time. As with last year, the FCC will not mail bills to telecommunications carriers. Carriers are required to check the FCC regulatory fee web page for payment information before the September due date.

Telecommunications Relay Service Fund Contribution Factor Decreases

Steve Augustino — Fri, 09 Jul 2010 10:10:18 -0500

We have a classic "man bites dog" story for you today: The FCC announced that its contribution factor for the fund that supports the Telecommunications Relay Service -- a telecom assistance service for persons with hearing or speech disabilities -- is decreasing by nearly 50%. Whereas last year's TRS contribution factor was 1.1% of telecom revenues, the 2010-11 factor is only 0.585% of telecom revenues.

However, this rate was lowered in part by a one-time application of a refund from the 2009-10 fund. Carriers can expect a slight increase in July 2011, after the one-time refund is exhausted.

The new rate is effective as of July 1. Carriers subject to the TRS fund (basically, any entity that files a FCC Form 499) should see the lower rate on their next invoice from the TRS administrator.

Kelley Drye's client advisory on the TRS reduction is available here.

The FCC order setting the TRS contribution factor is available here.

FCC Begins Groundwork to Extend Outage Reporting Obligations to Broadband and Interconnected VoIP Providers

Steve Augustino — Fri, 02 Jul 2010 12:46:15 -0500

Despite issues over the FCC's jurisdiction in light of the Comcast decision, the FCC's Public Safety Bureau took a step toward possible extension of the FCC's outage reporting requirements to broadband service providers and providers of interconnected VoIP services. In a July 2 Public Notice, the Bureau seeks comment "in advance of" a possible Commission rulemaking proceeding. The comment request in many ways presumes that the outage reporting rules should apply, and asks a number of questions about how they could apply and what changes might be necessary in light of the different technologies involved. Clearly, the Bureau is seeking to do its homework before the Commission initiates a rulemaking proceeding.

In addition to general questions about whether the rules should be applied to broadband or interconnected VoIP providers, the Public Notice seeks comment on a number of specific questions, including:

Interconnected VoIP

What constitutes outages for a service provided by an interconnected VoIP provider? For example, we know anecdotally that interconnected VoIP service users can collectively experience an outright loss of service comparable to the loss of service experienced by traditional time division multiplex (TDM)-based users. Are there also levels of service degradation specific to interconnected VoIP service that should be considered?
Would an outage reporting requirement based on some threshold [as applies to telecom providers] also be appropriate for interconnected VoIP service providers? If so, what would be a reasonable reporting threshold?

Broadband Internet Access

How should the differences between traditional networks and the packet switched Internet alter what constitutes a reportable ISP outage in the Commission’s Part 4 rules? Should the Commission alter its view of a reportable outage to include events that result in significant degradations to performance as perceived by end-users?
What special considerations should be given to services provided via Internet access to Public Safety Answering Points (PSAPs)?
If the Commission were to determine significant performance degradations to be outages that should be reported by broadband ISPs, how should the Commission define a significant degradation so as to trigger the reporting requirement? For example, would a threshold for Internet service based on “generally useful connectivity” be an appropriate construct? If so, how should the Commission define “generally useful connectivity” so that an objective reporting threshold can be established?

FCC Data Innovation Initiative Highlights Compliance Obligations

Steve Augustino — Wed, 30 Jun 2010 05:56:47 -0500

Yesterday, the FCC launched a review of its data collection practices, which it termed its "Data Innovation Initiative." Most relevant to the scope of this blog is the inventory of compliance obligations released by each FCC Bureau. The FCC's notice highlights just how extensive the reporting obligations are for carriers and other regulated entities.

The Data Innovation Initiative public notice is available here. As described by the FCC, the Initiative is designed "to modernize and streamline how [the Commission] collects, uses and disseminates data." Accompanying the initiative are three public notices establishing comment periods concerning the data collection requirements adopted by each of the main three bureaus -- Wireline Competition, Wireless Telecommunications and Media. Each bureau's public notice is accompanied by an "inventory" of data collection activities approved by the Office of Management and Budget ("OMB"). The inventories list the following number of data collection requirements:

Wireline Competition Bureau inventory: 104 data collection requirements

Wireless Telecommunications Bureau inventory: 96 data collection requirements

Media Bureau inventory: 140 data collection requirements

Verizon Settles FCC Privacy Investigation for $90,000

Steve Augustino — Mon, 28 Jun 2010 16:28:29 -0500

Consumer privacy is a hot topic in many arenas. At the FCC, consumer privacy is protected by the Commission's "customer proprietary network information" ("CPNI") rules. Today, the FCC released another CPNI enforcement item, but surprisingly, it was the first enforcement item in 2010 not related to a carrier's filing of its annual CPNI certification statement.

Today's action is a consent decree with Verizon Communications, Inc's regulated telecommunications operating entities. In the case, Verizon had self-reported a failure of its databases to track customers who had opted out of CPNI-based marketing. Verizon reported that it discovered a discrepancy in the total number of customers in its opt-out database. Verizon attributed the discrepancy to the absence of opt out records from seven weeks over a period of two years. Verizon reported the problem to the FCC, which launched an inquiry into Verizon's procedures.

Verizon does not admit or deny liability in the consent decree, but it agreed to pay $90,000 to resolve the case. In addition, Verizon agreed to a compliance plan to ensure future compliance with the CPNI opt-out procedures. The Compliance Plan obligates Verizon to:

perform monthly validation tests,
perform a weekly check for transaction errors,
perform validation tests prior to implementing any material changes to its systems,
enhance its employee training procedures, and
add CPNI compliance to its compliance management processes.

The consent decree applies to all Verizon entities. However, the consent decree exempts the Verizon entities to be sold to Frontier Communications Corporation. In a footnote, the FCC explained that Frontier committed to implement the "best practices" employed by Frontier and the Verizon entities. Relying on this commitment, the Bureau determined that it would exempt Frontier form the obligations "upon Frontier providing the Bureau with a copy of [its post-acquisition] practices and procedures."

Comcast, Phase II: FCC Opens Inquiry into Broadband Classification Options

Steve Augustino — Fri, 18 Jun 2010 07:55:11 -0500

The FCC today adopted and released its highly anticipated Notice of Inquiry (“NOI”) regarding the potential regulatory reclassification of facilities-based broadband Internet access services. This proceeding will explore the "third way" toward regulation that Chairman Genachowski suggested in response to the recent decision issued by the U.S. Court of Appeals for the D.C. Circuit in the Comcast case. In Comcast, the D.C. Circuit rejected the FCC's attempt to rely upon its "ancillary authority" to enjoin a cable operator from degrading its customers' lawful Internet services. This sparked a concern that similar decisions could cause the Commission to lose regulatory authority over time in connection with most, if not all, Internet access services. The heart of the problem is that the FCC made a series of decisions over the past decade that have classified wireline broadband Internet access services as "information services" that are exempt from Title II common carrier regulation, and this classification was upheld by the U.S. Supreme Court in its Brand X decision. If the Commission cannot exert "ancillary authority" to regulate them, then the FCC could be left with virtually no control over services provided over a broadband platform.

The NOI seeks comment in three areas. First, the FCC seeks input on whether the current "information service" classification remains adequate for the Commission to perform its mission. Second, it seeks comment on the legal and practical consequences of "reclassifying Internet services used to communicate with others that have Internet connections" as "telecommunications service" and then applying all of the regulatory requirements of Title II. Finally, and most importantly, the Commission seeks comment on the "third way" position by which so-called "Internet connectivity service" that is offered as part of a wired broadband Internet service would be reclassified as a "telecommunications service", but that the Commission would forbear from applying all Title II regulatory authority over it except such as necessary to implement a set of discrete rules applicable to universal service, consumer protection, competition and small business opportunity.

The Commission has fast-tracked the comment cycle in this case. Comments will be due by July 15, with replies due August 12.

Another Prepaid Card Provider Reduces Its Universal Service Revenue Reporting

Steve Augustino — Mon, 14 Jun 2010 14:27:06 -0500

Following on the heels of AT&T and Verizon's announcements, prepaid card provider Allcom Telink Corporation informed the FCC that it, too, would no longer report for universal service purposes the face value of the prepaid cards that it sells. In a June 11 letter to the FCC, Allcom stated that it "likewise intends to cease contributing on the basis of its non-contributing resellers' revenues (or our best estimate of those revenues) for this year and future years." In other words, Allcom will only report the revenue that it receives when selling the cards for distribution, not their ultimate face value. Given that prepaid cards often are sold to distributors at 35-40% below the face value, these actions could significantly reduce the amount of USF paid for prepaid calling card sales.

Allcom cited to the AT&T and Verizon letters and to USAC's August 2009 request for clarification from the FCC. Allcom then explained:

It is Allcom's preference that the Commission issue an order or guidance resolving this matter. Given the reality of the prepaid calling card market, however, Allcom now has little choice. To avoid an untenable competitive disadvantage in 2010 and future years, absent intervening Commission action, like AT&T and Verizon, we also intend to contribute only on the prepaid calling card revenue Allcom actually receives, not the ultimate retail sale price of those prepaid calling cards that Allcom sells to non-contributing resellers.

For good measure, Allcom also expressed support of a numbers-based USF contribution methodology.

Undoubtedly, Allcom is not the only prepaid card provider that has followed AT&T and Verizon's lead in reporting prepaid card revenues. We expect most other providers to report revenues in this way pending FCC action on the USAC request.

Meet the Enforcement Bureau

Steve Augustino — Fri, 11 Jun 2010 13:58:43 -0500

Yesterday, I attended a bar association event featuring the FCC's Enforcement Bureau. There were no newsworthy revelations made during the session, but the Bureau distributed an updated organizational chart and contact list. I'm attaching the materials here and will be adding them to our resource links on the right hand column of the blog.

Universal Service Contribution Factor Continues Roller Coaster Ride

Steve Augustino — Thu, 10 Jun 2010 16:58:04 -0500

Do you need another sign that the universal service fund needs reform? Today, the FCC announced another significant change in the quarter USF contribution factor. This time, the factor will decrease by nearly two percentage points, to 13.6% for the third quarter of 2010. The last four contribution factors have been (in order): 12.3%, 14.1%, 15.3% and now 13.6%. In other words, for three quarters in a row, the USF fund has seen a change of at least 1.2 percentage points up or down from the previous quarter's factor.

This volatility results from the structure of the contribution mechanism itself. At its core, the USF contribution factor is a simple calculation: quarterly USF distributions divided by quarterly projected revenues. The 3Q contribution factor declined primarily because projected revenues were nearly $1 billion higher than the 2Q projections. With a larger denominator (and a numerator that was roughly the same), the contribution factor declined. Of course, if 4Q projections decline, we could see the USF contribution factor reverse course again and rise once again. Stay tuned and hold on for the ride.

Strange Coalition Petitions Court of Appeals to Bypass FCC on VoIP Access Charges

Danny Adams — Mon, 24 May 2010 11:18:43 -0500

A diverse group of telecom companies and trade groups have jointly submitted a supporting brief to the U.S. Court of Appeals in the Paetec v. CommPartners appeal. The Joint Brief includes ILECS like AT&T and Verizon, CLECs like Neutral Tandem, and normally contrary trade associations like USTA and the VON Coalition. Although these parties have wildly divergent views on how the VoIP access charge dispute should be resolved, they all agree that the Court of Appeals should decide the issue now. The Joint Brief states that the parties submitting "have differing views about the merits" of the district court ruling, "but all agree that a decision from" the Court of Appeals is desirable to clarify the situation for all concerned.

No one knows for sure, but the many pending cases and disputes on VoIP access charges collectively probably have hundreds of millions of dollars at stake. The FCC has exerted much effort to avoid making a decision on the court referrals and various petitions that it has received on the subject since 2005.

Always hopeful that it will moot the question with a comprehensive reform of "intercarrier compensation" within the next 12 months, the FCC has allowed the issue to stay undecided for five years and counting. Paetec and the 14 organizations on the Joint Brief, believe things have dragged on long enough and want the Court of Appeals to rule where the FCC is apparently afraid to tread.

As described in our February 19 posting on the Paetec case, Paetec sued CommPartners in federal district court seeking to collect terminating access charges on interconnected VoIP traffic sent to Paetec by CommPartners. The district court ruled against Paetec, concluding that "the access charge regime is inapplicable to VoIP-originated traffic" because such transmissions qualify for the FCC's "information services" exemption from access on the basis that IP-to-TDM calls involve "net protocol conversion." The district court went on to deny Paetec's claims on unjust enrichment and quantum meruit as well, concluding that the Telecom Act's access charge regime creates a statutory bar to those equitable legal arguments. This ruling, if allowed to stand, would be a huge policy victory for VoIP providers and ISPs and a very expensive defeat for ILECs.

Paetec sought and was granted permission to file an immediate appeal of the Court's rulings. Because the case is not complete, the appeal is "interlocutory" and may be heard only if the district court allows it (it did) and the Court of Appeals agrees to hear it. Paetec has filed its request with the Court of Appeals in D.C. The Joint Brief in support was filed May 20.

FCC Open Meeting Recap

Steve Augustino — Fri, 21 May 2010 07:11:36 -0500

The FCC took a flurry of actions at yesterday's monthly open meeting. Fulfilling this blog's role as your resource for news and helpful links, below is your guide to yesterday's actions.

Wireless Market Report: The Commission adopted its 14th Annual Report on the state of the wireless market. Among other things, this report was controversial because it refused to make an "effective competition" judgment on the wireless market. The report also expands coverage beyond CMRS to address the broader mobile marketplace.

Number Porting: The Commission released a Report and Order shortening the time interval for "simple" ports. This action will particularly affect wireline-to-wireless ports, and might accelerate the trend of "cut the cord" conversions.

Pole Attachments: The Commission made a number of changes to its rules governing the rights of cable and competitive telecommunications providers to hang facilities on utility poles. The order also proposes a number of changes to the pole attachment complaint rules.

Universal Service: The Commission issued a Notice of Proposed Rulemaking to modify its "e-rate" rules, which support discounts for schools and libraries for internet access and other services.

Broadband Spectrum: The Commission adopted rules to make available another 25 MHz of spectrum for mobile braodband use.

REMINDER: For more information on many of these topics, peruse our links on the right hand side of this page.

Blast from the Past: Long Distance Carrier Faces $1.4 Million Fine for Slamming

Steve Augustino — Fri, 14 May 2010 08:20:27 -0500

In a story with a decidedly 1990’s feel, long distance reseller Silv Communication faces a Notice of Apparent Liability proposing a $1.48 million fine for switching customers’ long distance services without authorization (a/k/a “slamming”). After an investigation, the FCC alleges that Silv Communication submitted 25 switches without obtaining the customers’ authorization pursuant to the FCC’s rules. The FCC alleges that Silv’s third-party verification (TPV) of the calls failed to satisfy the rule’s requirements. Specifically, the Commission found that the TPV provider incorrectly stated that the purpose of the verification was for “quality control and … data entry purposes,” rather than to confirm the decision to switch carriers.

The FCC classified 12 of the switches as “egregious” because Silv’s telemarketer allegedly told customers that they were changing from one plan offered by their current carrier to another plan from the same carrier or that the call was simply to verify information regarding their current account. The Commission classified these misleading marketing statements as “unjust and unreasonable” practices under Section 201.

Per the forfeiture guidelines, the FCC proposes a fine of $40,000 per customer switched without authorization, plus a fine of $80,000 for each “egregious” violation.

Slamming, of course, was a significant problem in the mid- and late-1990s. Since 2000, however, the FCC’s slamming enforcement orders have declined sharply. This forfeiture is the FCC’s first proposed slamming fine since 2008. Its last slamming enforcement action – a proposed forfeiture of $5 million against Horizon Telecom, Inc. – remains unresolved. Two years after proposing that fine, the Commission has not issued a forfeiture order adjudicating the case.

In addition to the Silv Communication NAL, the FCC released a “Tip Sheet” advising consumers how to protect themselves against slamming.