BLOGS: Communications, Tech & Media Review

Monday, August 15, 2016, 4:30 PM

Sixth Circuit Says FCC Can't Preempt State Limits on Muncipal Broadband



By: Mark Palchick, Marty Stern and Rebecca Jacobs


In an August 10, 2016 ruling, the Sixth Circuit Court of Appeals reversed the FCC’s preemption of state laws in Tennessee and North Carolina which prevented municipal broadband providers from expanding their networks beyond their territorial boundaries, and in the case of North Carolina, placed other restrictions on municipal broadband operations. The ruling reverses a 2015 FCC Preemption Order, in which the FCC relied on its authority under Section 706 of the Telecommunications Act of 1996 to find that the Tennessee and North Carolina laws resulted in barriers to broadband deployment and competition. The two state laws at issue each involved geographic restrictions on the provision of broadband service by municipalities. In Tennessee, the state authorized municipal utilities to offer cable, video and Internet services, but restricted the geographic area of service to a municipal utility’s existing electric footprint. In North Carolina, state law similarly banned municipalities from providing broadband service beyond their municipal boundaries. The North Carolina law also placed a number of additional restrictions on municipal providers that were intended to level the playing field between municipal and commercial providers. Largely taken as given the FCC’s findings on the benefits of municipal broadband and the barriers the state laws imposed on expansion of service by municipal providers, the Court nonetheless found that the FCC’s preemption order exceeded its authority under Section 706, and impermissibly encroached on the unique relationship between states and municipalities and the "core sovereignty" of the state. The court found that any preemption order by the federal government seeking to intervene in this state-municipality relationship would have to stem from a clear directive from Congress authorizing the government to preempt a power of the state, finding no such clear directive in Section 706.


The court noted that this is not a case where there were particular federal regulatory provisions that state law would have required municipalities to violate. Absent a clear statement from Congress to the contrary, which the court found absent in Section 706, states remain free to control via statute, discretionary decisions on municipal broadband service expansion, rate setting, and rollout. The court was also rejected the FCC’s argument that while the FCC might not have the authority to absolutely ban municipalities from providing telecom services, it was free to preempt state laws regulating the conduct of municipal providers once such authority had been given. This, the court concluded, would lead to the anomalous result that states can flatly prohibit municipalities from engaging in telecom, but cannot limit municipal conduct based on the governmental nature of municipalities, which, it also found, to be "intrusive on state-municipal relations."


FCC Commissioner reaction to the 6th Circuit decision was along party lines, with the Democratic commissioners generally lamenting the decision and predicting significant adverse impacts on municipal broadband, while the Republicans praised it, with Commissioner Pai reiterating concerns [Pai statement] with the lawfulness of the preemption order and its impacts on state sovereignty. Chairman Wheeler, for his part [Wheeler statement], vowed that the Commission would consider all "legal and policy options to remove barriers to broadband deployment wherever they exist", and indicated that he would be happy to weigh into the fray, supporting through testimony efforts to repeal such statutes, or opposing efforts to enact such statutes, in either case, as he termed it, "on behalf of consumer choice."

Thursday, August 11, 2016, 4:55 PM

FCC Proposes to Fine E-Rate Telecom Provider $106,425 for Violation of E-Rate Lowest Corresponding Price Rule




A recent Notice of Apparent Liability ("NAL") issued by the Enforcement Bureau ("Bureau") of the Federal Communications Commission ("FCC" or "Commission") proposing to fine AT&T $106,425, highlights the need for service providers in the E-rate program to ensure that they abide by the pricing restrictions of the Commission’s Lowest Corresponding Price ("LCP") rule, 47 C.F.R. §54.511(b), which requires service providers to charge schools or libraries participating in the E-rate program no higher a price than providers charge to similarly situated non-residential customers, unless the lower rate is not compensatory for the services.


The Commission alleges that AT&T charged two school districts in Florida (Orange County and Dixie County) higher prices for non-Centrex Primary Rate Interface Integrated Services Digital Network ("PRI") and business flat-rate multiline (MFB) services than other business customers in Florida and higher prices for PRI than rates available in a state-wide contract from which all schools and libraries in Florida were eligible to order. Specifically, the NAL alleges that AT&T violated the LCP requirement by failing to charge the districts the lowest corresponding price for a one-year contract for MBF and PRI. The Bureau found that AT&T had charged the districts a variable month-to month rate, rather than the 12-month rate requested by the districts, and the variable rate was higher than the 12-month rates offered to other non-residential customers. In addition to charging a month-to-month rate, the Bureau found that AT&T also violated the LCP rule by charging the districts a higher price than the rates offered by AT&T for identical services under a state-wide contract, which offered a set monthly rate with no term, volume, revenue commitments or early termination fees.

When investigating AT&T’s actions, the Bureau challenged AT&T to show that the entities receiving lower rates were either not similarly situated to the districts or that the lower prices were not compensatory. The Bureau found that AT&T was unable to make this showing and that its pricing policies, which did not actively identify lowest prices offered to similarly situated entities, did not provide support for abiding by the LCP requirement.

Commissioners Pai and O’Reilly dissented to the NAL, with Commissioner Pai issuing a statement. According to Pai’s statement, the Commission did not have the authority to issue the NAL, since the charges leading to a violation of the LCP rule ended on June 1, 2015 – 421 days prior to issuance of the NAL – and therefore outside of the one-year Statute of Limitations.

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Tuesday, August 9, 2016, 8:53 AM

FCC OKs Certain Informational Calling and Texts by Schools and Utilities to Wireless Phones under TCPA



By: Douglas BonnerRebecca Jacobs, and Marty Stern 


The FCC recently released a Declaratory Ruling with new clarifications for schools and utilities on autodialed calls and texts and pre-recorded/artificial voice calling under the Telephone Consumer Protection Act ("TCPA") for informational messages. The ruling confirms that it is not a violation of the TCPA for: (1) schools to send automated texts and pre-recorded voice calls to student family wireless phones pursuant to the FCC’s "emergency purpose" exception or with prior express consent, typically by a student, parent or guardian providing the wireless number as a phone contact; and (2) for utilities to send automated texts and pre-recorded calls to wireless numbers provided by customers concerning matters "closely related to the utility service," such as service outages, warnings about potential outages due to weather, or the potential disconnection of service for non-payment, because customers consent to being contacted regarding those issues when they provide their phone number to the utility.

The Commission confirmed that schools may place autodialed calls and automated texts to student family wireless phones without consent for what it terms "emergencies," including weather closures, fire, health risks, threats, and unexcused absences. In addition, the Commission clarified that parents/guardians or students who provide their wireless number to a school as a contact have provided their prior express written consent to receive calls that are "closely related to the educational mission of the school or to official school activities," unless they have indicated otherwise. Such activities would include teacher conferences or school events. The Commission noted that non-school events, such as local community events, would likely fall outside the scope of prior express consent when a parent/guardian or student provided their wireless number without a disclosure from the school that non-school related calls/messages would be placed to that number.


With regard to utilities, the Commission clarified that customers who provide a utility with their wireless number when they initially register for service or later update their contact information, have provided their prior express consent to be contacted by the utility at that number with messages that are "closely related" to the utility service, unless the customer has indicated otherwise. Included in a list of calls found by the Commission to be "closely related" to the utility service include: warnings about service outages; updates on service outages or service restoration; requests for confirmation of service restoration or information about lack of service; notification of meter work; tree trimming, or other field work affecting the utility service; notification to customers that they may be eligible for subsidized or low-cost services due to certain qualifiers such as age, low income or disability; calls to provide information about potential brown-outs due to heavy energy use; and warnings about payment or other problems that threaten termination of service. Debt collection calls, including post service termination, are specifically excluded from the ruling, though the Commission made clear that nothing in the order disturbs existing jurisprudence that generally permits autodialed debt collection calls to be made to a wireless number with the prior express consent of the called party, typically obtained when a customer provides a wireless number in connection with the initiation of service.  The ruling also made clear that it does not cover calls related to energy savings programs. 


Under the ruling, schools and utilities still must ensure that they have measures in place to honor customer revocations of consent to be called.  In addition, nothing in the declaratory ruling changed a 2015 Commission decision finding a violation of the TCPA for calls to a reassigned wireless number after the first call to that number after it had been reassigned.



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