FCC Proposes Undoing More of its Unbundling Regulation

At its November 19 public meeting, the FCC is scheduled to vote on a proposed rulemaking that would update and pare back some of its legacy "unbundling" regulation "to reflect [competitive] marketplace realities and to remove unnecessary regulatory burdens that can inhibit the deployment of, and transition to, next- generation networks." This proposal appears to constitute another step in right direction by the Commission in reducing forced-access mandates that date back to the mid-1990s and were supposed to be temporary but have the effect of dis-incentivizing investment in new facilities.  

Report Highlights Mobile Wireless Advancements and the Future of 5G

For info-rich insight into the current state of the mobile wireless market as well as a glimpse at the 5G future, check out GMSA's report, "The Mobile Economy, North America 2019." The report identifies ongoing subscriber migration from 2G and 3G to 4G and, increasingly, to 5G, and the immediate economic opportunities offered by 5G fixed wireless residential broadband and 5G enterprise services. Additionally, the report charts recent and projected capital expenditures and job creation directly as well as indirectly related to wireless services. 

Wireless Carriers Launch Next-Generation Text Messaging Initiative

On October 24, the four major national wireless carriers announced a new joint venture to develop a next-generation wireless text messaging system. The Cross Carrier Messaging Initiative (CCMI) will be based on the Rich Communication Services (RCS) protocol. In my Perspectives from FSF Scholars paper, "The FCC Should Halt Bogus Lawsuits Threatening Popular Texting Services," I explained:

Texting services are in the process of upgrading to a next-generation technology called Rich Communication Services (RCS). This new protocol, which is being made available for cell phones with Android operating systems, allows more interactive functions, including live group chats, as well as transmission of higher-quality audio and video files. 

The launch of CCMI will help accelerate the adoption of RCS and provide consumers more advanced texting functions. The market for texting and messaging services generally is innovative and competitive. RCS text messaging services ought to receive the same unregulated treatment under Title I of the Communications Act that SMS and MMS texting services receive pursuant to the FCC's Wireless Messaging Services Order (2018). (That order states: "To the extent that successor protocols share the characteristics of SMS and MMS that we find controlling here, we expect they would be similarly classified under the Act.")

Roundup of Recent FCC Reform Actions

At its October 25 public meeting, the FCC took a number of actions, including a vote to approve its Effective Competition Order. This order was discussed in My Perspectives from FSF Scholars paper, "FCC Action Would Finally Eliminate Local Cable Rate Regulation." Additionally, the order is the subject of Free State Foundation President Randolph May's Media Advisory from October 4. Given the choice of video services consumers have today, the Commission's grant of relief from the last remains of early 90s-era local cable rate regulation is welcome.

Also at its October 25 public meeting, the Commission voted to approve a declaratory ruling that provides parity and prohibits discriminatory fees on VoIP services. My October 17 blog post discussed that ruling.  

At its September 26 public meeting, the Commission approved an order eliminating forms of access arbitrage involving the intercarrier compensation system. Prior blog posts called attention to that order. 

Transcript Released! FSF Seminar - "Privacy Regulation: Why, What, and When?"

The Free State Foundation has released the edited transcript the expert panel discussion held at FSF's June 2019 seminar - "Privacy Regulation: Why, What, and When?" 

The panel addressed potential new privacy regulation, whether by Congress, the FTC or other federal agencies, or the states. The panel featured Kelly Cole, Senior Vice President of Government Affairs at CTIA; Lynn Follansbee, Vice President, Policy & Advocacy at USTelecom; Loretta Polk, Vice President & Deputy General Counsel at NCTA - The Internet & Television Association; and Michelle Richardson, Director of the Privacy & Data Project at the Center for Democracy and Technology (CDT). The edited panel transcript is available here at FSF's website. Video of FSF's Privacy Regulation Seminar, including keynote addresses by Sen. Marsha Blackburn and FTC Commissioner Noah Phillips, is available here. 

House of Representatives Passes Small Copyright Claims Bill

October 22, the U.S. House passed H.R. 2426, the Copyright Alternative in Small-Claims Enforcement Act of 2019. Also known as the "CASE Act," the bill would provide copyright owners of modest means a less expensive, voluntary venue to bring infringement claims. My September 22 blog post discussed the merits of the CASE Act. It is important access to justice legislation. Bravo to the House for giving the bill a 410-6 passing vote. Hopefully, the Senate will promptly approve the CASE Act. 

FCC's Defining Case for Repealing Internet Regulations Upheld in Court

In my December 2017 Perspectives from FSF Scholars paper "The FCC's Defining Case for Repealing Internet Regulations," I explained that the legal fate of the Restoring Internet Freedom Order (RIFO) would come down to definition of terms in the Communications Act. Indeed, the D.C. Circuit's decision in Mozilla v. FCC upheld the RIFO based on the agency's interpretation of the relevant statutory terms. 

My paper explained that the draft RIFO presented a convincing explanation for why broadband Internet access service meets the definition of an "information service" under Title I. Further, my paper explained that the RIFO's reclassification decision was supported by agency precedent and the U.S. Supreme Court's decision in NCTA v. Brand X Services (2005). Also, my paper stated that "if an appellate court applies the deferential Chevron standard of review for agency interpretations of federal statutes, the Restoring Internet Freedom Order’s legal validity should be a foregone conclusion." In fact, Brand X and "Chevron deference" weighed heavily in the D.C. Circuit's decision in Mozilla v. FCC.

Notably, the D.C. Circuit did not uphold the RIFO's express preemption provision. For incisive commentary on that aspect of the decision, see the October 4 Perspectives paper by Professor Daniel Lyons, a Member of the Free State Foundation's Board of Academic Advisers. For a same-day reaction to the decision in Mozilla v. FCC, see Free State Foundation President Randolph May's October 1 Media Advisory.

Pre-72 Sound Recording Owners Now Receive Royalties They Deserve

October 11 marked the one-year anniversary of the signing of the Music Modernization Act of 2018. Free State Foundation President Randolph May and I supported the MMA, including its provision to ensure that copyright owners of sound recordings made before early 1972 receive federal protections for public performances of their recordings via digital audio transmission just like post-72 sound recordings.  

According to SoundExchange's "Digital Radio Report" for the third quarter of 2019: "SoundExchange is already administering the majority of the MMA’s provisions, distributing more than $10M in royalties to creators of pre-72 recordings and millions more to producers."

The U.S. Constitution’s Article I, Section 8 Copyright Clause empowers Congress to secure exclusive rights in creative works so that the creators of such works can enjoy the fruits of their labors. The MMA appears to be fulfilling that constitutional imperative.  

FCC Proposal for Would Provide Parity and Prohibit Discriminatory Fees on VoIP Services

At its October 25 public meeting, the FCC is set to vote on a proposed declaratory ruling to clarify federal law regarding state, local, and tribal government 911 fees and charges imposed on VoIP services. According to the proposed ruling:

[W]e hereby declare that the VoIP 911 Fee Parity Provision prohibits non-federal governmental entities from imposing 911 fees or charges on VoIP services in any manner that would result in a subscriber to such VoIP services paying a total amount of 911 fees or charges that exceeds the total amount of 911 fees or charges that the same subscriber would pay for a traditional telecommunications service with the same 911 outbound calling capability or same quantity of units upon which 911 fees are imposed for traditional telecommunications services. We find this statutory interpretation best effectuates long-standing goals to promote and enhance public safety by facilitating the rapid deployment of VoIP 911 services and to promote and facilitate the transition from legacy, TDM-based services to next-generation, IP-based services for the benefit of all Americans. 

The Commission's draft ruling states that "[t]his interpretation best comports with the text of the NET 911 Act as a whole [and] its legislative history." The NET 911 Act 's "VoIP 911 Fee Parity Provision" provides that "[f]or each class of subscribers to IP-enabled voice services, the fee or charge may not exceed the amount of any such fee or charge applicable to the same class of subscribers to telecommunications services."  

As a general matter, VoIP and other IP-based services should not be subject to any regulatory burdens or fees that are not also imposed on non-IP based services. The Commission's proposed declaratory ruling on VoIP 911 fee parity is based on a straightforward reading of federal law and it is sound policy. The Commission should adopt the declaratory ruling.

Online Video Offerings from INCOMPAS/DISH TV Bolster the Case Against Local Cable Rate Controls

On October 15, it was reported that INCOMPAS and DISH NETWORK have entered into a Retail Partner Program agreement to provide nationwide video service offerings, including video services comparable to cable multi-channel video programming distributor (MVPD) services. According to reports, INCOMPAS members will resell DISH TV's video services, making them available via broadband connections to INCOMPAS subscribers. This market development demonstrates the competitiveness of the video market and it bolsters the case against outdated local cable rate controls. 

My October 11 Perspectives from FSF Scholars paper, "FCC Action Would Finally Eliminate Local Cable Rate Regulation," explained why the Commission should adopt its proposed LEC "effective competition" order. Local rate regulation of basic cable tier services and equipment shouldn't exist in today's competitive video marketplace, which includes nationwide direct broadcast satellite (DBS) services and over-the-top (OTT) online video services. Based on the Commissions' "LEC test," the proposed order would eliminate local cable rate controls in the few geographic areas where they are still enforced. 

The Commission's proposed order is scheduled for a vote at its public meeting on October 25. The order is prompted by Charter Communications' petition requesting the Commission to find that AT&T TV NOW's nationwide offering of streaming video service via broadband Internet facilities is comparable to cable services and provides effective competition to cable systems in certain Massachusetts and Hawaii localities. My Perspectives paper sets forth some positive results that would obtain from the Commission's adoption of its proposal. 

The Commission's "LEC test" requirements aside, the INCOMPAS/DISH TV announcement goes to show that today's video marketplace offers consumers competitive choices. Legacy cable regulation based on early 1990s analog- and VCR-era market assumptions, including local cable rate regulation, provide no discernable benefit to consumers in 2019's video landscape. Local cable rate controls ought to be scrapped.

FCC Should Follow District Court's Common-Sense Ruling on Autodialers

Free State Foundation President Randolph May and I have previously written about the federal ban on "autodialers" contained in the Telephone Consumer Protection Act (TCPA). In our Perspectives from FSF Scholars paper, "The FCC Should Stop Runaway Liability for Smartphone Owners," we called on the Commission to adopt a sensible definition of "autodialers" that tracks with a plain reading of the TCPA and its intent to combat commercial automated mass robocallers. Going forward, the Commission ought to consider the common-sense reading of the TCPA's "autodialer" provision by a federal district court's decision from September 2019. 

In Smith v. Premier Dermatology, Judge Jorge Alonso of the U.S. District Court for the Northern District of Illinois wrote:

[T]he plain text of the statutory definition provides that an ATDS [autodialer] is a device that (1) stores or produces telephone numbers that (2) were randomly or sequentially generated and (3) dials them automatically. 

Because the Court finds that the statutory definition is not ambiguous, it need not reach plaintiffs' arguments about "the context and the structure of the statutory scheme." …But even if the Court were to consider them, they are unpersuasive. 

The District Court's conclusion that the TCPA's language is unambiguous as well and interpretation of prohibited "autodialer" capabilities are both contrary to the Ninth Circuit's decision in Marks v. Crunch San Diego LLC(2018). As Mr. May and I explained in our Perspectives paper, the Ninth Circuit deemed the relevant statutory language and ambiguous and misinterpreted "autodialers" to include callers using equipment that is merely capable of dialing ortexting a stored telephone number. The court disregarded the TCPA's provision that autodialer equipment also must have number generating capability – and dial the telephone numbers automatically. In consequence, the Ninth Circuit's decision in Marks makes anyone with a smartphone potentially liable under the TCPA for making a single unwanted phone call or text. (I also addressed the autodialer issue in my Perspectives paper, "The FCC Should Halt Bogus Lawsuits Threatening Popular Texting Services.")

A federal district court decision does not create binding precedent. So the legal uncertainty caused by the Ninth Circuit's misguided decision in Marks remains a problem that requires the FCC's attention. However, the Commission should take stock of the District Court's sensible ruling in Premier Dermatology. And the Commission should adopt a narrower autodialer definition that targets mass robocallers while avoiding open-ended liability for all smartphone owners.

Cable Wireless Service Entrants Poised to Increase Market's Competitiveness

Yesterday, Free State Foundation President Randolph May and I filed public comments with the U.S. Department of Justice regarding its proposed settlement for the T-Mobile/Sprint merger. Our comments addressed the dynamic communications market context of the proposed merger, including existing and potential competition to wireless carriers: 

Wireless market entry by Comcast and Charter Communications using hybrid Wi- Fi/cellular mobile wireless networks further diminish the likelihood of significant price increases or other anti-competitive conduct post-merger. Traditional cable operators are established providers of bundled voice, video, and data services. They are well suited to provide competitive mobile wireless services by leveraging their existing broadband network capacity and nationwide deployment of Wi-Fi hotspots and leasing network capacity for out-of-area voice and data transmission. As of the second quarter of 2019, Xfinity Mobile reportedly served 1.6 million subscribers and Spectrum Mobile reportedly served 518,000 subscribers. Those subscriber numbers are widely expected to increase. 

Close attention ought to be paid to future subscriber numbers for both cable wireless entrants. But there are other indications that these new entrants will further increase the market's competitiveness for mobile wireless services. According to reports, Xfinity Mobile and Spectrum Mobile are both increasing mobile data traffic offloads from leased Verizon network capacity onto their cable Wi-Fi networks. This competitive strategy reduces their lease payments. Also, both Xfinity Mobile and Spectrum Mobile reportedly have plans in the works to offer 5G wireless network services in future. And the largest multi-regional wireless carrier has reportedly acknowledged publicly competitive pressures by cable wireless entrants. 

(H/T to LightReading's Mike Dano for his incisive reporting and analysis.) 

Prof. Lyons Returns: Preemption of State Net Neutrality Regulation After Mozilla

Fast on the heels of D.C. Circuit's October 1 decision upholding most of the Restoring Internet Freedom Order (2018), Professor Daniel Lyons has published "Conflict Preemption of State Net Neutrality Efforts After Mozilla." This Perspectives from FSF Scholars paper, published on October 4, is a follow-up to a paper he wrote on this topic earlier this year and which I highlighted in a prior blog post. In this new paper, Prof. Lyons gives a quick overview of the D.C. Circuit's decision and what the future holds regarding the FCC, its light-touch national policy framework for broadband services, and state net neutrality laws. Prof. Lyons is a Member of the Free State Foundation's Board of Academic Advisers.

MEDIA ADVISORY: FCC Proposal Recognizes Video Streaming Service As Effective Competition

Regarding the FCC’s release of its “white copy” agenda item proposing to grant Charter’s request for relief from rate regulation for its cable services in certain communities in Massachusetts and Hawaii, Free State Foundation President Randolph May issued the following statement:

“The FCC’s proposed order granting Charter’s petition for relief from rate regulation is a very big deal. For the first time, the Commission is relying on the existence of a video streaming service, in this case, AT&T’S DIRECTV NOW, for purposes of applying the Communications Act's ‘effective competition’ test in considering rate relief. If the Commission adopts the order, this will be a commendable step by Chairman Pai and his colleagues in recognizing the reality that the video marketplace is now very competitive, and for the agency to ignore over-the-top streaming would be to close its institutional eyes.

Indeed, Congress needs to update the Communications Act to get rid of most video regulations, including regulation of cable rates, because those regulations are a relic of a long-gone video era."   

Flashback: Prof. Daniel Lyons on Mozilla v. FCC and Preemption of State Net Neutrality Regulation

On October 1, the U.S. Court of Appeals for the D.C. Circuit issued its decision in Mozilla v. FCC, upholding most of the FCC's Restoring Internet Freedom Order. Importantly, the D.C. Circuit upheld the FCC's decision to reclassify broadband Internet access services as "information services" under Title I of the Communications Act. (For Free State Foundation President Randolph May's reaction to the decision, see yesterday's blog post.)

Significantly, the D.C. Circuit's per curiam opinion vacated the express Preemption Directive contained in paragraphs 194-204 of the Restoring Internet Freedom Order. As is well known, states such as California have passed laws seeking to impose net neutrality regulation (and more), and governors in states such as Montana also have attempted to impose broadband network management restrictions through the use of their states' proprietary powers. So there will be much more to say about the Restoring Internet Freedom Order, state-level broadband services regulation, and preemption in the days ahead. That said, the preemption ruling in in Mozilla v. FCC was essentially anticipated by Professor Daniel Lyons in a February 2019 Perspectives from FSF Scholars. Prof. Lyons is a member of FSF's Board of Academic Advisors. For a perceptive analysis of express preemption and conflict preemption, as well as an advance outlook of what will likely follow the now-released decision by the D.C. Circuit, check out Prof. Lyons' paper, "Express and Conflict Preemption of State Net Neutrality Efforts."

MEDIA ADVISORY: The FCC (Mostly) Wins the Battle to Restore Internet Freedom

The following statement may be attributed to Free State Foundation President Randolph May regarding today's D.C. Circuit opinion reviewing the FCC's Restoring Internet Freedom Order:

"No doubt the FCC scored a major victory today when the D.C. Circuit uphold its fundamental determination that broadband Internet services are not subject to the Commission's regulatory jurisdiction. But no doubt it — and consumers —  also suffered a defeat when the court ruled that the agency could not broadly preempt state laws inconsistent with its deregulatory approach. The prospect of various states, like California or New York, imposing public utility-like regulation on Internet providers, and others imposing a patchwork of differing mandates, is more than unappealing — it's almost certainly harmful to the continued investment and innovation that has made the Internet the integrated 'network of networks' that it is today.

So, it’s important that the FCC attempt to overturn the court's preemption ruling. And it is even more important that Congress, finally, enact legislation that would embody a satisfactory national solution that doesn’t include at its core public utility-like regulation of Internet services."