FCC Report on 911 Taxes Identifies States' Improper Use of Funds

On December 19, the FCC published its 11th Annual Report on State 911 taxes, in which it found that nearly $198 million in 911 taxes charged to voice service consumers were improperly diverted to non-911 purposes in 2018. That's down from the $285 million in 911 tax revenues the FCC found were improperly diverted by states in 2017. However, the 11th Report reveals that New Jersey, New York, and Rhode Island continue to be the worst offenders. The 11th Report identified over $186 million in diverted 911 tax dollars from New Jersey and New York combined. It's important that FCC keep these states in the spotlight and that both the Commission and Congress consider measures to hold those states and others accountable.  

House of Representatives Passes the USMCA

On December 19, the House of Representatives passed H.R. 5430, the United States-Mexico-Canada Agreement Implementation Act. The House should be commended for its approval of the USMCA, which contains many provisions that will help strengthen Americans' copyrights in those neighboring nations. 

Free State Foundation President Randolph May and I have previously described the pro-copyright merits of the USMCA and called on Congress to pass it. As I explained in my April 2019 Perspectives from FSF Scholars paper, "Trade Agreements Should Include Stronger Online Copyright Protections":

By negotiating for stronger copyright protections and enforcement in international trade agreements, the U.S. can help curb the significant economic losses sustained by American copyright owners. The proposed USMCA, signed by President Trump in October 2018, and likely to be voted on by Congress this year, includes many provisions that would modernize and strengthen protections for Americans' copyrighted works in Canada and Mexico. For instance, under the USMCA, each member nation would be required to secure copyright owners' full enjoyment of exclusive rights in sound recordings and public performances. Each nation would guarantee contractual liberty so that copyright owners can transfer their rights for full value. Also, each nation would make available stronger remedies in civil copyright infringement cases, including injunctive relief as well as statutory damages. And each nation would authorize their border officials to pursue, seize, and destroy pirated goods. 

For more, see my similarly-titled October 2019 Perspectives paper, "Trade Agreements Should Strengthen Copyright Protections Against Piracy," which touches on the importance of the USMCA and other pro-copyright trade agreements in the context of the current problem of online piracy of movies and TV content. 

Hopefully, the Senate will promptly take up and pass the USMCA in early 2020. 

FCC Reaffirms RF Emissions Standards

On December 4, the FCC released an order to retain its existing limits on radiofrequency (RF) emissions. According to paragraph 2 of the Commission's order: 

After reviewing the extensive record submitted in response to that inquiry, we find no appropriate basis for and thus decline to propose amendments to our existing limits at this time. We take to heart the findings of the Food & Drug Administration (FDA), an expert agency regarding the health impacts of consumer products, that "[t]he weight of scientific evidence has not linked cell phones with any health problems." Despite requests from some to increase and others to decrease the existing limits, we believe they reflect the best available information concerning safe levels of RF exposure for workers and members of the general public, including inputs from our sister federal agencies charged with regulating safety and health and from well-established international standards.

Occasionally, local governments face pressure to assume a new role for themselves as wireless device health regulators based on spurious claims about RF emissions. And some local governments have even made misguided attempts to regulate wireless devices. Local governments ought to take note of the Commission's order and bring it to the attention of any citizens inquiring about RF emissions. The Commission, which has jurisdiction over RF emissions standards, has taken stock of the best evidence and analysis of the FDA in renewing its conclusion that cell phones are safe to use.

Legislation to Combat Robocalls Advances in Congress

On December 4, the U.S. House of Representatives passed the TRACED Act (S. 151) by a 417-3 vote. The House version mergers provisions of S. 151 passed by the Senate in May with the Stop Bad Robocalls Act (H.R. 3375). H.R. 3375 was passed by the House in July. Among its provisions the Engrossed House bill for S. 151 would do the following:

• Require carriers to implement call-authentication technology consumers and small businesses free of charge;
• Require carriers to provide opt-in or opt-out robocall-blocking to consumers free of charge;
• Authorize the FCC to assess penalties of up to $10,000 for each unwanted robocall for those intentionally violating telemarketing restrictions;
• Extend to four years the statute of limitations for Commission enforcement actions against illegal robocalls; 
• Require the Commission to make annual reports to Congress on anti-robocall enforcement;
• Require the Commission to conduct a rulemaking to protect subscribers from unwanted calls or texts from unauthenticated numbers by using new authentication methods; 
• Require the Commission to conduct a rulemaking on combatting one-ring scams meant to impose charges on unsuspecting consumers that call them back; and
• Require the Commission to establish a process for certifying when carriers have or have not participated in private initiatives to trace unlawful robocalls to their source, and also to report on such participation as well as follow through with necessary enforcement actions.

According to reports, the similarity of the House's bill to the Senate bill makes it likely that the Senate will concur in the changes or otherwise reach consensus with the House and that the TRACED Act or "Pallone-Thune bill" will go to President Donald Trump for signature.

Additionally, on December 11, the Senate Commerce, Science, and Transportation Committee passed a substitute version of the Data Analytics Robocall Technology Act of 2019 or "DART Act" (S. 2204). The DART Act would require the FCC to issue a rulemaking on maintaining a list of numbers that are not eligible to be blocked by carriers, such as emergency- or weather-related numbers. The bill also would require the Commission to report to Congress on implementation of call-blocking and caller-ID authentication.

C Proposes to Make 5.9 GHz Spectrum Available for Unlicensed Uses

Today, the FCC adopted a proposed rulemaking that would make valuable unused spectrum available for unlicensed Wi-Fi uses. According to the Commission's news release:

[T]he Commission proposes to designate the lower 45 megahertz of the band for unlicensed uses like Wi-Fi. This 45 megahertz sub-band can be combined with existing unlicensed spectrum to provide cutting-edge high-throughput broadband applications on channels up to 160 megahertz wide. 

Congratulations to the Commission and to Chairman Ajit Pai. The Commission's vote to issue its proposed rulemaking is an important step in making more spectrum resources available for wireless services.  

Report Tracks Tax Hikes on Wireless Consumers in 2019

In a report published by the Tax Foundation in late November, Scott Mackey and Ulrick Boesen provide an abundance of data on wireless taxes as well as government surcharges and fees imposed on wireless consumers. Their report, "Wireless Taxes and Fees Jump Sharply In 2019," tracks the overgrowth of wireless taxes over time and also compares overall tax bills faced by consumers in different states. As a general matter, states should not tax consumers of wireless services at rates higher than their general sales tax rates. Unfortunately,  the problem of over-taxation of wireless consumers appears to be growing. Consider this key report finding: 

Since 2008, average monthly wireless service bills per subscriber have dropped from just under $50 per line per month to $37.85 per month–a 24 percent reduction. However, wireless taxes have increased from 15.1 percent to 21.7 percent of the average bill–a 44 percent increase.

Former NASA Administrator Daniel Goldin on the L-Band

If, like me, you have been following the long-running saga in which Ligado is seeking the FCC's permission to use the long dormant L-Band spectrum, you definitely should read the December 9 letter from former NASA Administrator Daniel Goldin to FCC Chairman Ajit Pai. Mr. Goldin's letter is here.

Please read the entire letter – the essence of which is to vigorously contest NTIA's position that Ligado's applications, which seek to deploy a hybrid terrestrial-satellite network in the L-Band that will provide “Internet of Things” services and boost America’s position in the global race to 5G, should not be granted.

In the meantime, here are a few key excerpts:

•      On 5G, we have fallen behind, and badly. Of most immediate concern is the lack of available, appropriate spectrum for our wireless carriers to deploy. I have spent countless hours educating myself alongside a team of world class telecom executives and spectrum technical experts on these issues, notably L-Band's ability to drastically shorten the timeline for the U.S. to deploy 5G and truly compete with China. I am convinced the technological and policy justifications for allowing this "Ligado" modification to proceed are sound.
• 
  
•     This 35 MHz is not just one spectrum option to advance 5G.  Properly understood, it is absolutely critical to a viable U.S. 5G deployment strategy.

•      Simply put, GPS is not at risk I have studied the record. I have worked with an unparalleled technical team, and over 5000 hours of testing has shown there is no harmful interference. Globally recognized experts continue to refute all claims alleging actual degradation of GPS devices.
• 
  
•       As  it relates to a 1DB C/N out-of-band standard for interference, I agree that we cannot and will not set this unprecedented standard. Doing so would result in the FCC having to revoke substantial amounts of other adjacent spectrum already deployed. Setting such an unreasonably restrictive standard would also have catastrophic consequences on future spectrum in the pipeline. It is possible to protect GPS and still issue the L-Band license modification order; we must do both.
• 
  
•   c Of course, historically, the U.S. has transitioned new spectrum many times. There is always a strong push to preserve the status quo.

I do not purport to be an expert regarding spectrum interference or other engineering matters – although I know a heck of a lot more in this regard than I did over four decades ago when I first began participating in and studying Commission proceedings. I have a high degree of confidence that the FCC's engineers possess sufficient expertise to determine whether Mr. Goldin's and others' assertions regarding the 1DB C/N out-of-band standard for interference are correct. The notion that, if such a 1DB C/N out-of-band standard is adopted the Commission would be required to revoke a substantial amount of already-deployed spectrum, is surely troubling.

While I do not purport to be a spectrum engineering expert, I do consider myself an expert, by dent of considerable practical experience and "battle scars" as well as scholarly study and academic endeavors, regarding the operation of institutional bureaucratic and "public choice" imperatives frequently at work in agency matters. The fact of the matter is that there are incentives for one party or another to use the available administrative processes to protect its turf, and spectrum proceedings – including those involving government agencies – are by no means immune from this "self-protective" phenomenon. As Mr. Goldin aptly puts it, "[t]here is always a strong push to preserve the status quo."

In this instance, I submit, for the reasons Mr. Goldin cites, especially including the need to make available mid-band spectrum so that the U.S. does not fall behind China (or other nations) in the race to deploy 5G, that it is very important for the FCC to reject the urge to preserve the status quo. The Commission needs to move ahead to act on Ligado's long-pending applications. As Mr. Goldin puts it, "the stakes are too high not to act."

It would be wrong, of course, for the FCC not to give due consideration to NTIA's views regarding impacts on the use of government spectrum, especially including impacts on national security. Presumably, the FCC already has done so in preparing a draft order, and if it hasn't, it should.

At the end of the day, however, the FCC is an independent agency that must exercise its responsibility, based on its presumed expertise, to oversee the use of spectrum designated for private sector use in a way that serves the overall public interest.

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Troubled ALI Copyright Project Should Be Abandoned

The American Law Institute's (ALI) Copyright Restatement Project previously has come under fire for its attempt to produce a statement that effectively rewrites federal copyright law. Now, a December 3 letter by Senator Thom Tillis and four U.S. House members rightly criticizes the ALI's effort to reword and supplement copyright statutes passed by Congress. Given the serious concerns voiced by those federal lawmakers and by others, and the unusual nature of the Copyright Project, the ALI should abandon it. 

As Free State Foundation President Randolph May and I explained in a February 2018 blog, the ALI's historic restatements of the laws of property, contracts, torts, and more are treatises intended to objectively describe and summarize common law doctrines in the states. However, federal law is based almost exclusively on federal statutes and federal courts have exclusive jurisdiction over copyright claims. In their letter, Senator Tillis and his House colleagues point out that "laws created through federal statute, including federal copyright law, are ill-suited for treatment in a Restatement." Register of Copyrights Karyn Claggett made this same point in January 2018 when she wrote to the ALI that "[t]here can be no more accurate statement of the law than the words that Congress has enacted… and those that the Copyright Office has adopted in its regulation." 

In their letter, Senator Tillis and the U.S. House members observed that the ALI's Council approved two sections of the proposed ALI Copyright Restatement in mid-October of this year. Sections approved by ALI's Council must also be approved by its membership before they are made public. Yet earlier copyright section drafts have been publicly criticized by the Register, academics, and copyright lawyers for misconstruing the meaning of federal copyright statutes and for filling in statutory gaps with the ALI drafter's preferred views. Gap filling by ALI Reporters is inconsistent with the historic purpose of restatements: restating what the law is. Rather, such gap filling is likely to produce a restatement of what ALI reporters think the law ought to be. 

Indeed, the ALI's Copyright Project appears to be pursuing a course that was sharply criticized by the late Justice Antonin Scalia. In Kansas v. Nebraska (2015), Justice Scalia wrote: "Over time, the Restatements' authors have abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be." In addition to confusing black-letter copyright law with aspirational viewpoints, inserting ALI reporter conclusions about unsettled points of law into a Copyright Restatement poses serious methodological concerns. As Senator Tillis and his colleagues put the question to the ALI: "When there are gaps in the statutory or case law, how do the Reporters decide when to fill in those gaps as opposed to declining to take a position?" 

Senator Tillis and the U.S. House members directed several other pointed questions to the ALI that touch on purpose, methods, bias, and more. Those questions should be taken seriously, and the ALI should heed the warning given by these federal lawmakers. Many states have passed laws or resolutions to curb or reject the influence of the ALI's recent Insurance Liability Restatement. To their credit, Senator Tillis and his colleagues indicate their willingness to similarly push back against any future Copyright "Restatement" that effectively rewrites federal copyright law. As they wrote to ALI: "Since copyright law is predominantly federal law, codified in Title 17, it would be Congress, and not the states, that would take action in this case."

Perhaps earlier, ALI Reporters could have expressed their views on copyright law and policy through a Statement of Principles or some other vehicle. But because the ALI has shown an unwillingness to rethink its approach, the best thing the ALI can do now is abandon its Copyright Restatement Project. 

FCC Should Green Light Wireless Services in L-Band Spectrum

According to reports, the FCC reportedly has prepared a draft order approving mobile wireless operations in unused L-Band spectrum. A November 18 letter by the Defense Secretary reportedly disagrees with the FCC's proposal on certain points and repeats views already known to the Commission when it prepared the draft. The Commission has ultimate responsibility over the spectrum, and the agency should be undeterred in approving its draft order so that long fallow valuable L-Band spectrum can be put into commercial use. 

It's important to our nation's economy and its quest for global leadership in wireless to free up as much spectrum as possible for 5G and other advanced mobile services. If approved, Ligado Networks' modified applications would put 30 MHz of L-Band spectrum to use, generating economic benefits potentially between $250 and $500 billion. In July 2018, Free State Foundation President Randolph May and I submitted reply comments in the Commission's proceeding, recommending Ligado's applications be approved. 

Ligado's modified applications to deploy a hybrid satellite-terrestrial wireless network present the FCC's best near-term opportunity to make available lower-middle-band spectrum for next-generation mobile services – including 5G. As research firm LightShed Partners has explained: "Ligado's spectrum offers incremental wireless data capacity, which is needed not only for the ongoing wireless data growth on existing LTE networks but also to enable higher use 5G customers. LightShed has identified the potential for C-Band and mmWave spectrum to be paired with Ligado's L-Band spectrum for uplinks using dynamic spectrum sharing (DSS), thereby enhancing the value and opportunities for LTE and 5G in those higher bands. According to LightShed, "Ligado could supply an operator like Verizon with at least two years of wireless data growth on a network," and it could similarly help meet T-Mobile's capacity needs. 

The Commission submitted a draft order regarding Ligado's L-band applications to an interagency advisory review board in October. The review is set to conclude on or about December 6. Given that the review is ongoing and also that the Department of Defense is a member of the interagency board, it's unusual that Defense Secretary Mark Esper went outside the process and released to the press his November 18 letter. The letter claims that Ligado's proposed network would cause interference with services in other bands – claims the Defense Department previously made to the Commission in a June 2019 letter. Ligado has previously disputed those interference claims, and the Commission surely considered them in reaching its own conclusion on the matter. 

In some ways, the Defense Department's last-minute public rehash of old arguments is reminiscent of tactics used by other agencies attempting to derail the FCC's implementation of its 24 GHz spectrum band plan even after the auction was concluded. It's not unusual for government agencies or other institutions to have different viewpoints on technical matters. To avoid permanent interagency gridlock, federal law gives to the Commission the final say on how spectrum for non-government purposes will be used. In the case of the 24 GHz band, the Commission refused to be deterred and has followed through on its spectrum plan.

The Commission should show the same determination in the case of the L-Band. The agency should now proceed with dispatch to act on Ligado's modified applications. 

State AGs Should End the T-Mobile/Sprint Lawsuit and Make Way for 5G

In late November, Texas and Nevada became the two latest states to withdraw from the antitrust lawsuit challenging the T-Mobile/Sprint merger. The case is thin on the merits, and the FCC's order approving the merger recognizes the benefits that the combined T-Mobile/Sprint's nationwide 5G network will provide consumers. Now that several states have joined the U.S. Department of Justice's proposed settlement regarding T-Mobile/Sprint, the remaining State Attorneys General should withdraw their lawsuit. 

The U.S. is in a tight race to 5G with China, and every opportunity for advancing 5G services at home should be pursued. Analysts such as Accenture Strategies project that 5G networks will provide average speeds at least ten times faster than 4G LTE networks and provide peak speeds perhaps 100 times faster. Advanced 5G networks will enable smart-city applications, as well as precision agriculture, industrial, and other uses. Importantly, the T-Mobile/Sprint merger will fast-track nationwide 5G coverage. In its November 2019 order approving T-Mobile/Sprint, the FCC found that the merger "will enable deployment of a more robust, nationwide 5G network than either standalone company could deploy on its own." 

Due to the consumer welfare benefits of more rapid and widespread 5G rollout, the T-Mobile/Sprint merger is well positioned to succeed in court against the remaining State AGs. Although the State AGs' take the position that T-Mobile/Sprint merger isn't necessary for 5G deployment in the U.S., that position amounts to little more than state government lawyers' second-guessing of the investment-backed business judgment of wireless carriers in a highly competitive market. As the FCC's order approving the merger recognized: "Sprint has not widely deployed its 2.5 GHz spectrum assets and our technical analysis predicts that on a standalone basis it would fail to cover nearly half of the country with 5G services on its 2.5 GHz spectrum, even assuming it has the financial ability to reach its previously planned deployment level." The Free State Foundation's reply comments in the merger proceeding as well as a May 2019 blog by Free State Foundation President Randolph May identify Sprint's significant financial debt as well as its streak of annual revenue declines dating back to 2013. 

Moreover, the State AGs' amended complaint allegation that the merger would substantially lessen competition rests on a largely static and unduly narrow picture of today's dynamic mobile market. It downplays the increased competition that the New T-Mobile will pose to current market leaders AT&T and Verizon. Additionally, the State AGs' complaint downplays competition from regional and local wireless providers, as well as competition from entrants Charter and Comcast. As of the third quarter of 2019, those two hybrid/MVNO providers served nearly 800,000 and nearly 1.8 million subscribers, respectively, with continued subscriber increases widely expected. DISH Network also has plans in the works to launch a nationwide mobile wireless network. And DISH's acquisition of Sprint's Boost prepaid brand makes it even more difficult for the State AG's to show that the merger would harm the prepaid market segment. 

Texas and Nevada are not the only states that have withdrawn from the State AGs' antitrust lawsuit against T-Mobile/Sprint. Colorado and Mississippi withdrew in October 2019. Ten states have instead joined with the Justice Department in a proposed settlement with T-Mobile and Sprint.

Now it's time for the remaining 14 State AGs should end their lawsuit and make way for 5G.