Bill Would Incentivize RDOF Auction Winners to Speed Up Broadband Deployment

On June 22, Senators Roger Wicker (R–MS), chairman of the Senate Committee on Commerce, Science, and Transportation, Shelley Moore Capito (R–WV), and Marsha Blackburn (R–TN) introduced the Accelerating Broadband Connectivity (ABC) Act of 2020.

The ABC Act would provide the FCC with $6 billion to incentivize winning bidders in the Rural Digital Opportunity Fund (RDOF) reverse auctions – Phase I, scheduled for this October, and, to the extent that there are funds left over, Phase II – to accelerate buildout.

Incentive payments would be proportional to the amount of RDOF support received and conditioned upon recipients meeting the following milestones:

• Begin construction within 180 days;
• Initiate service within one year; and
• Satisfy all buildout obligations within three years.

The following day, FCC Chairman Ajit Pai tweeted his support:

I applaud @SenateCommerce Chairman @SenatorWicker, @SenCapito, & Sen. @MarshaBlackburn for introducing the Accelerating Broadband Connectivity Act. It would provide new funds for Rural Digital Opportunity Fund auction winners to deploy broadband faster. Big win for rural America! pic.twitter.com/z8ZCS9hgAV

— Ajit Pai (@AjitPaiFCC) June 23, 2020

It is encouraging to see policymakers recognize the urgent need to expand broadband coverage to areas currently unserved.

Fourth Circuit Issues Important Decision in Stream-Ripping Case

On June 26, a panel of the U.S. Court of Appeals for the Fourth Circuit issued its decision in UMG Recordings, Inc. v. Kurbanov (2020), a case involving two of the world's most high-trafficked websites offering stream-ripping services. As Free State Foundation President Randolph May and I have explained in our book, Modernizing Copyright Law for the Digital Age – Constitutional Foundations for Reform, and also in a recent Perspectives from FSF Scholars paper, stream-ripping is the most prevalent method for mass online piracy of copyrighted sound recordings.

Mr. Kurbanov, a Russian national and the respondent in the case, generates revenues from ads targeted to the large numbers of users of his stream-ripping websites. As the Fourth Circuit explained, spaces on the websites are sold to ad brokers who resell spaces to advertisers. Apparently, a majority of streams ripped using those websites derive unlawfully from YouTube videos. The U.S. District Court had dismissed the case for lack of jurisdiction, prompting an appeal. 

Importantly, the Fourth Circuit held that Mr. Kurbanov's activities in connection with his stream-ripping websites satisfied the purposeful availment prong of the federal courts' standard for exercising specific personal jurisdiction. It concluded that the copyright claims of several plaintiff owners of sound recordings arose from activities connected to the state of Virginia. Rightly, the Fourth Circuit rejected the District Court's conclusion that user visits to those stream-ripping sites were non-commercial in nature and that there were no acts by the defendant in targeting Virginia:

Here, the visitors' acts of accessing the Websites (and downloading the generated files) are themselves commercial relationships because Kurbanov has made a calculated business choice not to directly charge visitors in order to lure them to his Websites. Kurbanov then requires visitors to agree to certain contractual terms, giving him the authority to collect, among other information, their IP addresses and country of origin. Far from being indifferent to geography, any advertising displayed on the Websites is directed towards specific jurisdictions like Virginia. Kurbanov ultimately profits from visitors by selling directed advertising space and data collected to third-party brokers, thus purposefully availing himself of the privilege of conducting business within Virginia. 

The case is now being remanded for a determination of whether the exercise of specific personal jurisdiction would be constitutionally reasonable. The Fourth Circuit's decision preserves access to justice for the copyright owners who are pressing their case against websites that they allege have facilitated massive online piracy. Perhaps the precedent established by the court also will bolster the prospects for copyright owners in pursuing civil justice against online piracy in future cases. 

Privacy Roundup: CPRA Qualifies for CA Ballot, Comcast Enables Encrypted DNS

Two quick updates on privacy topics I've addressed recently:

First, California Secretary of State Alex Padilla announced on June 25 that the California Privacy Rights Act (CPRA) will appear on the ballot this November.

According to Californians for Consumer Privacy, the organization behind the ballot initiative, polling indicates that voters are likely to approve the CPRA.

For a critique of what many refer to as the CCPA 2.0, please check out my May 27 Perspective from FSF Scholars, "California Privacy Regulation Must Account for the COVID-19 Crisis."

Second, that same day Mozilla and Comcast announced that the latter will be the first ISP to provide Domain Name System (DNS) over Hypertext Transfer Protocol Secure (HTTS) (DoH) encryption to users of the Firefox browser.

According to the Press Release, "DoH helps to protect browsing activity from interception, manipulation, and collection in the middle of the network by encrypting the DNS data."

In an April 9 Free State Foundation Perspectives, "Maine's ISP-Only Privacy Law Will Not Protect Consumers," I explained how the increasing use of DoH, and HTTPS encryption generally, limit ISPs' ability to "see" what subscribers do online – and how edge providers, by contrast, have far greater access to online personal information.

This voluntary action by Comcast not only enhances subscriber privacy, it also undermines further the proffered justifications for the Maine statute.

Maine Cannot Require Cable Operators to Prorate Last-Month Bills

Consumers shopping for video today are faced with an overabundance of choice: traditional cable, direct broadcast satellite (DBS), telco TV, virtual multichannel video programming distributor (vMVPD) offerings, streaming services. Fierce competition between these providers leads to lower costs, differentiated products, and rapid innovation. When free markets operate with such efficiency, there is no need for onerous regulation.

Nevertheless, from time to time a state will adopt a law that ignores the current reality of the marketplace. Maine, in particular, has demonstrated an eagerness to do just that.

The latest example: on March 17, 2020, the Maine legislature passed Public Law Ch. 657, "An Act To Require a Cable System Operator To Provide a Pro Rata Credit When Service Is Cancelled by a Subscriber" (the Act). The governor signed it into law the following day.

As its name implies, the Act uniquely requires locally franchised cable operators to "grant a subscriber a pro rata credit or rebate for the days of the monthly billing period after the cancellation of service if that subscriber requests cancellation of service 3 or more working days before the end of the monthly billing period."

Charter Communications, Inc. (Charter) provides cable service in Maine. On May 11, it filed a Complaint for Permanent Injunctive Relief and Declaratory Relief with the United States District Court for the District of Maine. The state filed a motion to dismiss, to which Charter responded earlier this week. In its pleadings, Charter objects to the Act's interference in how it prices its offerings. With good reason.

As it happens, it is common industry practice to offer video subscriptions on a complete-month basis. The two DBS operators that provide effective competition to Charter in Maine (and elsewhere), DIRECTV and DISH, do not offer pro-rated credits upon mid-month cancellation. Nor do a number of Internet-based providers, including Netflix. Given the amount of competition that exists, however, should consumers prefer such an option, rivals would be expected to appeal to potential customers by satisfying that demand.

Nevertheless, Maine has chosen to meddle with the well-functioning marketplace by regulating the rate structure of cable operators — and ONLY cable operators.

The Act without question triggers the preemption provision in Section 636 of the Communications Act: "any provision of law of any State ... which is inconsistent with this chapter shall be deemed to be preempted and suspended." That is because Section 623(a)(2) plainly states that "if 'the [FCC] finds that a cable system is subject to effective competition" – as it has done with respect to cable systems in Maine – then "the rates for the provision of cable service by such system shall not be subject to regulation by … a State.."

In its Motion to Dismiss, the state valiantly tries to characterize the Act's requirement that cable operators price their offerings in a specific way – that is, per day – as something other than preempted rate regulation, but those arguments run counter to common understanding. In addition, the relevant case law is unambiguous: rate regulation encompasses the regulation of rate structure, of which this proration obligation is a prime example.

More to the point, the Act will not succeed on its own terms: consumers will not benefit. Cable operator costs will increase. So, too, may prices. And, notably, those who obtain video from non-cable sources – a substantial and steadily increasing number – fall outside of the Act's scope.

The District Court should grant Charter's request for relief.

FCC's General Counsel: Federal Law Preempts Berkeley's "Overwarning" Ordinance

Based on a review of available scientific evidence, the FCC's 2019 RF Order reaffirmed that certified cell phones pose no health risk. Yet, a City of Berkeley, California ordinance would require retailers in Berkeley to provide specific notice at the point of sale that warns against radio frequency (RF) emissions by those phones. This ordinance is the subject of a pending legal challenge in CTIA v. City of Berkeley. On June 22, the U.S. Department of Justice filed a statement of interest in the case that incorporates a letter by FCC General Counsel Thomas M. Johnson. 

In his letter, the General Counsel rightly explains: "The notice mandated by the Berkeley ordinance inaccurately suggests that cell phones are unsafe. Thus, it has the potential to 'overwarn' consumers and impede the accomplishment of the FCC's goal of fostering a safe and robust wireless communication system." 

The letter's cites to court precedents regarding federal agency preemption, including precedents regarding federal policy interests in preventing state regualtions that result in "overwarning." As the General Counsel correctly concludes, Berkeley's ordinance is preempted federal law. 

Regarding certified cell phone safety, the General Counsel's letter quotes the FCC's 2013 notice, which states that the agency's limits on RF emissions:

[A]re set at a level on the order of 50 times below the level at which adverse biological effects have been observed in laboratory animals as a result of tissue heating resulting from RF exposure. This "safety factor can well accommodate ... the potential for exposures to occur in excess of [the FCC's RF] limits without posing a health hazard to humans."

The General Counsel's letter is sensible and it succinctly sums up both the FCC's findings and its policy concerning the safety of certified cell phones. Certainly, Berkeley's ordinance appears unsupportable as a matter of fact and of law. Hopefully, the U.S. District Judge in CTIA v. City Berkeley will dismiss the case anon.

In the event that local governments field concerns from citizens about RF emissions from cell phones, local officials should carefully consult the General Counsel's letter. And I wrote in a December 2019 blog post, they also should consult the 2019 RF Order. Local governments should be mindful of the FCC's findings that certified cell phones pose no health risk, and they should refrain from taking actions that run contrary to federal law and policy.

Regarding the safety of 5G networks, I also commend FCC General Counsel Thomas Johnson's June 4 op-ed in the Washington Post titled "5G Conspiracy Theories Threaten the U.S. Recovery."

Electric Co-Op Broadband Providers Should Be Held to Non-Discriminatory Rate Requirements

Working its way through Louisiana's State Legislature is Senate Bill 10, which involves entry by electricity cooperatives into the broadband Internet access services market. A previous bill on this subject, Senate Bill 406, was vetoed by Louisiana's Governor, on account of that bill's authorization for electric co-op entry into the broadband market only unserved areas. It was claimed, in Governor Jonathan Bel Edwards' veto message for SB 406, that the Telecommunications Act of 1996 "specifically prohibits any state statute from prohibiting the ability of any entity to provide any telecommunication service." This was an apparent reference to Section 253(a) of the 1996 Act.

However, it is quite unlikely that the 1996 Act prohibits states from conditioning electric co-ops' entry in the broadband market on serving only unserved areas. Such a sweeping result follows from a hyper-literal reading of the statute. Electric co-ops are rate-regulated monopolies that are authorized for the specialized purpose of delivering electricity. It's not reasonable to think that the 1996 Act effectively rewrote the laws of every state to give electric co-ops charter to enter the broadband Internet services business and operate wherever they want. In passing the 1996 Act, Congress undoubtedly was particularly concerned with competitive entry by private market providers and not by government-sanctioned monopolies.

Louisiana SB 10, which is pending as of this post, does not contain the proviso that electric co-ops may only provide service in unserved areas. However, SB 10 does impose on electric co-op providers of broadband Internet services a non-discrimination provision regarding pole attachment rates. If, in the name of increasing access, states want to take the risk of authorizing electric co-ops to enter the broadband market, those co-ops should be required to make their utility poles available to competing broadband providers on a non-discriminatory basis. Otherwise, electric co-ops could use their monopoly power to impose above-market pole attachment rates on other providers and harm competition. SB 10's non-discrimination provision is good sense.

Permanent NTIA Head Needed to Restore the Interagency Coordination Process for Spectrum

On June 15, Free State Foundation Visiting Fellow Gregory J. Vogt published an important Perspectives from FSF Scholars paper titled, "Coordinated Government Decisionmaking on Spectrum Issues: It's Vital to Locating More Spectrum for 5G Use." In that paper, he identified steps that would help restore and revitalize the interagency coordination process regarding spectrum use. 

According to Mr. Vogt, one step for reform is this: "The President should appoint, and the Senate should confirm, a permanent NTIA head whose decisions are supported by the President and the Department of Commerce." On this point A similar view was expressed at FSF's Twelfth Annual Telecom Policy Conference in March by James Cicconi (then) Senior Executive Vice President at AT&T. Here is an excerpt from the transcript of the hot panel in which Mr. Cicconi spoke: 

It doesn't help the government's position on spectrum when you have this revolving door at NTIA.  They are supposed to be the lead in terms of government spectrum policy, especially policy with regard to the use of government spectrum.  We've had three years of dysfunction in that area.  It ought to be a simple thing for the government to address.  But sadly, at least until recent developments, it hasn't been addressed… [Y]ou can't expect any process to work if the person who's supposed to be leading the process is absent or you have a series of people acting in the position, or a situation where someone that does not have the responsibility nor is Senate confirmed is trying to make the calls on that.  I think it has been, at least from the outside, seemed fairly dysfunctional on these. Any interagency process requires people from the agencies to participate.  And when you don't have any degree of continuity or, frankly, a Senate-confirmed person with authority in that position, it's sure hard to make policy.

The importance of this step has also been brought to light by several news reports highlighting tFCC Commissioner Mike O'Rielly's confirmation hearing statement about how NTIA's position regarding Ligado Networks' proposal to use L-Band spectrum for mobile wireless services changed once its administrator was removed. (Free State Foundation President Randolph May and I have written favorably about the FCC's approval of Ligado's license modification request to deliver advanced mobile wireless services, including 5G with currently unused L-Band spectrum.)

Be sure to check it out Mr. Vogt's paper for more on this point and other needed reforms. And for plenty of other interesting discussion on communications policy topics, be sure to check out the event transcript. 

NTIA Internet Use Survey Highlights Primacy of the Smartphone

NTIA on June 10 released data from its latest Internet Use Survey, conducted in November of last year. This is the fifteenth edition of the survey over the past 25 years. That extended time horizon offers valuable insight into evolving trends. For those who are interested, NTIA's Digital Nation Data Explorer tool helpfully presents that information in visual form.

One trend of note: the ascendency of the smartphone as consumers' preferred means of accessing the Internet.

• In 2011, the first year for which device-specific data is available, most consumers – 45 percent – used a desktop computer, followed closely by a laptop at 43 percent. Only 27 percent used a smartphone.
• By 2015, the smartphone had become the most used device at 53 percent, the laptop remained relatively steady at 46 percent, while the desktop had dropped to 34 percent.
• In the most recent survey, the use of smartphones increased to 68 percent, 21 percentage points more than laptops (47 percent). Desktops, at 28 percent, trailed both smart TVs (41 percent) and tablets (30 percent).

The Free State Foundation argued in comments filed on April 27 in The State of Competition in the Communications Marketplace proceeding that:

[T]he Commission should move beyond its traditional siloed approach to competition policy by making substitution findings for broadband Internet services [and] adopt a broader product market definition for broadband Internet services that takes into account functional similarities and intermodal competition between wireless and wireline broadband services.

Smartphones, to an extent that differentiates them from other categories of devices, are able to access, and seamlessly transition between, mobile broadband data offerings and – via Wi-Fi – wireline high-speed Internet access. The increasing degree to which consumers rely upon smartphones to go online therefore further suggests that wireless and wireline broadband services indeed are functional substitutes. 

The Senate Should Confirm Commissioner O'Rielly For Another Term

                                                             

The following statement may be attributed to Free State Foundation President Randolph May regarding the confirmation of Michael O’Rielly:

“I have watched dozens of FCC commissioners perform their duties over four decades, and many, from both parties, have served with distinction. But I’d say, without any hesitation, that Mike O’Rielly is in the very top ranks of the commissioner cohort. His combination of experience and expertise, commitment to free market-oriented principles, willingness to work with all his colleagues, and roll-up-his-sleeves work-hard mentality, all advance the cause of achieving sound communications policy in so many areas. And he is always on the lookout to reduce unnecessary regulatory burdens whose costs outweigh their benefits and impair consumer welfare.

I especially applaud the work Commissioner O’Rielly has pursued doggedly in the area of FCC institutional reform. This work, in which Commissioner O’Rielly has played a leading role, is not necessarily sexy or headline grabbing, but it is important to making FCC decision-making as efficient, effective, timely, and transparent as possible, all to the benefit of those subject to the Commission’s jurisdiction, but, most importantly, to consumers and the public at large.

I urge the Senate to speedily confirm Commissioner O’Rielly to another term, so he can continue to serve the public in the same exemplary fashion he has since he became a commissioner."   

FCC Releases its Newly-Approved 5G Upgrade Order

The FCC has released the 5G Upgrade Order, which it approved at its June 9 public meeting. As stated in my blog post from May 20, the "FCC's 5G Upgrade Order Will Fast-Track Improvements to Wireless Networks." As summarized by the Commission's news release from June 9:

The Declaratory Ruling adopted today clarifies the Commission's 2014 rules with regard to when the 60-day shot clock for local review begins. The ruling also clarifies how certain aspects of proposed modifications – height increases, equipment cabinet additions, and impact on concealment elements and aesthetic conditions – affect eligibility for streamlined review under section 6409(a). In addition, today's action clarifies that, under the Commission's rules on environmental and historic preservation review, FCC applicants do not need to submit environmental assessments based only on potential impacts to historic properties when parties have entered into a memorandum of agreement to mitigate effects on those properties.  

Congratulations go to the Commission and to Commissioner Brendan Carr on the 5G Upgrade Order's approval. 

In addition to clarifying rules regarding non-substantial modifications to existing cell sites eligible for streamlined permit processing under Section 6409(a) of the Spectrum Act, the Commission's order also proposes rule changes regarding deployments outside the boundaries of existing tower sites for purposes of streamlined review. 

FCC Proposal on 70/80/90 GHz Bands Would Boost 5G Services

At its June 9 public meeting, the FCC unanimously approved a notice of proposed rule making that would make use of 70/80/90 GHz bands for wireless backhaul for 5G and for deployment of broadband services to aircraft and ships. These millimeter bands have gone largely unused or underused. The Commission’s proposal would make changes to the agency’s antenna rules to allow for smaller antennas in the 70/80/90 GHz bands. As the Commission’s announcement of the approval vote states: “This could lower costs, facilitate network densification, and help support the provision of backhaul for emerging 5G services.” Additionally, the proposal includes seeks comment on ways to allow use of those same bands for broadband services on aircraft in flight and ships at sea.

The 70/80/GHz band proposal is a welcome part of the FCC’s 5G Fast Plan. The Commission should be applauded for unanimously launching this commonsense undertaking to put more spectrum into use for 5G and other advanced services.

NTIA Seeks Input on National 5G Security Strategy

As I noted in an April 6 blog post, President Trump signed into law the Secure 5G and Beyond Act of 2020 on March 23. That Act directs the Administration to develop a 5G security implementation plan within 6 months of its enactment.

The White House initiated that process with the same-day release of the "National Strategy to Secure 5G," a framework document organized around four lines of effort:

• Facilitating the private-sector led rollout of 5G;
• Defining core security principles in response to potential risks;
• Addressing risks to economic and national security interests; and
• Working with like-minded countries to develop and deploy secure and reliable standards and infrastructure.

Late last month, NTIA solicited public input on that implementation plan. Its request for comment, which is organized around the same four lines of effort noted above, presents a number of specific questions. For example:

• With respect to facilitating the domestic rollout out of 5G, how can the U.S. Government further motivate the commercial ecosystem (equipment and chip manufacturers, software developers, cloud providers, system integrators, network providers, etc.) to increase R&D and testing? What specific goals should it prioritize?
• In assessing risks and identifying core security principles, what factors should the U.S. Government consider in evaluating potential security gaps?
• In addressing risks to economic and national security, what opportunities does 5G deployment create for U.S. companies?
• In promoting the responsible global development of 5G, how can the U.S. Government best encourage the domestic private sector to participate in standards development?

Comments are due on or before June 18.

Twitter's Sham "Neutrality" Policy

For a window into Twitter's not-so-principled approach to net neutrality and Internet speech, check out the following tweets by Free State Foundation President Randolph May:

News Flash! I wanted to run an ad campaign to promote this tweet, but @Twitter rejected it as "political." In other words, @Twitter claims to be for Net Neutrality - but not when a view is expressed contrary to their views on Net Neutrality! Can you believe it was rejected? https://t.co/Qwqabrhgvl

— Free State Foundation (@FSFthinktank) June 5, 2020

See @eggerton @MultiNews report on @Twitter rejection as "political" of my ad promoting a tweet declaring the Internet shouldn't be regulated as a public utility! This from a self-proclaimed proponent of #NetNeutrality! What hypocrisy! https://t.co/Gw9mDwK0YL

— Free State Foundation (@FSFthinktank) June 6, 2020

Privacy Recap: Another CCPA Update, Another COVID-19 Bill

Another round of privacy developments:

First, I reported last Saturday that "it ... appears likely that rules implementing the California Consumer Privacy Act (CCPA) will not become effective until October 1." Attorney General Xavier Becerra had not yet submitted those rules to the Office of Administrative Law (OAL), and time was almost up.

It's a good thing that I qualified that statement, because on Monday – the deadline was extended from May 31, a Sunday, to Monday, June 1 – the AG beat the buzzer, seeking approval, and requesting expedited review, of the same version of rules on which his office sought public comment nearly two months ago.

I find it interesting that the request for expedited review comes right out and acknowledges that, "[o]nce final regulations are adopted, the Attorney General will enforce the regulations that establish procedures to facilitate new consumer rights under the CCPA and provide guidance to businesses for how to comply." I couldn't have said it better myself.

If the OAL grants that request and completes its review within 30 days, the rules still could go into effect on July 1, the same day on which the AG in a June 2 press release confirmed his intention to commence CCPA enforcement. Stay tuned.

Second, yet another coronavirus-specific privacy bill has been introduced. Senate Republicans on the Commerce Committee unveiled the COVID-19 Consumer Data Protection Act of 2020 (CCDPA) on May 7. Congressional Democrats responded with the Public Health Emergency Privacy Act (PHEPA) on May 14. A bipartisan group of Senators completed the trilogy on June 1 with the Exposure Privacy Notification Act (EPNA).

Sponsored by Senators Maria Cantwell (D – WA), ranking member of the Commerce Committee, and Bill Cassidy (R – LA), and co-sponsored by Senator Amy Klobuchar (D – MN), the EPNA, as its title suggests, focuses on the notices provided via contract tracing apps and similar technological approaches  to containing the spread of the virus ("automated exposure notification services").

Among other things, the EPNA would:

• Require "opt-in" consent – and allow consumers to revoke that consent at any time;
• Require app developers to collaborate with public health officials;
• Limit notifications to medically-authorized diagnoses of infectious diseases;
• Allow participating consumers to determine whether their diagnoses are included in such notifications;
• Limit data collection and use to that which is reasonably necessary for public-health purposes;
• Ban any commercial use of that data;
• Prohibit, with certain exceptions, the transfer of that data;
• Create a right to delete – and allow consumers to exercise that right at any time;
• Require, on a rolling basis, data deletion after 30 days;
• Prohibit discrimination based upon that data or a refusal to participate;
• Require minimum data security practices including breach notifications;
• Provide for oversight and reporting by the Privacy and Civil Liberties Oversight Board;
• Empower the FTC and state attorneys general to enforce its provisions;
• Authorize the FTC to impose civil penalties for first-time violations; and
• Preserve (that is, not preempt) state laws.

No "Fairness Doctrine for the Internet"

On June 2, Free State Foundation President Randolph May issued the following tweet:

Perhaps it was inevitable that advocates of Internet regulation would go from advocating "net neutrality" to public utility regulation to "fairness doctrine for the Internet" a la @RoKhanna below. This is misguided and would violate the #FirstAmendment. @AjitPaiFCC @mikeofcc pic.twitter.com/W90TtcoHNm

— Free State Foundation (@FSFthinktank) June 2, 2020

For more, see Mr. May's follow-up Perspectives from FSF Scholars paper published today titled "Don't Regulate the Internet as a Public Utility!" Also check out John Eggerton's brief writeup at Multichannel News.