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Rural Spectrum Scanner

Vol. 15

No. 3 January 16, 2009
In This Week's Issue:

Martin Out, Genachowski In for FCC Chair

House Economic Recovery Bill Includes $6 Billion for Rural Broadband

Congress and FCC Scramble Ahead of Looming DTV Transition Deadline

Qwest and Others Go to Court to Force an FCC Non-Rural USF Decision

AT&T Pays Government $4 Million to Settle Dobson Antitrust Disputes

AT&T Will Pay $10 Million to Terminate FCC Proceeding Involving CPNI and USAC Violations

Nortel Goes Bankrupt

Dingell Bill Reintroduced to Change FCC Forbearance Process

Clinton Pushes 2-1-1 Law Before Exit from Senate

Republicans Announce Telco Subcommittee Members

Bennet & Bennet Holiday Closings

Upcoming Meetings


Martin Out, Genachowski In for FCC Chair

FCC Chairman Kevin J. Martin has announced his resignation from the Commission, effective January  20th.  Although President-elect Obama has yet to name a successor, by all accounts he is expected to name Julius Genachowski as the next Chairman.  Martin leaves the FCC after 8 years of service and will now serve as a Senior Fellow at the Aspen Institute in Washington, D.C.  Genachowski, no stranger to the FCC, is the former senior legal advisor to Reed Hundt, who himself was the FCC Chairman under President Clinton.  A friend and former Harvard Law classmate of President-elect Obama, Genachowski first made a name for himself as the architect of Obama’s technology policy platform and his successful Internet-centric Democratic Primary and Presidential campaigns.  Genachowski has experience in both the private sector and government.  After clerking for two U.S. Supreme Court Justices and a Federal Appeals Court judge, Genachowski worked for a variety of technology-based companies, including IAC/InterActiveCorp, the parent company to Ticketmaster and CitySearch.  The biggest immediate challenges facing Genachowski will be a successful DTV transition and boosting FCC employee morale after a rocky tenure under Martin.        

For additional information, please contact Daryl Zakov.

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House Economic Recovery Bill Includes $6 Billion for Rural Broadband

Democrats in the House of Representatives have released a draft version of the economic stimulus bill, officially titled the American Recovery and Reinvestment Act of 2009, which will provide the country with $825 billion in spending and tax cuts.  Specifically, $6 billion of that total amount is earmarked towards providing broadband and wireless services in underserved and unserved areas of the country.  The $6 billion will be distributed through broadband and wireless grants, which according to the House Appropriation Committee, are intended to strengthen the economy, create jobs, and bring benefits to e-commerce, education and healthcare.  The Rural Utilities Service rural broadband program will receive $2.825 billion of that grant money and apply it towards providing broadband service in unserved areas with the hopes of generating $5.5 billion in additional direct investment from the private sector.  An additional $2.825 billion in grants is to be awarded as well, with $1 billion in wireless grants and $1.825 in broadband grants.  Recipients of those grants will have build-out requirements and open access obligations.  Additionally, $650 million has been allocated for sustaining the digital TV converter box coupon program, which quickly exhausted its original budget of $1.34 billion.  Finally, the bill also proposes $350 million in state broadband data and improvement grants to be administered by NTIA.

For additional information, please contact Daryl Zakov.

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Congress and FCC Scramble Ahead of Looming DTV Transition Deadline

With the transition to digital television scheduled to occur on February 17, 2009, both Congress and the FCC are scrambling to avoid what some have characterized as a potential train wreck when television viewers lose their analog television signals on the transition date.  The FCC has now adopted rules to implement the recently enacted  Short-term Analog Flash and Emergency Readiness Act  (also known as the “Analog Nightlight Act”).  The primary purpose of this law is to provide a temporary safety net by allowing television broadcasters to continue to broadcast public safety and DTV transition information on an analog signal for a period of 30 days following the DTV transition to ensure that at risk groups do not lose access to critical public safety information while the transition occurs.  The FCC has identified and pre-approved 826 eligible stations, covering 47 states, Puerto Rico, and Washington, D.C. to participate in this voluntary program and has established rules to expedite approval of additional stations that wish to participate.
 
Meanwhile, Congress has been busy trying to provide additional funding for the DTV Converter Box coupon program administered by NTIA which has reached its appropriations limit, but still has a backlog of converter box coupon requests pending.  The problem is that even if Congress were willing to act now to appropriate additional funds to accommodate the backlog, there is insufficient time before the DTV transition on February 17, 2009 for NTIA to issue new coupons and get the required converters into the homes of all coupon participants.  Accordingly, members of Congress are attempting to solve the timing problem.  Representative Bruce L. Braley (D-Iowa) has introduced a bill (H.R.508) to allow a refundable credit against Federal income tax for the purchase of digital-to-analog converter boxes for taxpayers who did not use coupons.  This would allow taxpayers to go out and purchase the necessary converters without having to wait for NTIA-issued coupons.  The bill has been referred to the Committee on Ways and Means and the Committee on Energy and Commerce.  There has also been discussion of postponing the DTV transition for 90 to 180 days in accordance with the recent recommendation of President-elect Obama’s transition team.  FCC Commissioners Copps and Adelstein have sent a letter to ranking members of key committees both in the House and the Senate asking them to consider legislation that would delay the DTV transition.

For additional information, please contact Howard Shapiro.

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Qwest and Others Go to Court to Force an FCC Non-Rural USF Decision

Qwest Corp., the Maine Public Utilities Commission, the Vermont Public Service Board, and the Wyoming Public Service Commission have asked the U.S. Court of Appeals for the Tenth Circuit to force the FCC to issue a final Order on universal service fund (USF) rules for non-rural telecommunications providers.  Qwest and company have asked the court to set a 90-day deadline for the FCC to address non-rural high cost support which, according to Qwest, the FCC has abandoned since a 2005 rulemaking.

For additional information, please contact Ken Johnson.

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AT&T Pays Government $4 Million to Settle Dobson Antitrust Disputes

After facing a civil suit by the Department of Justice (DOJ), and a companion investigation by the FCC's Enforcement Bureau, AT&T has agreed to settle both matters stemming from alleged anticompetitive practices in violation of the AT&T-Dobson merger Order and Consent Decree.  As part of the settlement, AT&T is required to pay the DOJ $2,050,000, an amount which includes reimbursement for the United States’ investigation.  Additionally, AT&T has agreed to make a “voluntary contribution” of $2,380,000 to help put to rest the FCC’s investigation.  After acquiring Dobson for $2.8 billion in 2007, AT&T was required to divest certain Dobson markets.  According to DOJ, AT&T failed to fulfill its obligations to separate confidential customer account information in the divested businesses from its own records.  Based on this information, DOJ alleges that AT&T obtained unauthorized access to this sensitive information and used the data to solicit and win back customer accounts in the divested markets.

For additional information, please contact Daryl Zakov.

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AT&T Will Pay $10 Million to Terminate FCC Proceeding Involving CPNI and USAC Violations

The FCC issued an Order adopting a Consent Decree entered into with AT&T and its affiliates to terminate a proceeding concerning alleged violations of the CPNI rules and USAC rules.  AT&T agreed to voluntarily pay $10,080,600 to resolve the matters.  The alleged violations concerned failures in AT&T’s opt-out mechanisms, including the failure to restrict use of CPNI during the opt-out period resulting in use of CPNI of customers who had elected to restrict use of their CPNI, e-mailing opt-out notices that did not allow customers to reply, and sending opt-out notices with a toll-free number to reply that did not work.  In addition, AT&T, through several companies, recovered federal USF contribution costs from end-users in excess of amounts permitted.

For additional information, please contact Marjorie Spivak.

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Nortel Goes Bankrupt

Canadian-based Nortel Networks Corp. has filed for bankruptcy protection from creditors in Canada, the United States and Europe.  Trading of Nortel shares on the Toronto Stock Exchange was halted after dropping down to $0.12 per share.  This is in stark contrast to when Nortel once commanded a market capitalization of over $100 billion at the height of the telecommunications sector bubble in 2000.  For several years, Nortel has struggled with both its identity and a viable, long term strategy, all while battling stiff competition from Ericsson, Nokia and upstart Huawei.  Eroding profit margins, combined with consolidation in the operator marketplace, further exacerbated Nortel’s financial problems.  Nortel’s problems began over a decade ago when it purchased fiber and networking companies that were highly overvalued.  The slow decline continued after accounting missteps and the company’s ill-conceived departure from the UMTS (3G) marketplace.  Nortel enters Chapter 11 bankruptcy protection with several options, which include a streamlining of core operations, a sale of high-value units in order to generate operating cash, or an outright merger with a larger rival.  According to Mike Zafirovski, CEO and President of Nortel, filing for bankruptcy now has allowed the company to keep approximately $2.4 billion of cash on its books.  Without an immediate restructuring of its finances, Nortel was expected to burn almost $1 billion in cash by mid-summer.

For additional information, please contact Daryl Zakov.

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Dingell Bill Reintroduced to Change FCC Forbearance Process

Congressman John D. Dingell (D-MI) has reintroduced legislation to address what he deemed a “significant procedural problem” in the forbearance process at the FCC.  Currently, the Communications Act of 1934, as amended (Act), provides for the automatic grant of a telecommunications carrier’s petition for forbearance (i.e., to forbear from applying certain statutory or regulatory requirements to it) if the petition remains pending at the Commission beyond the statutory deadline (generally one year, unless extended by the FCC).  The proposed bill, known as the “Protecting Consumers through Proper Forbearance Procedures Act,” would modify the Act by eliminating the automatic grant provision.  The bill was originally introduced in October 2007 in response to a 2006 controversy surrounding a Verizon petition for forbearance that was granted by statute and later found to be immune to appellate court review.  The 2007 bill, however, was never brought to a vote. 

For additional information, please contact Robert Silverman.

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Clinton Pushes 2-1-1 Law Before Exit from Senate

Outgoing Senator Hillary Clinton (D-NY) has introduced legislation into the Senate that would facilitate nationwide availability of 2-1-1 telephone services.  The “Calling For 2-1-1 Act of 2009,” which is not so ironically designated S.211, has been referred to the Senate Committee on Health, Education, Labor and Pensions for further deliberation.  The purpose of 2-1-1 is to connect citizens with private community service organizations, such as the United Way, in a time of need.  Currently, only 69 percent of Americans have access to community assistance organizations through 2-1-1 call centers.  If enacted, the law would empower the Secretary of Health and Human Services, who is likely to be former Senator Tom Daschle, to grant funds to qualifying states in order to develop capable 2-1-1 systems.  Under the legislation, guaranteed funding over a five-year period would total $6 million.   

For additional information, please contact Daryl Zakov.

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Republicans Announce Telco Subcommittee Members

Representative Joe Barton (TX), senior G.O.P. member of the House Energy and Commerce Committee, has announced the list of those Republicans serving on the House Subcommitee on Communications, Technology and the Internet.  In descending order of seniority, the Republican members include Representative Cliff Stearns (FL) who will act as minority leader, Representatives Fred Upton (MI), Nathan Deal (GA), John Shimkus (IL), John Shadegg (AZ), Roy Blunt (MO), Steve Buyer (IN), George Radanovich (CA), Mary Bono Mack (CA), Greg Walden (OR), Lee Terry (NE), Mike Rogers (MI) and Marsha Blackburn (TX).  The Ranking Republican on the Commerce, Trade and Consumer Protection subcommittee is Representative Radanovich.  The G.O.P. lead on the House Oversight and Investigations subcommittee will be Representative Walden. 

For additional information, please contact Daryl Zakov.

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Bennet & Bennet Holiday Closings

In observation of Martin Luther King, Jr. Day and Inauguration Day, Bennet & Bennet will be closed January 19-20, 2009.  Bennet & Bennet will resume regular operating hours on Wednesday, January 21, 2009.

For additional information, please contact Traci Quan.

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Upcoming Meetings

The Bennet & Bennet attorneys noted below will be presenting at or attending the following industry meetings.  For more information about a particular meeting, please visit http://www.bennetlaw.com/events.php.

  • OPASTCO 46th Annual Winter Convention (January 17-21, 2009):  Carri Bennet and Michael Bennet
  • NTCA 2009 Annual Meeting & Expo (February 8-11, 2009):  Andy Brown and Dee Herman

For additional information, please contact Traci Quan.

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DO YOU LIKE WHAT YOU SEE?

If you have come across the Rural Spectrum Scanner on-line and do not already receive our free weekly e-mailed version, simply e-mail the Editor, Jason Bernstein , by clicking here. Thank you for your interest.

Questions??? Call Rural Spectrum Scanner's Editor Michael Bennet [(202) 371-1500], and refer to Vol. 15, No. 3.

Rural Spectrum Scanner is a weekly digest of regulatory and legislative news affecting rural and independent telecommunications providers. RSS is delivered by e-mail in time for your Monday morning download. For subscription information or to report a lead on regulatory or legislative news that affects rural America, please call/fax/e-mail RSS Editor Michael Bennet at 202-371-1500 or 202-371-1558 (fax).

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