TR Daily High-Cost, Spectrum Frontiers, Robocall, Texting Items Teed Up
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Tuesday, November 20, 2018

High-Cost, Spectrum Frontiers, Robocall, Texting Items Teed Up

FCC Chairman Ajit Pai today outlined plans for the FCC’s Dec. 12 meeting, which include providing additional high-cost support funding for rate of return (RoR) carriers while encouraging them to deploy faster broadband service, as well as establishing an incentive auction format for allocating licenses next year in the agency’s spectrum frontiers proceeding.

Chairman Pai also said he plans to seek votes on items addressing robocalling, the regulatory status of texting, a consolidated markets report mandated by Congress earlier this year, the agency’s quadrennial review of its media ownership rules, and rules governing the display of broadcast licenses.

Chairman Pai said in his blog post that high-cost subsidies “should provide maximum incentive to be efficient” and that they “should be sufficient to build out networks; after all, these are areas where the business case for private investment is lacking.” In addition, he said the program “should support high-quality services” and the subsidies should be “predictable.”

“Unfortunately, for many, many years, the program hasn’t satisfied each of these important principles,” he said.

The draft high-cost item he is proposing for a vote on Dec. 12 would “promote efficiency by moving away from simply telling rate-of-return carriers what their allowable costs and return on investment will be and toward setting broad goals for deployment and rewarding companies for being efficient in meeting those goals (what’s called an ‘incentive-based’ model). Specifically, we’re offering rate-of-return carriers another opportunity to opt in to model-based support, which would give them a guaranteed revenue stream for a decade in exchange for meeting specified buildout requirements,” Chairman Pai said.

Those carriers will have to build out to meet a speed target of 25 megabits per second downstream/3 Mbps upstream, according to a senior FCC official who briefed reporters on the item during a conference call today on the condition of not being quoted by name.

“Second,” the Chairman continued in his blog post, “we’re ensuring support is sufficient by offering additional funding to carriers that currently receive model-based support and who agree to meet increased buildout requirements.”

The high-cost item would provide additional funding for RoR carriers whose support is already based on the Alternative Connect America Cost Model (A-CAM) if they agree to build out networks to provide service at 25/3, rather than the current 10/1 standard, the FCC official said during the conference call.

“We’re also increasing funding for carriers who do not receive model-based support,” the Chairman said. That additional funding would also be subject to a 25/3 service requirement.

Finally, the Chairman said, “we’re making the program more predictable by setting a new long-term budget for rate-of-return carriers who choose not to opt in to model-based support and ending arbitrary funding cuts. Long story short, we’re making the Universal Service Fund a more efficient, effective way of distributing funding to close the digital divide.”

Lawmakers, as well as small carriers, have repeatedly urged Chairman Pai to address the lack of sufficient funding to meet the calculated needs of rural carriers for high-cost support (TR Daily, Oct. 3). At a congressional hearing in August, Chairman Pai committed to address the issue by year-end (TR Daily, Aug. 16).

The draft order would enable the Commission to proceed with an auction of the upper 37 GHz, 39 GHz, and 47 GHz bands by the end of 2019, according to Chairman Pai. The auction would provide more spectrum for 5G wireless services and would be “another breakthrough in U.S. leadership on 5G,” he said.

“In combination, the upper 37 GHz and the 39 GHz bands offer the largest amount of contiguous spectrum in the millimeter-wave bands for flexible-use wireless services — a total of 2,400 megahertz — and the 47 GHz band will provide an additional 1,000 megahertz of millimeter-wave spectrum for such services,” Chairman Pai explained.

“Notably, this would be the second time the Commission uses an incentive auction format. And combined, all of these auctions will free up more spectrum than is currently used to provide terrestrial mobile broadband by all providers combined,” he added.

In August, the FCC adopted a fourth further notice of proposed rulemaking that proposed steps to prepare the bands for auction in the second half of next year (TR Daily, Aug. 2).

The proposed incentive auction would have two phases: a clock phase, in which bidders would bid on generic license blocks; and an assignment phase, in which clock phase winners could bid on specific frequencies, the FCC said. Incentive payments would be offered to incumbents that chose to relinquish the spectrum.

The draft robocall order would establish a database of reassigned numbers that marketers and others could consult to avoid placing unwanted robocalls to someone who now has a phone number previously assigned to someone who had consented to receiving robocalls from them. The database would be administered by a party to be chosen through competitive bids submitted in response to a request for proposals, similar to the way the local number portability administrator (LNPA) was chosen, and numbers would have to be held for 45 days before being reassigned to end-users to ensure database queries yield up-to-date information, the senior FCC official explained to reporters.

“These rules would reduce the number of unwanted calls consumers receive and enable businesses to make sure they are not wasting your?—?or their?—?time,” Chairman Pai said.

A draft declaratory ruling would deny pending petitions that asked to have texting services declared to be telecommunications services, and would instead declare texting services to be information services, which both Chairman Pai and the senior official described as better from both legal and policy standpoints.

The telecom service classification “would dramatically curb the ability of wireless providers to use robotext-blocking, anti-spoofing, and other anti-spam features. So I’m circulating a Declaratory Ruling that would instead classify wireless messaging as an ‘information service.’ Aside from being a more legally sound approach, this decision would keep the floodgates to a torrent of spam texts closed, remove regulatory uncertainty, and empower providers to continue finding innovative ways to protect consumers from unwanted text messages,” Chairman Pai said in his blog post.

Regarding the legal analysis, the senior official emphasized texting’s similarity to e-mail, which is an information service, stating that both e-mails and texts can be held and delivered later if a user is offline, and that text services involve processing capability.

In a statement responding to the blog post, FCC Commissioner Jessica Rosenworcel said, “The claim that the FCC needs to classify text messages to protect consumers from unwanted texts is bogus doublespeak. It’s brought to you by the same agency that gave broadband providers the right to censor your online activity by rolling back net neutrality. Now, the agency wants consumers to believe that giving cell phone companies the ability to block your text messages is a good thing. This makes no sense.”

Public Knowledge, which has a pending petition for declaratory ruling to classify text messaging as a telecommunications service that it submitted “after Verizon temporarily blocked NARAL from sending mass text message alerts to its members on legislation impacting reproductive rights,” said in a statement that Chairman Pai’s blog post “not only fails to mention Public Knowledge’s 2007 Petition and Verizon’s deliberate blocking of NARAL, but blatantly mischaracterizes the law by ignoring the FCC’s 2016 Declaratory Ruling authorizing carrier blocking and filtering of spam and robocalls.”

Public Knowledge Senior Vice President Harold Feld said, “It wouldn’t be the holiday season without Chairman Pai giving a great big gift basket to corporate special interests at the expense of American consumers. Chairman Pai proposes to grant the wireless industry’s request to classify text messages as Title I ‘information services,’ stripping away vital consumer protections. Worse, Chairman Pai’s action would give carriers unlimited freedom to censor any speech they consider ‘controversial,’ as Verizon did in 2007 when it blocked NARAL and prompted the Public Knowledge 2007 Petition.”

Mr. Feld added, “Chairman Pai supports this outrageous action by claiming the Title II ‘telecommunications service’ classification undermines spam filtering. As the FCC made clear in 2016 (over then-Commissioner Pai’s dissent), text messages and robocalls are both ‘calls’ under the anti-robocall statute, and this Title II designation does not prevent filtering or other technological means to block unwanted robocalls or spam texts. Indeed, Chairman Pai undermines his own argument by pointing out that email, which has always been an information service, has a 50 percent spam rate whereas text messaging, which the FCC treats as a ‘phone call,’ has a 2.5 percent spam rate.”

Chairman Pai also said he plans to ask his fellow Commissioners to vote on a consolidated market reports mandated by RAY BAUM’S Act, which was passed earlier this year.

“The FCC has long been required by law to submit a variety of reports to Congress. Each of these reports used to be issued as separate documents and at different times, making it hard for elected officials and the public to track everything down. To streamline these reports into a single document providing a comprehensive evaluation of the state of the communications marketplace in the United States, Congress, in the RAY BAUM’S Act of 2018, required the FCC to craft every two years what we are calling our Communications Marketplace Report. The draft report I’m circulating for my colleagues’ consideration consolidates many of the reports that the Commission had been previously required to produce. For the first time, the Report places essential information about mobile wireless, video, audio, wireline broadband, voice telephony, satellite, broadband deployment, and international broadband all in one place,” Chairman Pai said.

He also plans to seek votes on a draft notice of proposed rulemaking teeing up the agency’s quadrennial review of some of its media ownership rules — the local radio ownership rule, the local TV ownership rule, and the dual ownership rule — and a draft order that would eliminate certain requirements for broadcasters to display their licenses and related materials in specific locations. —Lynn Stanton, [email protected]

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