NET NEUTRALITY CONDITION IS KEY TO FCC APPROVAL IN THIS WEEK'S - - PDF document

January 11, 2007 Bulletin #116 IN THIS WEEK'S ISSUE: NET NEUTRALITY CONDITION IS KEY TO FCC APPROVAL OF AT&T BELLSOUTH MERGER NEW CONGRESS REVISITS NET NEUTRALITY FCC CALLS OUT WIRELESS CARRIER FAILURES REGARDING E911 IMPLEMENTATION FCC CURBS THE POWER OF LOCAL FRANCHISING AUTHORITIES TO DELAY DEPLOYMENT OF COMPETITIVE VIDEO SERVICES Troutman Sanders Telecommunications Practice Group Socket to Me Archive Team Leader

Williams, Robert P. II 404.885.3438 404.962.6721 Benedict, Thane Hull, Gerit Kirsner, Matthew B. Kowalski, Raymond A. Lawhon, Joseph R. Ragsdale, Joy M. Schwalb, Eric J.. Still, William R.. Young, Benjamin L.

NET NEUTRALITY CONDITION IS KEY TO FCC APPROVAL OF AT&T AND BELLSOUTH MERGER By Joy Ragsdale

The Federal Communications Commission (“FCC”) met its end-of-the- year deadline and, on December 29, 2006 approved the AT&T Inc. (“AT&T”) and BellSouth Corporation (“BellSouth”) merger. AT&T filed additional conditions and commitments which persuaded the two Democratic FCC Commissioners to approve to the merger, breaking the partisan impasse that had been holding up the merger for several months. An example of the conditions and commitments AT&T volunteered to adhere for a period of 42 months (with the exception of special access conditions which will remain in effect for 48 months) from the merger closing date include: (1) a 100 percent deployment of broadband Internet access service to residential units throughout the regions in which AT&T-BellSouth are the incumbent local exchange carrier; and (2) an agreement to not raise unbundled network elements competitors use to lease portions of AT&T or BellSouth’s network. Central to closing the merger deal is AT&T’s offer to include a net neutrality condition. For thirty days after the merger closing date, AT&T-BellSouth will maintain a neutral Internet network and have agreed not to offer varied pricing based upon the service provider, application or content of data transmitted over their network. AT&T-BellSouth’s enterprise managed Internet Protocol services are exempt from this commitment. Furthermore, AT&T’s IPTV service, which is known as “U-verse” and

• ffered over a private Internet network employing either fiber-to-the-

home or fiber-to-the-node technology, is also exempt from the above commitments. It has been reported that FCC Chairman Kevin Martin recently stated that the net neutrality conditions were unnecessary to gain the support

• f the Democratic Commissioners for the AT&T-BellSouth merger.

However, although it might have little effect on broadband investments, Martin expressed concern that the condition could create a problematic precedent.

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NEW CONGRESS REVISITS NET NEUTRALITY By Ben Young and Joy Ragsdale

On January 9, 2007, the new Democratic majority in the United States Congress re-introduced a bill that will amend the Communications Act of 1934 to ensure net neutrality. Specifically, this bill would bar telecommunications carriers from charging commercial tolls on the Internet and would serve to make net neutrality law in the United

• States. This action comes at the heels of AT&T’s net neutrality

concessions pursuant to its $86 billion takeover of BellSouth. Known as the “Internet Freedom Preservation Act of 2007,” the net neutrality bill includes aggressive net neutrality mandates and would also require all carriers to offer standalone broadband service, preventing carriers from requiring customers to bundle their Internet access with services such as cable or phone. Though an identical bill died in the Senate Commerce Committee last year after a deadlocked 11 to 11 vote, net neutrality proponents are

• ptimistic that a change in the political make-up of Congress will finally

allow the legislation to move forward. As reported in previous bulletins

• f Socket to Me, net neutrality supporters have waged a large a publicity

campaign in the past year both on Capitol Hill and on the Internet aimed at passing legislation that would prevent broadband infrastructure companies, such as Verizon and Comcast, from charging for transferring certain types of data on high-speed networks. Proponents have argued that such legislation is necessary in order to ensure that the Internet remains in the hands of the users and not in the hands of a few gatekeepers. Many critics, on the other hand, contend that such legislation would mark the beginning of a new era of unprecedented and unnecessary federal political and regulatory control over the Internet. In addition to the net neutrality bill, Senator John F. Kerry (D-MA) introduced a spectrum-related bill requiring the FCC to issue a final

• rder regarding television white spaces. On the other side of Capitol

Hill, Representative John D. Dingell (D-CO) introduced a bill to improve communications interoperability for emergency response. Finally, Senator Hillary Rodham Clinton (D-NY) introduced the fourth telecommunications-related bill, that would facilitate a nationwide availability of the three-digit dialing code, 2-1-1 reserved for information and referral social services.

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FCC CALLS OUT WIRELESS CARRIER FAILURES REGARDING E911 IMPLEMENTATION By Eric Schwalb

The Federal Communications Commission (“FCC”) set December 31, 2005 as the date by which wireless service providers were to provide location-based emergency services for 95 percent of their customers. No carrier met that deadline. Carriers that filed requests for extensions,

• r requests for non-compliance, included: Alltel Centennial

Communications, Dobson Cellular Systems, Leap Wireless, Sprint Nextel, Nextel Partners, U.S. Cellular, Verizon Wireless, and jointly the CTIA and Rural Cellular Association, who filed on behalf of several providers. A little over a year after the FCC’s deadline expired, the Commission released several decisions denying the petitions of wireless carriers seeking to delay the enforcement of the 2005 deadline. Although certain companies appear to have been informed as many as six months ago that their requests were denied, the Commission opted to release all of its decisions publicly last Friday. Some carriers, like Verizon wireless, came close to the 95 percent requirement and were not targeted for enforcement. Verizon indicated that 93 percent of its customers had upgraded to phones that included the GPS location support necessary for the company to provide E911 services. Other carriers, such as Sprint Nextel and Alltel, fell far short of the 95 percent threshold and now face fines or other discipline from the

• Commission. As to Sprint Nextel, which had signed up 86 percent of its

customers for E911, the Commission stated: “It is amply clear that the measures Sprint Nextel took in the past or promises for the future fall short of satisfying the Commission’s criteria for waiver of the December 31, 2005 deadline.” In addition to Sprint Nextel and Alltel, U.S. Cellular and Nextel Partners also were referred for enforcement.

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FCC CURBS THE POWER OF LOCAL FRANCHISING AUTHORITIES TO DELAY DEPLOYMENT OF COMPETITIVE VIDEO SERVICES By Ray Kowalski

On December 20, 2006, the Federal Communications Commission adopted limits on the ability of county and municipal franchising authorities to impede the deployment of competitive video services through unreasonable franchising requirements. (The FCC’s action specifically does not include statewide franchising.) The action came on the same day that the FCC adopted a report on cable industry prices that found that cable prices had increased 5% over the previous year and 93% since 1996. The report also found that cable prices were 17% lower in areas where there was competition from wireline providers. The FCC’s report can be viewed here: Cable

• Report. The Republican majority at the FCC cited this report as

evidence of the need to hasten video competition.

The FCC declared unreasonable: drawn-out local negotiations with no time limits, unfair build-out requirements, requests for “in-kind” payments and unfair requests for public, educational and governmental access to channels. The FCC imposed a 90-day processing time limit for applicants who are already authorized to access local rights-of-way and 6 months otherwise. The FCC forbade buildout requirements which would require the entire community to be served. A further rulemaking will deal with the treatment of incumbent franchisees. A day before the FCC’s meeting, then-incoming House Commerce Committee Chairman John Dingell (D-Mich), had attempted to prevent the FCC from acting on the matter. Telling FCC Chairman Martin in a letter that that the action would exceed the FCC’s authority and usurp the prerogative of Congress to reform the local franchising process, Mr. Dingell gave the FCC until January 3 to explain its legal authority to act. The FCC took action nonetheless, with the Democrat commissioners, Copps and Adelstein, dissenting. The proceeding is Media Bureau Docket No. 05-311 and the FCC’s News Release can be viewed here: FCC Franchising News Release.

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FOR MORE INFORMATION The Troutman Sanders LLP Newsletter is intended to provide general information about legal and regulatory utility developments which may be of interest. It is not intended to be comprehensive nor to provide specific legal advice and should not be acted or relied upon as doing so. If you would like further information or specific advice, please contact our

• ffice.