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FCC Transaction Review: Competition and the Public Interest

by Jon Sallet, General Counsel
August 12, 2014 - 12:39 PM

The Federal Communications Commission has long played a unique and pivotal role in reviewing communications transactions. Our review is prescribed by the Communications Act and is separate from (though complementary to) the analysis conducted by our sister, antitrust agencies under Section 7 of the Clayton Act.

Three points about the Commission's review of transactions are important to understand: First, the nature of the substantive review that Congress has instructed the Commission to apply. Second, the process that the Commission has instituted, consistent with that statutory standard, to provide an open and fair means of reviewing transactions. Third, the manner in which the complementary approaches of the Commission and the antitrust agencies work harmoniously to serve the public interest in a sector that has traditionally been the subject of careful governmental scrutiny.

The starting point of our mission—and therefore, our substantive review—is the language of the Communications Act itself.

Congress has directed the Commission to review transactions involving licenses and authorizations under the Communications Act and to determine whether the proposed transaction would serve "the public interest, convenience, and necessity."1 The breadth and importance of the public-interest standard to the review of transactions involving our nation's communications networks logically flows from the Commission's statutory mission, since the conduct of buying other licensees can be as important to the public as the way a licensed company conducts itself in the absence of a transaction. This standard complements, but is different from the antitrust agencies' standard set forth Section 7 of the Clayton Act, which instructs them to challenge transactions that would "substantially lessen competition".

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Post Text of Meeting Items in Advance

by Michael O'Rielly, FCC Commissioner
August 7, 2014 - 12:44 PM

Early in his tenure, Chairman Wheeler launched a laudable effort to reform a number of Commission procedures.  Because I was new to the Commission when ideas were solicited, I generally deferred to agency veterans on the proposals that were put forward.  But now that I am nine months into my term, I have become convinced that there is one significant change in our overall process that would be incredibly helpful: we should post on the FCC’s website the actual text of the items to be considered at our Open Meetings at the same time they are provided to Commissioners.    

Section 19.735-203 of the FCC’s rules prohibits disclosure of the content of items that will be voted on by the full Commission at a meeting or “by circulation” (not at a meeting).  Therefore, as soon as bureau staff sends the “8th Floor” a draft for consideration, the Commissioners are not allowed to reveal the substantive decisions with outside parties.  In other words, at the very moment that I learn the particulars of an important rulemaking upon which I will spend the next few weeks in ex parte meetings listening to stakeholder concerns, I am not permitted to disclose any details of the draft text in order to extract more thoughtful responses. 

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FCC Makes Open Internet Comments More Accessible to Public

by Gigi B. Sohn, Special Counsel for External Affairs, Office of the Chairman
August 5, 2014 - 12:29 PM

It goes without saying that there has been tremendous interest in the FCC’s Open Internet rulemaking.  As of yesterday, over 1.1 million comments were filed in the docket, both through our Electronic Comment Filing System (ECFS) and our special openinternet@fcc.gov email address.  We welcome and expect many more comments in the weeks to come.  And to be clear, every comment will be reviewed as part of the official record of this proceeding.

Because of the sheer number of comments and the great public interest in what they say, Chairman Wheeler has asked the FCC IT team to make the comments available to the public today in a series of six XML files, totaling over 1.4 GB of data – approximately two and half times the amount of plain-text data embodied in the Encyclopedia Britannica.  The release of the comments as Open Data in this machine-readable format will allow researchers, journalists and others to analyze and create visualizations of the data so that the public and the FCC can discuss and learn from the comments we’ve received.  Our hope is that these analyses will contribute to an even more informed and useful reply comment period, which ends on September 10.  We will make available additional XML files covering reply comments after that date.

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Empowering Small Businesses

by Roger C. Sherman, Wireless Telecommunications Bureau Chief
August 1, 2014 - 11:01 AM

Today, Chairman Wheeler circulated a proposal to open new opportunities for small and growing businesses in the mobile marketplace. Although the proposal may sound technical – updating the Commission’s approach to small business participation in wireless auctions— the purpose is simple: To provide innovative, smaller companies the opportunity to build wireless businesses that can spur additional investment and bring more choices to consumers.

Think about the wireless industry today. Consumer demand is exploding, data usage is growing exponentially, and faster 4G networks enable even more data services. That kind of growth should naturally lead to more opportunity for more businesses to serve more consumers.

But current FCC rules stand in the way. The current rules are a by-product of an earlier time— before data services became ubiquitous, before Congress instructed us to make more spectrum available to wireless networks, and, equally important, before consolidation in the wireless industry accelerated.

When the rules were first written in the 90s, we believed that bidding credits for spectrum auctions should be used only to acquire licenses by companies that would engage exclusively in building their own networks to provide retail or wholesale services – often referred to as “facilities based” service. That made sense when the wireless industry was in its infancy.

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Updating FCC Policies and Processes

by Tom Wheeler, FCC Chairman
July 18, 2014 - 01:53 PM

The American economy is dynamic and innovative, which is critical for sustained economic growth. The FCC is tasked with overseeing broadband and other communications networks. We must be as agile as the communications sector, as well as protect consumers. Both goals will be served in the items I circulate today for our August meeting.

First, we must ensure that consumers can continue to rely on 911, even as the technologies and platforms we use to communicate evolve.

This past April, we saw a large-scale 911 outage centered in Washington state, where more than 4,500 911 calls did not get through during one six-hour period. The FCC launched an investigation in to these outages in May, and the investigation is ongoing. Initial reports suggest that this outage appears to be a case where the transition to new networks may have been managed poorly and providers in the 911 ecosystem are not operating in a manner that is transparent to system users, regulators and each other.

Let me be plain – no company will be allowed to hang up on 911.

Admiral David Simpson, the head of our Public Safety Bureau, delivered this message to the National Association of Regulatory Utility Commissioners earlier this week. He was clear -- incumbent providers that have taken a responsibility for making 911 work have also undertaken a public trust that cannot be compromised.  It will never be acceptable to tell anyone they can’t connect to 911 because of “innovation in the cloud” or a new business model, or because a new communications function has superseded carrier responsibility.  The bottom line is 911 must be preserved and improved.

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Commission Continues Important Work of Providing Relief from the High Cost of Inmate Calling

by Kalpak Gude, Chief, Pricing Policy Division, Wireline Competition Bureau
July 18, 2014 - 11:22 AM

On July 9, 2014 the FCC held a workshop to analyze the impact of, and discuss issues relating to, ongoing reforms of Inmate Calling Services (ICS). 

Last fall, the Commission – in response to a petition that had languished for almost a decade – reformed what it concluded was an unjust, unreasonable, and unfair ICS rate structure by adopting a Report and Order and Further Notice of Proposed Rulemaking (Order) on the subject.  Among other things, the Order capped interstate rates at $0.21/minute for debit and prepaid calls and $0.25/minute for collect inmate calling.  These rates took effect on February 11, 2014. 

By holding this workshop, the Commission highlights its continued commitment to ensure just, reasonable and fair rates, by hosting frank and open discussions with groups representing diverse points of view, including ICS providers, public policy leaders, elected officials, correctional facility officials, human rights organizations, and inmate advocacy groups.

We heard about the impact that the Commission’s reforms have had on inmates and their friends and families, but also learned that there is more to be done.  For example, we learned that:

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The Need to Modernize the FCC’s IT Systems

by Tom Wheeler, FCC Chairman
July 16, 2014 - 04:46 PM

It’s wonderful that more than 900,000 Americans have expressed their opinions in the first round of Open Internet comments. The Commission’s decision to extend until Friday the period for public comments on the Open Internet proceeding reflects both the public’s interest in the topic as well as the antiquated IT capabilities of the agency that have not been able to handle the surge of comments.

The FCC has been forced by budget restrictions to operate with an IT infrastructure that would be unacceptable to any well-managed business.  Efforts to upgrade this IT capability were a casualty of sequestration. Most recently, the agency requested of Congress approximately $13 million for IT upgrades in the FY 2015 appropriation. I appreciate that the Senate subcommittee has provided the Commission with full funding in its FY 2015 spending bill, so that we can make these important upgrades.   Unfortunately, the appropriations bill passed by the House today would fund the FCC at $17 million below current levels and $53 million below our overall budget request, dramatically undermining any effort to modernize our IT systems.

The ability to improve the FCC’s internal procedures – an important priority for Congress – will be hurt without 21st Century IT infrastructure.

The ability of the public to communicate with their government has – as we have seen – already has been hurt by the inability of the FCC to receive all of their comments without complication.

The ability of those companies the FCC regulates to express their views is similarly hurt by an infrastructure none of them would tolerate in their own companies, even though their fees pay for the FCC budget without touching tax dollars.

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Keeping Track of the Open Internet Comments Submitted to the FCC

by Dr. David A. Bray, FCC Chief Information Officer
July 14, 2014 - 03:04 PM

*Update: The blog post below has been revised to reflect  the extension of the initial Net Neutrality comment period to 7/18.

This week marks the end of the first round of comments in the Commission’s Open Internet Proceeding.  During the past 60 days, the Commission has received a large number of comments from a wide range of constituents – both from the FCC’s Electronic Comment Filing System (ECFS) and from the openinternet@fcc.gov email address.  Chairman Tom Wheeler and I both enthusiastically support open government and open data, so with this post I wanted to share the hourly rate of comments submitted into the FCC’s ECFS since the start of public comments on the FCC’s Open Internet Proceeding (Proceeding 14-28). Here’s a link to a Comma Separated Values (CSV) text file providing those hourly rates for all comments submitted to ECFS and those specific to the Open Internet Proceeding; below is a graphical presentation of that same data.

As the data show, the public has been submitting a high-volume of comments into ECFS over the last two months. The FCC IT team rapidly implemented an additional caching feature on June 3 to support some of the highest concurrent commenting levels that ECFS has seen in its 17-plus year history.

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Creating a “Model City” to test spectrum sharing technologies

by Julius Knapp, Chief, Office of Engineering & Technology
July 11, 2014 - 02:39 PM

Today, the FCC’s Office of Engineering & Technology (OET) and the Commerce Department’s National Telecommunications and Information Administration (NTIA) released a Joint Public Notice that seeks input on the establishment of a “Model City” program to test advanced wireless spectrum sharing technologies.

The NTIA and the FCC have encouraged and supported the development of advanced spectrum sharing technologies and techniques. Notably, the Commission recently revised its experimental licensing rules to facilitate development of radio technologies by establishing provisions for program licenses and innovation zones.

The President’s Council of Advisors on Science and Technology (PCAST) recommended the creation of an “urban Test City” to “support rapid experimentation” of advanced spectrum sharing technologies. The Joint Public Notice seeks to start the process of transforming this recommendation from an idea to reality. We have chosen to use the term “Model City” to better reflect the idea that systems or networks might be developed that could serve as a model for spectrum sharing techniques that can be deployed elsewhere.

It is too soon to know what a “Model City” might entail and what aspects would fall within the jurisdiction of the NTIA and/or the FCC. For example, the model city could be developed as a public-private partnership and implemented under existing provisions such as the FCC’s experimental licensing program.

What is clear is that there is a high likelihood that both NTIA and FCC will have a role to play, particularly because most of the spectrum is shared between federal and non-federal users. That is why we have initiated this process through a joint notice.

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Most Definitely: Terminate Dormant Proceedings

by Michael O'Rielly, FCC Commissioner
July 8, 2014 - 03:34 PM

Last week, the Consumer and Governmental Affairs Bureau (CGB) released a Public Notice seeking comment on whether to terminate almost 650 dormant proceedings (i.e., dockets that have no planned action and no further comments expected).  I applaud Chairman Wheeler for initiating this item as well as the CGB staff and the individual Bureaus and Offices that worked on this document. 

The charts below, prepared by my great staff, help visualize the scope of the Commission’s recent effort.  As the first chart shows, the agency has over 2,800 open proceedings pending.  The second chart organizes—by Bureau and Office—the specific proceedings contemplated for closure in the Public Notice. 

I’m in the process of reviewing CGB’s recommendations and its corresponding attachment, but in general I believe that closing outdated FCC proceedings makes a lot of sense.  Doing so could help the agency become more organized and focused on decisions that need to be made.  It could also make it easier for both Congress and the public to track what the agency is working on or still considering.  And it could help prevent the Commission from using antiquated information as a basis for regulating. 

In fact, clearing the regulatory decks is something we should probably do more often—maybe even annually.  The Commission may also want to consider creating an automatic closure process.  Perhaps after a year, and with appropriate notice, we could close proceedings that have been concluded and for which no further pleadings are filed.  This could significantly reduce the number of unnecessary open proceedings, while still allowing public access to the documents that were generated. 

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