Release of the FCC net neutrality order brought limited clarity to how the rules and the commission’s accompanying reclassification of broadband as a Communications Act Title II service will affect state telecom regulation, state telecom lawyers and observers said in interviews last week. That lack of clarity largely stems from continued uncertainty about whether the net neutrality rules -- and particularly Title II reclassification -- will survive legal scrutiny, lawyers said. Alamo Broadband and USTelecom filed lawsuits Monday seeking reviews of the net neutrality order at the 5th U.S. Circuit Court of Appeals and the U.S. Court of Appeals for the D.C. Circuit, respectively (see 1503230066). The order faces continued scrutiny on Capitol Hill (see 1503200048).
Opening briefs were due Monday in the Supreme Court case Arlington, Texas, et al. v. FCC, which will take a hard look at the Chevron doctrine and federal agencies’ ability to determine their jurisdiction. The court took up the question Oct. 5, raising questions about how the FCC exerts its authority (CD Oct 12 p1). Petitioners include the city of Arlington and San Antonio, Texas, Los Angeles, San Diego and the Texas Coalition for Utilities Issues. The petitioners have attracted significant support among state advocates. The National Association of Regulatory Utility Commissioners adopted a resolution Nov. 13 in support of the petitioners (CD Nov 14 p5) and NARUC is now one among many state advocates speaking up.
With 555 question marks, the 182-page further notice of proposed rulemaking on contribution reform, released late Monday, contains as many questions as there are feet in the Washington Monument. Throughout the further notice, after posing several dozen questions, the commission pauses to ask whether certain proposals are consistent with its fundamental goal of being efficient, fair, and sustainable.
Feb. 26-March 1 National Religious Broadcasters convention, with House Speaker John Boehner, R-Ohio, Gaylord Opryland Resort and Convention Center, Nashville -- www.nrbconvention.org
The IRS properly assessed AT&T more than $505 million in taxes from universal service payments made to the company because the funds should be considered income and not capital contributions, a three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans ruled last week. AT&T had lost its case on summary judgment at a lower court and appealed, arguing that its money it got from USF was capital contributions that shouldn’t count as gross income for tax purposes. The panel upheld the summary judgment, ruling that under both the relevant statutes and the Supreme Court’s 1973 U.S. v. CB&Q Railroad decision the government’s intentions in handing out the money are determinative. AT&T officials did not respond to a request seeking comment. An FCC spokesman declined to comment. The court’s decision concluded that the transferor didn’t intend the funds to be a contribution to capital, tax expert Rob Willens said. The funds instead were intended to be a supplement to AT&T’s income to compensate it for the lost revenue and increased costs it incurred in serving low-income, high-cost users, he said. Transfer of funds, as the court said, didn’t exhibit the “characteristics” of a contribution to capital as set forth by CB&Q, Willens noted. He said states would also tax these amounts because most, if not all, states use federal taxable income, with certain adjustments, as the tax base.