Network Services Solutions and its CEO may be fined nearly $21.7 million by the FCC for wire fraud and overbilling the USF Rural Health Care (RHC) program. Also, the commission plans to order the company to refund $3.5 million in improper payments received through the program, the agency said in a Friday news release announcing the notice of apparent liability. Network Services and CEO Scott Madison allegedly used forged and false documents to seek funding from the program, violating the federal wire fraud statute and the program’s competitive bidding rules, the FCC said. Never before has the agency issued an enforcement action involving the RHC program or proposed a fine for wire fraud related to a USF program, the commission said. “Forgery, bribery, bid rigging, and fraud are absolutely unacceptable in any federal program,” said Enforcement Bureau Chief Travis LeBlanc. “The Commission calls on Network Services Solutions and its CEO to account for any misuse of federal funds in this vital program that assists rural communities with access to critical services for health care.” Commissioners Ajit Pai and Mike O’Rielly approved in part and dissented in part. In a statement, Pai agreed that the FCC should recover the unlawfully taken funds, bar the company from getting any further USF subsidies and levy a “hefty fine.” But he questioned the legal reasoning supporting the amount. The NAL “fatally compromises our ability to impose a lawful forfeiture of more than $189,361 upon the carrier,” the Republican commissioner said. Lukas Nace's Russell Lukas, lead attorney for Network Services Solutions, said the company "has cooperated with the FCC in this investigation and looks forward to a full and complete review of the facts underlying the allegations."

Two public interest groups filed a petition for review of the FCC's 2014 quadrennial review order in the 3rd Circuit U.S. Court of Appeals, as expected (see 1608250063). The FCC's order “once again fails to satisfy this Court’s remands in either Prometheus II or III,” said the petition from Prometheus Radio Project and Media Mobilizing Project, referring to Prometheus' prior successful challenges of the FCC's quadrennial reviews. The FCC order reinstated the revenue-based definition of an eligible entity “without obtaining any additional information or improving its data collection,” as it had been instructed to do by the 3rd Circuit, the petitioners said. Prometheus also asked the court to review “the Commission’s decision to modify certain of its broadcast ownership rules so as to permit increased concentration of ownership,” and the FCC's “failure to require that so-called Shared Services Agreements be treated as 'attributable' interest,” the petition said. The quadrennial review required SSAs to be reported, but didn't attribute them. A similar appeal of the quadrennial review is expected from broadcasters, industry officials said. That appeal will likely be filed in the Court of Appeals for the D.C Circuit, and a lottery for the venue will likely take place, broadcast and public interest officials said.

Rules requiring emergency alert system participants to report to the FCC about any efforts to provide non-English emergency alerts took effect Thursday, said the agency in that day's Federal Register. That means participants have a deadline of Nov. 3, 2017, to provide such information to State Emergency Communications committees to be included in their state EAS plans, said Fletcher Heald broadcast attorney Harry Cole in a blog post Thursday. “Thus far there does not appear to be any officially-endorsed template for the required 'description', but it’s possible the Commission may flesh that out sometime in the next year.” The rules don't require participants to offer foreign-language alerts, and explicitly say participants can report they took no such steps, Cole said. At their March meeting, commissioners approved the rules 4-1 (see 1603300064).

The FCC alerted consumers about a gift card scam in which callers pretending to be government or law enforcement officials demand immediate payment, usually by buying gift cards and providing the card numbers to the scammers. “These ‘officials’ typically say that payment will protect the consumer -- or the consumer’s family or friends -- from arrest or some other legal action,” the FCC said in a consumer alert Thursday. “Government agencies and legitimate companies never call consumers to seek payment via gift cards.” Also, the commission announced a Twitter town hall about robocalls Friday at 1:30 p.m. The public may participate using the hashtag #RobocallChat. Senior agency staff will answer questions through the Twitter handle of Gigi Sohn (@GigiBSohnFCC), counselor to Chairman Tom Wheeler.

The FCC is seeking broad comment on its telecom regulations as part of the so-called biennial review. “We seek input from the public as to what rules should be modified or repealed as part of the 2016 biennial review,” said a public notice released Thursday in docket 16-149. “Submissions should identify with as much specificity as possible the rule or rules that the commenting party believes should be modified or repealed, and explain why and how the rule or rules should be modified or repealed.” Commissioner Ajit Pai said he’s not impressed with the FCC’s version of a review. “This is a time of widespread dissatisfaction with and distrust of government,” Pai said in an accompanying statement. “Many Americans perceive that government agencies don’t bother following the law or, at best, make a half-hearted attempt to comply.” The agency shares some of the responsibility, he said. The commission treats the law the same way “the Dude” handles bowling taunts in The Big Lebowski, Pai said: “Yeah, well, you know, that’s just, like, your opinion, man.” Section 11 is a “simple and powerful tool for scrubbing outdated regulations from our books and promoting private sector innovation and investment,” Pai said. “In a sense, it ties the Communications Act together. Or at least could be, if the FCC took this task seriously.” Two years ago, the agency “simply ignored this duty entirely," he said. “This time around, it promises a few desultory efforts at paging through the Code of Federal Regulations -- efforts certain to result in many staff hours being wasted and nothing meaningful being done.” Commissioner Mike O’Rielly said he wants a thorough review. “Every rock should be turned over and every rule should be thoroughly reviewed to generate the best Section 11 NPRM ever imagined,” he said. “With hundreds of applicable pages in the Code of Federal Regulations, there is much material to review and likely a good portion that can be eliminated given the vast changes in the communications marketplace since the 2012 review. We owe the American people, and their duly elected representatives, nothing less.” Comments are due Dec. 5, replies Jan. 3.

Government must do more to remove barriers to deployment of broadband and digital services, said FCC Commissioner Ajit Pai Wednesday at a Smart Cities Expo showcasing internet-connected technology and devices, according to his posted remarks. Pai recommended "five concrete steps," starting with aggressive FCC use of its statutory authority under Section 253 of the Communications Act to ensure local governments don't hold up broadband deployment, with Section 332(c)(7) of the Communications Act and Section 6409 of the Spectrum Act providing further mandates to remove infrastructure barriers. Second, he said the FCC needs "to take a fresh look at our pole attachment rates" and Congress needs to give the commission broader related authority. Third, to help cities and towns wanting more deployment and competition, he urged the FCC to create a Broadband Deployment Advisory Committee to draft a model code on "local franchising, zoning, permitting and rights-of-way regulations" that balances municipal interests and broadband needs. Fourth, the federal government should speed broadband deployment on federal lands, including through agency distribution of mapping information and "reasonable internal shot clocks for processing applications and negotiating leases," he said, seeking a hard one-year deadline on decisions no matter how many agencies are involved. Finally, "We must make 'dig once' a central tenet of our nation's transportation policy. ... Every road and highway construction project should include the installation of the conduit that can carry fiber optic cables," he said. "With these five steps, policymakers can do their part to ensure that next-generation broadband networks -- and the smart cities they support -- will become a reality."

Robert McDowell became the latest lawyer to leave Wiley Rein for another law firm. Cooley hired the former Republican FCC commissioner, he and the firms told us Wednesday. McDowell, who was a partner in Wiley's Telecom, Media & Technology practice, now is a partner at Cooley. With Michael Basile, McDowell is co-leader of Cooley's global communications practice, said McDowell. The two communications lawyers succeed practice head John Feore, who remains a partner at Cooley. Feore "wanted to pass the baton to the younger generation," said a Cooley spokeswoman. McDowell said "many" clients remain with him in his new practice, which the firm representative said has 15-20 lawyers in Washington and many more globally. The entire firm employs 900-some attorneys, said McDowell. The "energy, breadth and depth of the Cooley platform is simply irresistible and it’s a very exciting firm that is bringing a lot of new companies, disruptive new companies, to market," McDowell said. Cooley is a multinational firm with many practices including securities, capital formation and litigation, he said. Wiley has been a smaller law firm than Cooley, and more focused on communications, with a lobbying outfit that last month said it renamed itself Signal Group. During September, DLA Piper said it hired two well-known attorneys from Wiley who used to help run Wiley Rein practices in the communications area, others left the firm (see 1609290039), and it promoted David Gross and Kathleen Kirby to co-chairs of the Telecom, Media & Technology practice (see 1609070040). Wiley Rein looks "forward to continuing to maintain a personal and professional relationship with" McDowell, said Gross in a written statement. "The firm is strategically transforming and growing our preeminent Telecom, Media & Technology Practice, which remains the largest in the country.” Richard Wiley, a former Republican FCC chairman who is the firm's chairman emeritus, co-founded the firm in 1983. Like Basile, Feore came to Cooley when it bought Dow Lohnes almost three years ago (see report in the Oct. 16, 2013, issue). Cooley was founded in Silicon Valley in the 1920s.

The FCC Wednesday released the 219-page text of the broadband privacy order that it adopted by a 3-2 vote at its Oct. 27 meeting (see 1610270036).

Don’t count out a “cable surprise” disrupting CenturyLink’s $34 billion acquisition of Level 3, Raymond James financial advisers said Tuesday. The companies announced the deal Monday, and it’s expected to get regulatory OK (see 1610310033). “We still believe Comcast and/or Charter paying a similar price for Level 3 could be accretive to both providers and gets them a better platform to sell into medium and larger enterprises,” Raymond James analysts wrote investors. CenturyLink/Level 3 would provide big cost savings, said the analysts, estimating about $850 million of annual operating expenditure synergies and $125 million in capital expenditure savings. Level 3 has about $10 billion of net operating loss carryforwards that make the deal “much more attractive,” and the companies expect cash tax saving to be at least $650 million annually for the first four years after the transaction, they said. But Raymond James predicted softer business for the combined company in the early going. “As we have said with prior business services combinations, it is very likely the combined company growth rate will experience softness post-closing vs. on a standalone basis given the nature of combining two sales forces and changes,” the analysts said. Also, the transaction likely means less business for vendors like Infinera that today sell to both companies, they said in a separate note Monday.

Aides to Democratic presidential nominee Hillary Clinton apparently considered lauding federal regulators for blocking Comcast's attempted buy of Time Warner Cable last year in a Clinton opinion piece that ultimately appeared in Quartz Oct. 20, 2015. That’s according to new emails released by WikiLeaks Tuesday, the result of an apparent hack of campaign manager John Podesta’s email account that U.S. intelligence officials believe involves the Russian government. “Should we applaud the FCC and Justice blocking the Comcast-Time/Warner merger?” asked Clinton adviser Mandy Grunwald in an Oct. 19 email reviewing a draft of the piece. Traveling press secretary Nick Merrill responded within the hour, addressing Kristina Costa, the aide who first circulated the draft requesting edits: “As the boyfriend of an FCC staffer who helped block that merger, yes. Kristina, her name is Val if you could please compliment her by name.” A few minutes later, Clinton aide Michael Shapiro weighed in and referred to an exchange he and Clinton domestic policy adviser Sara Solow had with Comcast Senior Executive Vice President David Cohen, who has donated thousands of dollars to Clinton's bid: “I think we were trying to keep this as a diagnosis of what's wrong with capitalism systemically, rather than naming specific folks. Sara and I talked to David Cohen today to give a heads up -- and our sense was we'd get deeper into broadband concentration specifically once we do our technology innovation agenda, rather than to some extent previewing or preempting it here.” That Quartz piece last year detailed Clinton’s desire for robust antitrust enforcement and mentioned priorities such as retaining strong net neutrality rules, but no reference to Comcast/TWC was included in the final version. Gonring, Spahn President Andy Spahn emailed Podesta in February to give “a head’s up” of a Senate letter to federal regulators from signers including Clinton primary opponent Sen. Bernie Sanders, I-Vt., “calling for higher scrutiny of the Charter-Time Warner deal,” acquisitions of TWC and Bright House Networks that ultimately cleared regulators. “It's not a surprising development, and we don't anticipate the letter getting much play, but it could come up on your end given Sanders' involvement,” Spahn told Podesta. “Please keep us in the loop if it becomes an issue for you. Happy to get you or someone on your team more information if need be.”