Regulatory oversight is a critical part of reducing cyber risk on telecom networks, the FCC Public Safety Bureau said Wednesday. “As the end-to-end Internet user experience continues to expand and diversify, the Commission's ability to reduce cyber risk for individuals and businesses will continue to be taxed,” the bureau said in a white paper. “But shifting this risk oversight responsibility to a non-regulatory body would not be good policy. It would be resource intensive and ultimately drive dramatic federal costs and still most certainly fail to address the risk for over 30,000 communications service providers and their vendor base.” The FCC can’t rely on organic market incentives alone to reduce cyber risk, it said. “As private actors, ISPs operate in economic environments that pressure against investments that do not directly contribute to profit. Protective actions taken by one ISP can be undermined by the failure of other ISPs to take similar actions. This weakens the incentive of all ISPs to invest in such protections. Cyber-accountability therefore requires a combination of market-based incentives and appropriate regulatory oversight where the market does not, or cannot, do the job effectively.” FCC Chairman Tom Wheeler, who steps down Friday, mailed the cybersecurity white paper to Sen. Mark Warner, D-Va. “This whitepaper outlines risk reduction activity engaged in by the Commission during my tenure and suggests actions that would continue to affirmatively reduce cyber risk in a manner that benefits from and incents further competition, protects consumers, and addresses significant national security vulnerabilities,” Wheeler wrote. Earlier, Wheeler was seen as backing off more ambitious cybersecurity plans (see 1611300063).

The FCC and critics diverged on whether inmate calling service litigation should be suspended as Republican commissioners prepare to take control of the agency Friday. The commission and DOJ said it shouldn't be delayed, but ICS providers and state and local government officials challenging the FCC orders said it should be. The U.S. Court of Appeals for the D.C. Circuit asked litigants to show cause by Tuesday why its review shouldn't be delayed "in light of the impending changes to the Commission" (see 1701110073). "The Court should allow these cases -- which are fully briefed and ready for argument -- to proceed on the current schedule," said an FCC/DOJ response (in Pacer) in Global Tel-Link v. FCC, No. 15-1461, which is scheduled for oral argument Feb. 6. "Particularly given how long inmates and their families have awaited relief from the exorbitant rates they pay for inmate calls, and given the considerable resources all parties have already invested in this litigation, the Court should not place these cases in abeyance based on a possibility that a newly constituted Commission might adopt different policies." Others disagreed. "It makes perfect sense to give the Commission a reasonable period of time -- as explained below, we propose 60 days -- to inform the Court as to whether it intends to revisit the confusing array of orders issued by the prior Commission," said a Global Tel*Link and CenturyLink response (in Pacer). "Republican commissioners will hold a 2-1 majority on the Commission. Both of the Republican commissioners issued vigorous dissents from the Commissions prior rulings. It is therefore appropriate for the Court to give the new Commission an opportunity to take a position on the issues implicated by the petitions for review before the Court devotes further resources to this case." Pay Tel Communications, Securus, Telmate and NARUC and state and local government officials also filed responses (here, here, here and here, all in Pacer) that backed holding the case in abeyance. But a Network Communications International response (in Pacer) said the case shouldn't be held in abeyance.

The FTC filed a complaint against Qualcomm Tuesday, alleging the company maintained a monopoly in baseband processors used in cellphones and other products. Commissioners voted 2-1 to file the complaint with U.S. District Court in San Jose. Commissioner Maureen Ohlhausen dissented, saying in a separate statement the "enforcement action based on a flawed legal theory ... that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide. These extreme circumstances compel me to voice my objections." The redacted complaint said that "Qualcomm has engaged in exclusionary conduct that taxes its competitors' baseband processor sales, reduces competitors' ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets." In a news release, the agency, which said the company violated the FTC Act, also alleged Qualcomm received "elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject" by threatening to disrupt the baseband processor supply. Plus, it precluded Apple from getting processors from Qualcomm competitors from 2011 to 2016, the agency said. The commission said it's asking the court to order the company to cease its anticompetitive conduct. Qualcomm responded to us that "the portrayal of facts offered by the FTC as the basis for the agency’s case is significantly flawed. In particular, Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms. The FTC’s allegation to the contrary -- the central thesis of the complaint -- is wrong.”

Competitive Carriers Association President Steve Berry said the FCC should ignore a letter by Max Media CEO Gene Loving seeking a pause of the TV incentive auction and a rethink of the auction rules (see 1701120059). “Many people in Washington have quipped that election season is ‘silly season,’ but this recent letter from the CEO of Max Media proves that ‘silly season’ is not quite over,” Berry said in a statement. “The FCC should take Gene Loving’s request for what it truly is -- a ridiculous stall tactic in an attempt to distract policymakers from getting more mobile broadband services to consumer, and as such, the FCC should reject the request without hesitation.” The kind of delay Loving proposes would “violate the law, counter congressional intent and negatively impact auction participants who have spent countless hours and resources planning auction strategies,” Berry said. Thanks for letting me know "I'm part of the continuing 'silly season,'' Loving said in an emailed response. It would cost about $10 billion to close the auction now, new figures show (see 1701130077).

Rep. Kevin Cramer, R-N.D., is planning to send broadcast networks a questionnaire on their coverage and possible bias. “They distribute their product over taxpayer-owned airwaves, otherwise known as spectrum,” said Cramer, a Communications Subcommittee member, during the latest episode of C-SPAN’s Washington Journal, which was to be telecast over the weekend. “The CEOs need to be confronted.” Cramer aides didn't comment on the timing of the questionnaire. He called political bias “blatant” and cited a letter he sent last year to the network chiefs. He called for hearings then (see 1611070062). “After the election, I decided not to do hearings but I think we still need to explore the possibility with the companies,” Cramer said. He said he values the broadcast industry but broadcasters “shouldn’t take for granted” that they have “beachfront” spectrum. “Their news coverage just demands a little more scrutiny,” Cramer said. Freedom of the press “is not a license to simply manipulate,” he said, suggesting interest in knowing about hiring practices and scrutiny by management. “Do they just sort of let them go? Do they even think about it?” He called oversight “not unprecedented” and invoked FCC indecency standards. He would “not support that that license would require a regulation of news content,” he said, saying it’s “important to have independence in news.” He stressed the difference between a cable network like Fox News and the broadcast TV networks, repeatedly invoking the broadcasters' spectrum and their FCC licenses. “I’m just talking about fundamental fairness,” he said.

The FCC Public Safety Bureau gave the District of Columbia’s Homeland Security and Emergency Management Agency (DCHSEMA) a waiver so it could test wireless emergency alerts before the Jan. 20 presidential inauguration. The test, in cooperation with various federal agencies including the Secret Service, was to be conducted at 3 p.m. Sunday on the National Mall, said the Friday order. The D.C. agency told the FCC it wanted to test the WEA message system and city official email list portion of the federal Integrated Public Alert and Warning System before the inauguration. DCHSEMA will broadcast a message that reads: “This is a test of the District of Columbia Emergency Alert System. No action is required.” The bureau said in an order it saw ample reason to grant a waiver. More than a million visitors are expected on or near the National Mall during the inauguration, the bureau said. “In the event of an emergency, DCHSEMA and its federal partners must be able to communicate quickly and effectively to the crowd. WEA offers this unique capability, and its use could be essential to ensure public safety in the event of an emergency. A live test would ensure that WEA can reach the entire National Mall yet be ‘geo-fenced’ to minimize any extension beyond this intended area.” Carriers undertook extensive preparations for the inauguration and accompanying protests (see 1701050059).

Eight states and Puerto Rico diverted a portion of state 911 fees for other purposes in 2015, the FCC said in an annual report to Congress. The report was submitted to legislators Dec. 30 and released Friday. The total amount diverted was nearly $220.3 million, or about 8.4 percent of total fees collected, the FCC said. In the previous year’s report, the FCC said eight states diverted $223.4 million, or 8.8 percent of 911 funds, in 2014. And the practice appeared to continue last year despite a few state legislative tries to address it, our earlier research on the topic found (see 1605270020). Also in the report, the FCC said 36 states, the District of Columbia and Puerto Rico combined spent about $164.8 million in 911 revenue on Next Generation-911 programs in 2015. That's 6.26 percent of total 911 fees collected, the FCC said. But 13 states, American Samoa and the U.S. Virgin Islands didn't spend any money on NG-911, the agency said. Also, 38 states and three territories spent no 911 funds on 911-related cybersecurity programs for public safety answering points, but nine states and the District did, it said. In addition to seeking comments on the findings, the FCC asked about the role of oversight and auditing in ensuring collected 911 fees are used properly. "As in previous years, the Report finds that almost every reporting jurisdiction collects 911 fees from in-state subscribers, but many states lack authority to audit service providers to verify that the collected fees accurately reflect the number of in-state subscribers served by the provider,” the commission said in a public notice. Comments are due Feb. 13, replies March 15.

FCC items on advanced telecom capability (ATC) deployment and spectrum rules implementing a 2012 World Radiocommunication Conference (WRC-12) agreement are now before commissioners, according to the agency's circulation list, which was updated Friday. A draft report circulated Jan. 9 on the commission's inquiry into whether broadband-like ATC is being deployed to all Americans in a reasonable and timely fashion pursuant to a mandate in Section 706 of the Telecom Act. Past reports under the Democratic FCC found ATC isn't being adequately deployed and were used to help justify net neutrality rules, but there's more uncertainty this time because of the Republican takeover Jan. 20. The report has a Jan. 31 deadline, according to the FCC. GOP Commissioner Ajit Pai, who's expected to be named acting chairman, concurred on last year's report and said it showed the FCC and President Barack Obama's administration failed in their broadband efforts, despite much USF support and stimulus spending. His colleague, Commissioner Michael O'Rielly, dissented. Parties filed a mixture of comments on the FCC's Section 706 notice of inquiry (see 1609070039 and 1609220058). "The 706 report on broadband deployment has become a political exercise lacking analytical rigor and consistent methodology," emailed network engineer Richard Bennett, who filed comments seeking a consistent methodology to replace past analysis he called flawed. "The Commission needs to create an assessment framework immune from the winds of political fashion. It should define broadband in terms of network-enabled activities and focus on deployment in rural and low-income areas. Akamai says the average broadband connection in the US is now faster than 70 Mbps, so the traditional goal of the 706 report has been achieved." FCC officials didn't comment. An item circulated Jan. 6 on amendments to various parts of the FCC's rules to implement the final acts of the WRC-12 and other issues.

The last two state reviews for Verizon’s acquisition of XO Communications could wrap up soon. Pennsylvania and New York commissioners might vote this month, state commission officials told us Thursday. The Pennsylvania Public Utility Commission initially planned to vote on the deal at its Dec. 22 meeting but postponed the item until the Jan. 19 meeting, a PUC spokesman said. Commissioners didn’t give a reason for the delay, he said. In November, an administrative law judge there issued an initial decision to OK the deal without conditions (see 1611100025). The New York Public Service Commission expects to vote on the deal this quarter, a PSC spokesman said. That commission’s next meeting is Jan. 24, but the agenda hasn't been released. The FCC and FTC OK’d the Verizon/XO deal in November (see 1611160066). “We expect to close on the XO transaction very shortly after receiving the final state approvals,” a Verizon spokesman emailed. “We’re hopeful those approvals will be granted at upcoming state commission meetings.”

The next FCC will likely roll back net neutrality and broadband reclassification in two steps, Raymond James analysts wrote investors on their recent discussions with communications policy professionals at a conference they hosted. "We believe the new Republican controlled FCC will initially refrain from enforcing most aspects of net neutrality and Title II regulation post inauguration," they wrote. "A proceeding to formally remove the rules will take at least 6 months to write and get through the Commission (likely in time for an early to mid-summer appointment of the two vacant seats at the FCC, including a permanent chair)." They said there appears to be congressional support for a net neutrality legislative solution after "growing irritation with the FCC." On merger and acquisition reviews, they said the general view is the FCC "has been far too activist" and "should be less involved." They said incoming President Donald Trump's choice for assistant attorney general for antitrust "will signal whether the DOJ will see a shift in its enforcement policies in reviewing M&A," but company synergy arguments "may need tempering" regardless. "Since synergies largely involve headcount, our panelists felt this would not be a good argument under a Trump administration, and other offsets such as consumer benefit and interest from lower pricing or other such byproducts of the deal would have to be highlighted," wrote the analysts. They said broadband looks likely to be part of any infrastructure initiative, adding to ongoing FCC Connect America Fund subsidy efforts. Bank of America Merrill Lynch cable/satellite analysts largely agreed, in a Wednesday note, saying they believe the GOP election sweep increases "the likelihood of: (1) a reversal of the Open Internet Order (and at a minimum a considerable de-risking of retail price regulation...) (2) a re-write of the 1996 Telecom Act with a shift towards a lighter regulatory touch, and (3) a reversal of much of the regulations adopted under" President Barack Obama and Chairman Tom Wheeler. They also noted Trump's interest in a $1 trillion infrastructure package and said the Trump antitrust policy remains unclear, given his expressed opposition to AT&T buying Time Warner and the traditionally "less interventionist" Republican stance. AT&T met Thursday with Trump (see 1701120040).