Customs Duty

Rules requiring all carriers comply with the transparency provisions of the 2015 net neutrality rules formally took effect Tuesday, with expiration of the small-business exemption. Commissioner Mignon Clyburn released a statement expressing disappointment. Commissioners Ajit Pai and Mike O’Rielly, who will form the FCC’s 2-1 Republican majority starting Friday, already have assured small ISPs that the commission won't clamp down on companies not in compliance with the rules after they take control (see 1612190059). O’Rielly repeated Tuesday the agency is soon likely to address the issue.

FCC staff ruled that eligible telecom carriers must allow Lifeline-eligible customers to apply their low-income USF discounts to stand-alone broadband internet access service (BIAS) if the ETCs offer such service and are subject to USF "high-cost public interest broadband obligations." The clarification renders moot a petition for temporary waiver that was filed by NTCA and WTA, which was dismissed, said an order in docket 11-42 from the Wireline Bureau listed in Monday's Daily Digest. "ETCs that do not have a standalone BIAS offering in areas where they receive high-cost support are not required to create a new standalone Lifeline BIAS offering" under the FCC's March Lifeline overhaul order, the new order said. "Rather, recipients of high-cost support may meet their broadband public interest obligations by offering BIAS as part of a bundle with voice or on a standalone basis, at the carrier’s discretion." But the bureau said if an ETC offers stand-alone broadband in an area where it receives high-cost support, it must allow eligible consumers to apply their Lifeline discount to that service.

West Coast union workers hope to avoid a strike against AT&T when they return to the bargaining table at the start of the new year, a Communications Workers of America official told us Monday. But one union worker from San Diego said he believes a work stoppage is inevitable and could provide similar gains to those won by East-Coast CWA members in their six-week strike earlier this year against Verizon (see 1606170051). Workers last week held protests on overpasses in San Diego and the San Francisco Bay Area. The union hasn’t set a date for a work stoppage (see 1612160065).

FCC staff detailed the effective dates of new broadband privacy rules and offered guidance, after the Federal Register's Dec. 2 publication of a summary of the order the commission adopted in October (see 1612020049 and 1610270036). The rules will take effect Jan. 3, except for new data-security requirements and certain provisions that need Paperwork Reduction Act (PRA) approval by the Office of Management and Budget, said a Wireline Bureau public notice in docket 16-106 in Thursday's Daily Digest. The PN noted the FCC's broadband privacy order said the data-security duties will take effect March 2; breach-notification requirements take effect the latter of PRA approval or June 2; and the notice and customer approval provisions take effect the latter of PRA approval or Dec. 4, with small providers having an additional year to comply with those. The bureau said telecom carrier and interconnected VoIP providers subject to existing phone privacy rules must continue to comply with the substance of those rules until the new rules take effect. But the broadband privacy order relieved them of certain compliance recordkeeping and annual certification duties in subsections (c) and (e) of Section 64.2009, so once the new rules take effect Jan. 3, those entities will no longer be required to comply with those subsections, the PN said.

It's surprising how many Lifeline providers opted for FCC broadband forbearance, said Norina Moy, Sprint director-government affairs, on an FCBA panel Tuesday. She said Sprint has begun offering Lifeline-supported broadband service to low-income customers, and it remains to be seen how much competition there will be. The National Hispanic Media Coalition was "troubled by the number of providers that asked for broadband forbearance," said Policy Counsel Carmen Scurato. Garnet Hanley, Wireline Bureau counsel, noted providers choosing forbearance could still offer Lifeline-supported broadband voluntarily.

Sandwich Isles Communications faces $77 million in repayment duties and proposed fines from the FCC for violations and apparent violations of the USF high-cost program in Hawaii, with more repayments to come. The commission also ruled against SIC in a cost dispute with AT&T and the National Exchange Carrier Association (NECA) over an undersea cable. The agency noted Sandwich Isles has continuing obligations to its customers and can't discontinue telecom service without express authorization.

Even before the FCC released its net neutrality rules on March 12, 2015, ISP interests signaled they would take the agency to court. The likes of CTIA and NCTA predicted lawsuits, as reported in Part I of this Special Report (see 1609150017). Even FCC officials predicted such suits -- accurately, as it turned out. This Part II focuses on how litigation came to pass. Part III reports how the commission won an initial court case (see 1610130014).

A legal challenge to newly issued FCC ISP privacy rules is a virtual certainty, though who will seek review is less clear, said industry officials who opposed and also those who supported the rules approved last week (see 1610270036). The agency posted the order Wednesday, explaining in much detail what it considers its authority to act. FCC members approved the order, over the dissents of Republican commissioners Mike O’Rielly and Ajit Pai, after months of debate and thousands of filings.

The Computer & Communications Industry Association identified data localization, internet censorship and other restrictions on online content as significant barriers to digital trade in comments Thursday to the Office of the U.S. Trade Representative. USTR sought comments on trade barriers as it prepared its national trade estimate (NTE) report. “The Internet has been the single biggest component of the cross-border trade in services, with many of those services facilitating the international goods trade as well,” CCIA said in its filing in docket 2016-0007. "These developments call for maintaining and expanding the NTE’s focus on digital trade barriers." Traditional trade and non-tariff barriers "such as onerous customs procedures and duties for small shipments, postal policies, housing rental and taxi regulations, and outdated financial services regulations should also receive continued attention from USTR," CCIA said.

CenturyLink said the FCC should effectively look before it leaps into new regulation of business data serves. The BDS rule changes the FCC is considering "would have far-reaching operational and procedural impacts, broadly affecting business systems, regulatory procedures, and compliance efforts and necessitating an appropriate implementation glide-path," said a CenturyLink filing Thursday in docket 16-143 on a meeting with Wireline Bureau and Office of General Counsel staffers. "Proposals now under consideration would require multiple follow-up proceedings and would consume significant agency resources. The competitive market test, for example, will require close monitoring of the services provisioned, which in turn will entail extensive ongoing work by ILECs and CLECs alike." The incumbent telco said "transitions from one regime to another tend to take substantially longer than expected," and it attached a 20-page overview of BDS complexities that it said the FCC must consider. BT Americas provided additional information (some of it redacted) supporting its proposal that "minimum revenue commitments ('MRCs') should be capped at 50 percent or less with respect to contracts entered into with ILECs and/or their affiliates" providing dominant services, including BDS, and nondominant services. The MRC levels in existing ILEC BDS tariffs and contracts are generally set at or above 80 percent of a customer’s previous spend," said a BT filing. "This commitment level does not allow a wholesale purchaser to migrate BDS from ILEC circuit-based data services to packet-based data services sold by either ILECs or CLECs." Comcast discussed what it saw as the limitations of prescriptive rate regulation with General Counsel Howard Symons, Wireline Bureau Chief Matt DelNero, an aide to FCC Chairman Tom Wheeler and other staffers. The commission should adopt NCTA's proposal to apply rate regulation only where monopoly conditions are present and competition is unlikely, said a Comcast filing. If a regulatory backstop is needed to ensure wholesale BDS access, Comcast suggested the FCC give providers "a baseline duty to deal on a commercially reasonable basis," similar to its wireless data-roaming requirement.