Follow-Up Report: FCC Seeks Comments on Overturning of Copper Retirement Notice Requirements and Other Consumer Protections

As previously reported, on November 16, 2017, the FCC adopted an Order rolling back consumer protections in connection with the retirement of copper lines and the discontinuance of traditional telephone services. The FCC took this action even though the alarm industry, consumer advocates and members of Congress objected that the actions could lead to consumers losing their telephone service and could adversely impact alarm service.

This article provides a more detailed analysis of the Order and Further Notice of Proposed Rulemaking (FNPRM) adopted by the FCC overturning a number of protections previously adopted for consumers and competitors in connection with copper retirement and the discontinuance of telecommunications service. The FCC’s Order is the culmination of the Technology Transitions Notice of Proposed Rulemaking (NPRM), Notice of Inquiry (NOI), and Request for Comment (NPRM/NOI), in which the FCC outlined proposed changes to its rules ostensibly “to accelerate the deployment of next-generation networks and services by removing barriers to infrastructure investment.”

In the Order, the FCC eliminates the requirement that retail customers must be notified before their copper facilities are retired. The FCC eliminates the customer notification requirement even though AICC, many consumer advocates, state commissions and a number of U.S. Senators urged the FCC to maintain a notice requirement to protect consumers from potential confusion and the suspension or termination of their service. The Order limits a notice requirement to telephone exchange service providers that directly interconnect with the incumbent local exchange carriers (ILECs) network and reduces the amount of notice to 90 days after the FCC issues a public notice of the planned copper retirement.

The Order also eliminates the rule prohibiting ILECs from discussing planned network changes in advance of public notice. In an ex parte letter, AICC argued against this action because it would frustrate the nondiscrimination provisions of Section 275 of the Communications Act of 1934, as amended, and would have a negative impact on competition in the alarm industry. Section 275 requires ILECs to “provide nonaffiliated entities, upon reasonable request, with the network services it provides to its own alarm monitoring operations, on nondiscriminatory terms and conditions,” among other things. By prohibiting ILECs from disclosing information about network changes ahead of public notice, the FCC’s non-eliminated rule, Section 51.325(c), supported Section 275’s goal of ensuring that all alarm providers – affiliated or not – would have an equal opportunity when it came to utilization of ILEC network services. AICC stated that the absence of Section 51.325(c) may be interpreted as permission for ILECs to give their alarm service affiliates a clear competitive advantage over non-affiliates by providing advance notice of network changes. AICC argued that, in order to meaningfully preserve the level playing field that Section 275’s nondiscrimination requirement creates, unaffiliated alarm companies should be accorded the same access to information as affiliates, and the Commission should not permit ILECs to choose who receives information about network changes and who does not in advance of public notice.

The Order eliminates the “functionality test” standard for determining whether an ILEC must obtain section 214 authority to discontinue a service. Among other things, the functionality test required an ILEC to ensure that third-party devices, including alarm systems, would continue to work on a service intended to replace existing services. Instead the FCC only will require the new service to meet the carrier’s description of the service being terminated in its tariff—or customer service agreement in the absence of a tariff.

In its ex parte letter, AICC argued that the Commission’s decision to reverse the “functional test” is not in the public interest because alarm customers rely on their alarm equipment and services to protect their lives and their property and, therefore, before a service is discontinued there must be a service that continues to be compatible with alarm equipment and service. The FCC, however, has now found that “service providers do not bear the burden of ensuring compatibility with third-party devices.” According to the FCC, “carriers cannot know all of the myriad ways in which their services are used by customers, and it would be impracticable to require them to account for all these many uses in deciding whether a planned discontinuance triggers a requirement to file an application with the Commission. Carriers have no means of knowing what devices their customers are using and therefore cannot be expected to account for their proper functioning.” The FCC also found that it “makes more sense from a cost and efficiency perspective to require third-party manufacturers of ancillary devices— as opposed to telecommunications carriers —to bear the cost of ensuring compatibility. As the manufacturers of such devices— and the parties who know their operation and uses first-hand—these companies are in the best position to adapt such devices to changes in the underlying telecommunications service for the least cost and with the smallest disruption to consumers.”

The FCC also streamlines the discontinuance application process for carriers seeking to grandfather any voice and data services at speeds below 1.544 Mbps and the discontinuance process for applications seeking authorization to discontinue legacy data services that have previously been grandfathered for a period of at least 180 days; the FCC adopts new streamlined processing rules for applications to discontinue low -speed legacy services having no customers for the prior 30-day period; and the FCC finds that a carrier need not seek approval from the Commission to discontinue, reduce, or impair a service pursuant to section 214(a) of the Act when a change in service directly affects only carrier-customers.

In the FNPRM, the FCC seeks comment on a number of issues including whether a single interconnected VoIP service (without any service quality or other requirements) should enable streamlined discontinuance of legacy voice service. It also seeks comment on whether the FCC should streamline discontinuances for higher-speed data services.

Specifically, the FCC seeks comment on “Verizon’s proposal that the Commission streamline processing of section 214(a) discontinuance applications for legacy voice services where a carrier certifies: (1) that it provides interconnected VoIP service throughout the affected service area; and (2) that at least one other alternative voice service is available in the affected service area.” According to Verizon “adoption of this streamlined test ‘would compel carriers to maintain legacy services only in those rare instances . . . where their absence would cut consumers off from the nation’s telephone network’ and would ‘free[] carriers to focus on rolling out and improving the next -generation technologies their customers demand.’” The FCC seeks comment on the benefits and burdens of streamlining section 214(a) discontinuances for legacy voice services and on the benefits and burdens of Verizon’s specific recommendation.

In the FNPRM, the FCC also:

  1. Proposes to streamline the approval process for applications seeking to grandfather data services with download/upload speeds of less than 25 Mbps/3 Mbps, so long as the applying carrier provides data services of equivalent quality at speeds of at least 25 Mbps/3 Mbps or higher throughout the affected service area.
  2. Proposes a uniform reduced public comment period of 10 days and an auto-grant period of 25 days for all carriers submitting such applications. Under this proposal, such services must be grandfathered for a period of no less than 180 days before a carrier may submit an application to the Commission seeking authorization to discontinue such services.
  3. Seeks comment on AT&T’s proposal that the FCC eliminate the requirement that incumbent LECs provide public notice of network changes affecting the interoperability of customer premises equipment.

Comments on the FNPRM are due by January 17, 2018. Reply comments are due by February 16, 2018.

Thanks to Mary Sisak, attorney at Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP, for this report. 

FCC Overturns Copper Retirement Notice Requirements and Other Consumer Protections

On November 16, 2017, the FCC adopted an Order rolling back consumer protections in connection with the retirement of copper lines and the discontinuance of traditional telephone services. The FCC took this action even though the alarm industry, consumer advocates and members of Congress objected that the actions could lead to consumers losing their telephone service and could adversely impact alarm service.

The FCC’s Order:

  • eliminates notice to customers when copper facilities will be retired;
  • allows local exchange carriers (LECs), apparently, to notify some customers of upcoming network changes and copper retirements;
  • reduces the notice that must be provided to interconnecting carriers;
  • allows LECs to discontinue low speed services on an expedited basis;
  • appears to allow LECs to discontinue service even if there is not a replacement service that is as good as the discontinued service.

The FCC also adopted a Further Notice seeking comment on whether a single interconnected VoIP service (without any service quality or other requirements) should enable streamlined discontinuance of legacy voice service. It also seeks comment on whether the FCC should streamline discontinuances for higher-speed data services.

As TMA’s Alarm Industry Communications Committee reviews the Order, TMA members should record and report to TMA (communications@tma.us) if they have experienced an increase in the number of alarm signals that do not go through; the area where there are problems; the cause of the problem; and, if known, whether there is a copper retirement in the area where it occurs.

A more detailed analysis of the Order and Further Notice will be provided soon.

FCC Adopts NPRM, NOI, and Request for Comment on Copper Retirement, Section 214 Discontinuance and State Law Preemption

The FCC has released a Notice of Proposed Rulemaking (NPRM), Notice of Inquiry (NOI), and Request for Comment outlining proposed changes to current rules regarding copper retirement and the discontinuance of telecommunications service and seeking comment on the preemption of state laws governing the maintenance or retirement of copper facilities “to accelerate the deployment of next-generation networks and services by removing barriers to infrastructure investment.”

The FCC’s NOI addresses state laws inhibiting broadband deployment.  Comments on the NOI are due June 12 and reply comments are due July 10. 

In the NOI, the FCC seeks comment on  adopting rules that would help decrease State-sponsored impediments to broadband deployment. Most importantly for the alarm  industry, the FCC seeks comment on “whether there are state laws governing the maintenance or retirement of copper facilities that serve as a barrier to deploying next-generation technologies and services that the Commission might seek to preempt.”  As examples of rules that may be barriers to deploying next-generation technologies the FCC states that “certain states require utilities or specific carriers to maintain adequate equipment and facilities” and others “empower public utilities commissions, either acting on their own authority or in response to a complaint,  to require utilities or specific carriers to maintain, repair, or improve facilities or equipment or to have in place a written preventative maintenance program.”  The  FCC seeks comment on:

  • The impact of state legacy service quality and copper facilities maintenance regulations.
  • The impact of state laws restricting the retirement of copper facilities.
  • Whether Section 253 of the Act provides the FCC with authority to preempt state laws and regulations governing service quality, facilities maintenance, or copper retirement that are impeding fiber deployment, including whether such laws have the effect of prohibiting the ability of incumbent LECs to provide any interstate or intrastate telecommunications service and whether such laws are not competitively neutral or not necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

The FCC also asks for comment on:

  • Eliminating excessive delays in negotiations and approvals for rights-of-way agreements and permitting for telecommunications services.
  • Prohibiting excessive fees and other costs that may have the effect of prohibiting the provision of telecommunications service.
  • Prohibiting unreasonable conditions or requirements in the context of granting access to rights-of-way, permitting, construction, or licensure related to the provision of telecommunications services.

In the NPRM, the FCC seeks comment on proposed changes to the copper retirement and  Section 214 rules to discontinue services.  The comment dates for the issues raised in the NPRM have not been established.

The FCC proposes a number of revisions to the Part 51 network change disclosure rules and the rules applicable to copper retirement.  Under one proposal, the FCC would repeal Section 51.332 of the rules and return to the prior short-term network change notification rules for copper retirement.  Under this proposal,  an incumbent LEC would be allowed to retire copper facilities 90 days after FCC issuance of a public notice and without providing direct notice to retail customers.

Under a second proposal, the FCC would eliminate all differences between copper retirement and other network change notice requirements, rendering copper retirement changes subject to the same long-term or, where applicable, short-term network change notice requirements as all other types of network changes subject to Section 251(c)(5).  Under this proposal, an incumbent LEC would be allowed to retire copper facilities 10 days after FCC issuance of a public notice and without providing direct notice to retail customers.

Under a third proposal, the FCC would “retain but amend Section 51.332 to streamline the process, provide greater flexibility, and reduce burdensome requirements for incumbent LEC copper retirements.”  Among other things, the FCC seeks comment on whether the rule should be changed to require an incumbent LEC to serve notice only to telephone exchange service providers that directly interconnect with the incumbent LEC’s network and not retail customers and reduce the waiting period to 90 days from 180 days after the FCC releases its public notice before the planned copper retirement can be implemented.

Similarly, the NPRM proposes a number of measures to shorten timeframes and eliminate protections when an incumbent LEC seeks to discontinue the provision of a telecommunications service pursuant to Section 214 of the Act.  Specifically, the FCC seeks comment on:

  • Reducing the Section 214(a) discontinuance process for applications that seek authorization to stop accepting new customers for the service while maintaining service to existing customers (a.k.a. “grandfathering”) to 10 days.
  • Changing the list of eligible services for grandfathering.
  • Adopting a streamlined uniform comment period of 10 days and an auto-grant period of 31 days for both dominant and non-dominant carriers for discontinuance of services that have been grandfathered for at least 180 days.
  • Whether the FCC should conclude that Section 214(a) discontinuances will not adversely affect the present or future public conveniences and necessity, provided that fiber, IP-based, or wireless services are available to the affected community and what types of fiber, IP-based or wireless services would constitute acceptable alternatives.

Read more and submit comments.

Act by August 1: Annual AICC Communications Survey

AICC Chair Louis T. Fiore has issued a call for participation in the annual AICC Communications Survey. The results of the survey assist the AICC in planning messaging and strategy for legislative efforts involving Congress and the FCC.

This survey, now in its fifth year, focuses on the percentages of monitored accounts using POTS (plain old telephone systems), VoIP digital dialers (DACT), or other technologies either as a sole method of transmission or in conjunction with another technology. The ten-question survey will take no more than a few minutes to complete.

Survey participation is not limited to AICC or CSAA members. Industry-wide input will strengthen the findings. Input is anonymous and individual answers will be kept confidential.

Results will be presented at the September 2016 AICC meeting.

AICC: Wireless Disaster Resilience and Information Sharing Proposal

AICCLogofullcolorWireless Industry Seeks to Avoid Unwanted Regulation Following System Failures after Superstorm Sandy

On April 28, the FCC’s Public Safety and Homeland Security Bureau issued a Public Notice seeking comment on the ex parte presentation made by wireless providers AT&T, Sprint, T-Mobile, US Cellular, and Verizon, together with CTIA, in which they announce a “Wireless Resiliency Cooperative Framework” described as “a voluntary initiative that will enhance coordination and communication to advance wireless service continuity and information sharing during and after emergencies and disasters.”

In the letter, the carriers detail a five-pronged approach to enhance industry coordination to “facilitate greater network resiliency and faster restoration of service” which they assert will “obviate the need for legislative action or inflexible rules that could have unintended consequences.”  Specifically, the five prongs include: (1) providing for reasonable roaming under disaster arrangements when technically feasible; (2) fostering mutual aid during emergencies; (3) enhancing municipal preparedness and restoration; (4) increasing consumer readiness and preparation; and (5) improving public awareness and stakeholder communications on service and restoration status.  Under each prong, the carriers provide specific actions that they will undertake designed to “enhance coordination among wireless carriers and all key stakeholders, improving information sharing and making wireless network resiliency more robust.”

The Disaster Resilience Proposal is clearly an effort by the wireless industry to avoid unwanted regulation in the wake of notorious system failures after Superstorm Sandy and other recent disasters. Since many alarm companies rely on the existing cellular network for customer premise alarm radios, as well as communications with field personnel, this matter is of obvious interest to the alarm industry. Since the FCC is fond of adopting “industry consensus” proposals on thorny issues that draw a lot of public complaint (such as network outages), AICC and alarm providers should review the proposed approach to see if it is something that they can live with (or if it instead ignores the need for protecting and rapidly restoring wireless alarm operations).

Opposition comments, or suggestions on how to remedy any shortfalls in the industry proposal, can be submitted to the FCC. AICC is planning on providing feedback on this matter to the FCC by the end of June.  Please contact CSAA Counsel John Prendergast at jap@bloostonlaw.com if you have any concerns to include in such comments.

FCC Announces New Requirements for FCC Registration Numbers – Effective Date is Sept. 1, 2016

If you wish to conduct business with the FCC, you must first register through the FCC’s Commission Registration System (“CORES”). To register, you must create a username and password. This username will uniquely identify you in the CORES system. You will also use this username to access CORES to update your FRN information and reset/update your FRN Password. CORES will now require FRNs to have an Administrator(s). This user(s) will manage which users have access to the FRN and what user role they will have. IF YOU CURRENTLY HAVE AN FCC LICENSE, YOU HAVE ALREADY REGISTERED.

A filer, licensee, certificate holder, or any entity sending payments to the FCC is considered to be doing business with the FCC and must, therefore, have a registered username and FRN.

(Petitioners or non-feeable complainants are not required to have a registered username and FRN.)

 In an effort to ensure security of FCC registration numbers, the FCC is changing  CORES in order to implement several user-specific identification requirements. In addition to enhancing security, the FCC believes that these changes will also make the FCC’s CORES system more user friendly.

 These changes will:

  •  Implement a requirement for existing and new users to designate user-specific IDs (user names) for access to FCC Registration Numbers (FRNs) and related records.
  •  Allow registrants to establish multiple user names for each FRN with different levels of access. In this regard, the first user establishing access to an FRN will have administrator privileges with the capability to limit the level of access to all other users.

(By default, the first user establishing access to an existing FRN will be granted administrative responsibilities over the account and will have the ability to limit the level of access for future users, if desired.) 

  • Require users to provide a valid e-mail address for online access to the system.
  •  Establish password-recovery security questions specific to each user.

 Some of the changes being implemented by the FCC were proposed almost five and a half years ago in its Notice of Proposed Rulemaking in MD Docket No. 10-234 (released December 7, 2010). Nonetheless, the FCC is making certain changes from the NPRM and others without notice and comment rulemaking since the changes are considered administrative in nature and not subject to the rulemaking process. The FCC believes that the changes are necessary to strengthen the security of its records (including social security numbers and federal Employer Identification Numbers) and make CORES more user friendly as well as strengthen the FCC’s ability to comply with various statutes and regulations governing debt collection activities and the collection of personal information.

The Commission will be implementing a pilot launch on April 29, 2016 for a four month period ending on August 31, 2016 in order to test its proposed system and obtain feedback from users of the CORES system. The pilot program will initially be targeted to users of the Commission’s Cable Operations and Licensing System (COALS) as well as business and governmental entities that have a significant number of registered FRNs associated with a single EIN as well as the top 100 Regulatory Fee payers by FRN. The pilot program initially will not be available for most. The FCC anticipates that the updated version of CORES will be available to the full FCC user community as of September 1, 2016  at https://www.fcc.gov/cores.The current version of CORES will remain available through September 30, 2016 at https://apps.fcc.gov/coresWeb/publicHome.do

Additional details about these modifications can be found on the CORES website at  https://apps.fcc.gov/cores/publicHome.do?help=true

Ownership Changes and Internal Corporate Reorganizations May Require FCC Approval

Alarm service providers and equipment manufacturers should keep in mind FCC approval is required for most ownership changes.  If radio licenses are involved, prior FCC approval is generally required, although there may be ways to significantly reduce the usual 90 to 120 day approval time, using the FCC’s “conditional temporary licensing” mechanism (depending on the type of licenses involved).  For equipment manufacturers, the FCC generally must be notified of ownership changes that affect FCC equipment certifications within 60 days after the closing.  But some manufacturers also have radio licenses (such as demonstration licenses) that may require prior approval filings.

These entities should also keep in mind that many types of reorganizations, estate planning and tax savings activities and other transactions require prior FCC approval. Companies planning on such transactions should determine whether they must file an application for FCC approval, and obtain a grant, before closing the transaction.  Transactions requiring prior FCC approval include (but are not limited to):

  • The distribution of stock to family members in connection with estate planning, tax and other business activities, if there are changes to the control levels discussed above; Any sale of a company that holds FCC licenses;
  • Any sale, transfer or lease of an FCC license;
  • A change in the form of organization from a corporation to an LLC, or vice versa, even though such changes are not regarded as a change in entity under state law.
  • Any transfer of stock that results in a shareholder attaining a 50% or greater ownership level, or a shareholder relinquishing a 50% or greater ownership level;
  • Any transfer of stock, partnership or LLC interests that would have a cumulative effect on 50% or more of the ownership.
  • The creation of a holding company or trust to hold the stock of an FCC license holder;
  • The creation of new classes of stockholders that affect the control structure of an FCC license holder.
  • Certain minority ownership changes can require FCC approval (e.g., transfer of a minority stock interest, giving the recipient extraordinary voting rights or powers through officer or board position).
  • The conversion of a corporate entity or partnership into another form of organization under state law – e.g., from corporation to LLC or partnership to LLP and vice versa.

–Contributed by CSAA Counsel John Prendergast (Blooston, Mordofsky, Dickens, Duffy, and Prendergast, Washington, DC)