The FCC Seizes the Reins on Privacy: Observations from Our Summer Internship

Posted by: AT&T Blog Team on August 10, 2016 at 2:13 pm

By Lindsey Knapton, Alex McLeod, Sean Vallancourt, AT&T Summer Interns 

(The opinions expressed in this blog are solely those of the student authors and are not attributable to AT&T)

When we each arrived at AT&T’s DC offices earlier this summer for our internships, we knew that we would have a front seat for policy discussions around some of the most hotly debated topics, including net neutrality, privacy and the march toward 5G wireless technologies. Little did we know the discussions would take such an interesting turn after the D.C. Circuit released its long awaited net neutrality decision. While some claimed victory, others were left with unanswered questions regarding the Court’s decision. In US Telecom v. FCC, the Court allowed the FCC to reclassify Internet Service Provider (“ISP”) offerings as telecommunications services rather than information services. The Court also determined that mobile broadband services are now commercial rather than private because mobile broadband is an interconnected service that is a part of the new public switched network that includes IP addresses. These decisions, which deviate from FCC precedent regarding ISPs and broadband Internet access services, were only marginally explained in the FCC’s 2015 Open Internet Order. Yet the Court accepted the FCC’s limited explanation as sufficient justification for its decision.

As a result of this decision, many scholars are left questioning: how much deference should administrative agencies receive in interpreting a Congressional statute? In Chevron, the Supreme Court required that an agency must give a reasonable explanation to justify its action but, after the DC Circuit decision, many question whether agencies should be held to a higher standard. As a result of the Court’s reclassification choices in US Telecom v. FCC, the FCC has extended its reach in regulating the telecommunications industry; and the impact of the D.C. Circuit’s decision will continue to affect all telecommunications operations, including privacy and wireless issues.

When the D.C. Circuit upheld the 2015 Open Internet Order, it was known that there would be significant restructuring of the privacy rules that govern ISPs. Before the FCC reclassified ISPs as common carriers, the sensitivity of data used and shared on the Internet by ISPs was subject to the Federal Trade Commission’s flexible regulation regime. The FTC’s rules did not apply only to ISPs – but to every player on the Internet, including edge providers, such as Google and Facebook. Since assuming sole authority over ISPs, the FCC has released a set of proposed privacy rules to provide clarity to an ecosystem it considers chaotic. Critics of the rules, however, assert that only confusion will arise from the FCC’s onerous proposals. While the FCC could have proposed rules to mirror the FTC’s longstanding regime, which has, according to many leading industry players, worked effectively, the FCC proposed a code of unprecedented heft, which could severely curtail the marketing practices of many major ISPs. While the rules have not yet been adopted – and while it is far too early to tell how they will affect the business practice of ISPs – they have already been tied to the recent merger of Verizon and Yahoo, which many observers interpret as a sign of things to come as ISPs expand their data marketing operation.

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Reaching a Sound 3.5 GHz Framework

Posted by: Joan Marsh on April 11, 2016 at 11:44 am

We’ve been watching with interest as a Further Order on the 3.5 GHz band plan is being considered by the FCC’s 8th floor. The Order proposes to preserve a Priority Access License, or PALs, scheme that has been broadly rejected by almost everyone who had advocated for the PALs approach. Given this opposition, it’s hard to see why the Commission remains committed to it.  “If you build it they will come” may be a slogan that works with magical baseball fields, but it’s not going to be an effective approach here.

It’s not hard to see why wireless operators are unenthusiastic.

First, it’s far from certain that a bidder will be able to obtain a rational PALs footprint at auction.  The Commission has concluded that, to ensure auction competition, it will require multiple bidders in each license area and auction one less PAL than the total number of PALs applied for in a given census tract.  This means that if only one carrier is interested in PALs in a given license area, zero PALs will be available.  Would-be PAL licensees could therefore simply find themselves locked out from the start in many license areas.  And, as many commentators have pointed out, the N-1 requirement will effectively act to reduce the number of PALs available over time, systematically phasing out PALs with each subsequent auction.  This alone is probably sufficient to discourage meaningful interest.

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A Note from Base Camp

Posted by: Joan Marsh on February 10, 2016 at 9:25 am

Last week while speaking at a spectrum conference, Gary Epstein, Chair of the FCC’s Incentive Auction Task Force observed that progress on the incentive auction can be compared to climbing a mountain. With the rules complete and as we move toward the auction start date, the collective group of auction climbers are essentially now at base camp awaiting the final ascent to the summit, which will begin March 29.  But as everyone who has read Jon Krakauer’s “Into Thin Air” knows, the ascent to the peak is one of the most dangerous parts of the climb and the descent can also be lethal.

With the quiet period about to commence, as we sit at base camp, I offer a few final thoughts on the auction.

Surely we can all agree that much has been accomplished – perhaps more than many thought possible.  The auction rules are firmly in place, the FCC has been releasing a steady stream of data file formats, applications are being filed and workshops are underway to educate auction participants. The FCC auction team has climbed tirelessly to reach this point and all the stakeholders impacted by the auction have climbed tirelessly along with them.

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Getting the Incentive Auction Right

Posted by: Joan Marsh on August 6, 2015 at 1:32 pm

Today, the FCC cast a series of votes that set the stage for the incentive auction to move toward its slated March 2016 start.  The results of the votes, however, are a mixed bag and leave significant wireless industry concerns unanswered.

On the one hand, the FCC has finally resolved the protracted debate on the reserve and its triggers, putting to rest at last T-Mobile’s never-ending quest to expand the favors it will receive at auction. That decision was long over-due and essential to moving the process forward, and the Commission was right to reject T-Mobile’s demands.

On the other hand, some of the auction framework proposals adopted today raise significant questions about the value and utility of the spectrum that will be made available at auction.

First, the FCC has reserved for itself significant flexibility to affirmatively create impairments in the new wireless allocations by assigning broadcasters in-band.  In the past, FCC band plans have failed to properly account for existing interference concerns (think 700 MHz), but never in the history of FCC auctions has the Commission chosen to affirmatively create long-lasting and debilitating in-band impairments.  This not only repeats the sins of the 700 MHz band – which remains under-deployed to this day – it doubles down on them. 

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Auction 97 – More Lessons
For Future Auctions

Posted by: Joan Marsh on March 4, 2015 at 1:36 pm

Additional reactions to Auction 97 are emerging with everyone putting their own spin on the results.

First, in a blog, T-Mobile offered its view, calling the auction a disaster for U.S. consumers.  Hard to figure how they can reach that result.  The auction reallocated 50 MHz of valuable paired spectrum to the wireless industry – an allocation that T-Mobile itself has long advocated for.  The spectrum is internationally harmonized and is already being standardized so it can be efficiently deployed to bring substantial additional data capacity to U.S. wireless consumers.  And the auction proceeds will fully fund FirstNet, so the country will finally realize the promise of an interoperable public safety broadband network.  These are all wins for the FCC, the wireless industry and the American public.

The Public Interest Spectrum Coalition also offered its own lessons, oddly casting the Dish entities as victims of the “continued dominance” of other bidders. But to believe them, you have to ignore the fact that the Dish entities won more licenses than any other bidder in the auction and have laid claim to a $3B subsidy from American taxpayers to boot.

Any serious analysis of the auction must be based on the facts of what actually happened in the auction – not fiction and not bluster about “twin bell” monopolies.  Consider this an addendum to my last blog, with more lessons from the auction.

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