Current Telecom
Developments
January 30, 2015
Bidding Ends on Paired AWS-3 Bands in Record
Auction
After 44 days and 337 rounds, bidding ended late Wednesday for paired 17551780 MHz and 2155-2180 MHz licenses in the FCC’s record-breaking auction of
Advanced Wireless Service (AWS)-3 spectrum, which continues to garner bids
at a snail’s pace for unpaired licenses in the 1695-1710 MHz band. At the end of
Wednesday’s activity, total gross bids for the paired AWS-3 licenses stood at
nearly $42.5 billion.
In This Issue:
 Bidding Ends on Paired
AWS-3 Bands in Record
Auction more
 Senate Bill Would Prohibit
State Limits on Municipal
Broadband more
 Telcos Urge
Retransmission Consent
Reform, Elimination of
Video Service Categories
more
 FCC Issues Enforcement
Advisory Against Wi-Fi
Blocking more
 Federal Trade Commission
Recommends Best
Practices for Internet of
Things more
 Cablevision to Launch WiFi Phone Service more
©2015 Paul, Weiss, Rifkind, Wharton &
Garrison LLP. In some jurisdictions, this
brochure may be considered attorney
advertising. Past representations are no
guarantee of future outcomes.
The current bid total of $44.9 billion for both paired and unpaired AWS-3
channels has been calculated to be roughly $8 billion less than the combined
net proceeds of all previous FCC auctions to date ($53 billion). Three of the five
top bids for paired AWS-3 channels were posted for the New York City region,
in which one license received a winning bid of $2.8 billion and two others were
sold for $1.3 billion each. The second place bid of $2.1 billion was posted for
the Los Angeles region, while the Chicago region took the fifth highest bid of
$1.2 billion.
Bidding is expected to end at any time on the unpaired channels to bring the
AWS-3 auction to its conclusion. The FCC will identify the winning bidders and
their respective licenses in a public notice to be issued within one or two weeks
after the auction close.
Senate Bill Would Prohibit State Limits on
Municipal Broadband
Seizing upon President Obama’s endorsement of municipal broadband
networks in a recent Iowa speech, Senators Ed Markey (D-MA), Claire
McCaskill (D-MO) and Cory Booker (D-NJ) introduced legislation last
Thursday that would bar state governments from enacting laws restricting the
deployment of municipal broadband networks. Known as the Community
Broadband Act, the bill specifies that “no statute, regulation, or other legal
requirement of a state or local government may prohibit, or have the effect of
prohibiting or substantially inhibiting, any public provider from providing
telecommunications service or advanced telecommunications capability or
services to any person or any public or private entity.”
The measure was announced as the FCC continues to consider petitions, filed
last year by the cities of Chattanooga, Tennessee and Wilson, North Carolina,
Current Telecom
Developments
requesting the FCC to preempt state laws that limit or bar deployment of municipal broadband networks. A ruling on the
petitions is expected next month, and FCC Chairman Tom Wheeler has urged his colleagues to vote in favor of preemption
“in the best interests of consumers and competition.”
Defining public providers as “states, their public subdivisions, and Indian tribes, as well as their agencies, authorities and
instrumentalities,” the bill would require public providers with regulatory authority over competitors to apply ordinances,
rules and policies without discriminating in favor of public providers. Before they offer broadband service, public
providers would be required to publish advance notice of their plans and offer private-sector entities “an opportunity to
bid to provide the capability or services.” The measure encourages public-private partnerships and also includes
exemptions to public notice and other transparency-related provisions in times of state or national emergency.
Markey explained that the legislation will “support the ability of cities to decide for themselves whether or not they would
like to build their own broadband networks” as “barriers at the state level are preventing communities from developing
local solutions when there is little or no choice in their Internet service provider.” Observers predict, however, that the bill
is likely to face an uphill battle in the Republican-controlled Congress where House Energy and Commerce Committee
Chairman Fred Upton (R-MI) asserted in reply to Obama’s speech that “state and local officials know better than beltway
bureaucrats what’s best for their communities.”
Telcos Urge Retransmission Consent Reform, Elimination of Video Service
Categories
In comments that address the most recent House Energy and Commerce Committee white paper on efforts to update the
1934 Communications Act, carriers that offer facilities-based video service to customers are urging Congress to reform the
current system of broadcast retransmission consent and to end regulatory distinctions between online video distributors
(OVDs) and traditional multichannel video program distributors (MVPDs).
Comments were submitted last Friday in response to last month’s white paper, which solicits input on the regulation of the
U.S. video content and distribution markets. Over the past year, the Energy and Commerce Committee has requested and
received comment on five other papers that deal with topics such as universal service, spectrum allocation, network
interconnection, and competition.
Spotlighting the issue of program blackouts that sometimes occur when broadcasters and MVPDs are unable to agree on
retransmission terms, CenturyLink asked lawmakers to provide MVPDs with “the right to carry national programming
from an adjacent or alternate market or source during a broadcast retransmission negotiation breakdown.” By amending
the law in this fashion, CenturyLink claimed that “the balance of negotiating power between broadcasters and MVPDs
could be at least partially restored” while “consumers would be protected from blackouts.”
On behalf of its members, the Independent Telephone & Telecommunications Alliance (ITTA) endorsed “local choice”
legislation, circulated last year by the leaders of the Senate Commerce Committee, that would eliminate the broadcast
retransmission consent regime by allowing broadcasters to set a per-subscriber price for their channels. That price would
be passed directly to customers who would select and pay for the channels they want. As it advocated for “relief from
coercive and anticompetitive practices by video programmers, such as wholesale tying,” ITTA also urged Congress to
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Current Telecom
Developments
“repeal the network non-duplication and syndicated exclusivity rules and allow MVPDs to import broadcast programming
from out-of-market stations.”
The Free State Foundation (FSF), meanwhile, recommended elimination of regulatory distinctions between MVPDs and
OVDs. Arguing, “replacement of the legacy video services regime should be part and parcel of a new Digital Age
Communications Act,” FSF called for “a single, unified framework for digital services” that “furthers the goals of policy
simplicity and harmony” and that “should rely on the same fundamental principles applicable to other digital services.”
FCC Issues Enforcement Advisory Against Wi-Fi Blocking
An advisory published Tuesday by the FCC’s Enforcement Bureau warns hotels and other entities that it is illegal to block
access to Wi-Fi hot spots and that the FCC will protect consumers “by aggressively investigating and acting against such
unlawful intentional interference.”
The advisory follows a settlement last October between the FCC and Marriott International, through which Marriott
agreed to pay a $600,000 fine to settle an FCC probe into allegations that employees of the Marriott Gaylord Opryland
Resort blocked the personal Wi-Fi connections of guests to force guests to pay for access to the hotel’s Wi-Fi network.
Prior to the settlement, Marriott joined the American Hospitality and Lodging Association and Ryman Hospitality in filing
a petition for declaratory ruling or rulemaking, which asks the FCC to declare that operators of hotel-based and other
commercial Wi-Fi networks do not violate Section 333 of the 1934 Communications Act when blocking usage of Part 15
personal Wi-Fi devices that could pose security and other risks to on-premise Wi-Fi networks. Although Marriott
announced earlier this month that it was no longer blocking personal Wi-Fi connections at Marriott-owned or managed
properties, the company affirmed that it would continue to pursue the requested declaratory ruling, which remains
pending before the FCC.
Despite the recent settlement with Marriott, the FCC noted in Tuesday’s advisory that it has “seen a disturbing trend in
which hotels and other commercial establishments block wireless consumers from using their own personal Wi-Fi hot
spots on the commercial establishment’s premises.” Proclaiming, “no hotel, convention center, or other commercial
establishment or the network operator providing such services may intentionally block or disrupt personal Wi-Fi hot spots
on such premises,” the advisory emphasizes that “such action is illegal, and violations could lead to the assessment of
substantial monetary penalties.” The advisory also encourages affected consumers to file complaints with the FCC.
In a press statement, FCC Chairman Tom Wheeler decreed that “consumers must get what they pay for” and that
“protecting consumers from this kind of interference is a priority area” for the FCC. Maintaining that “Marriott remains
committed to protecting the security of Wi-Fi access,” a company spokesman said, “we will continue to work with the
industry and others to find appropriate market solutions that do not involve the blocking of Wi-Fi devices.”
Federal Trade Commission Recommends Best Practices for Internet of
Things
By a 4-1vote, the Federal Trade Commission (FTC) adopted a report on Tuesday that recommends six best practices that
companies should undertake in protecting the privacy and security of personal consumer data used in support of the
Internet of Things (IoT). The 71-page report is said to be based on material derived from a November 2013 FTC workshop
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Current Telecom
Developments
on IoT, as well as on public comments submitted to the FTC on the subject. Statistics cited in the report show that there
are 25 billion IoT devices in use today that include automobiles, thermostats, home appliances, health monitors, and
watches. Experts anticipate the number of IoT devices will double by 2020.
The report focuses exclusively on IoT devices “that are sold to or used by consumers” and does not address “devices sold in
a business-to-business context” or machine-to-machine communications “that enable businesses to track inventory,
functionality or efficiency.” Industry best-practices recommended by the FTC include: (1) incorporation of security
features in IoT devices “at the outset, rather than as an afterthought in the design process,” (2) training employees on the
importance of security, (3) ensuring that outside providers “are capable of maintaining reasonable security,” (4)
consideration of “defense-in-depth” strategies whereby “multiple layers of security may be used to defend against”
identified security risks, (5) measures to prevent unauthorized users from accessing consumer devices and related
network data, and (6) monitoring IoT devices “throughout their expected life” and providing security patches when
needed “to cover known risks.”
Declaring, “the only way for the [IoT] to reach its full potential for innovation is with the trust of American consumers,”
FTC Chairwoman Edith Ramirez predicted that, “by adopting the best practices we’ve laid out, businesses will be better
able to provide consumers the protections they want.” Charging, however, that the report lacks “analytical support,” FTC
Commissioner Joshua Wright maintained in a dissenting statement that “an economically sound and evidence-based
approach to consumer protection . . . would require the Commission to possess and present evidence that its policy
recommendations are more likely to foster competition and innovation than to stifle it.” In remarks on the report’s
release, House Energy and Commerce Committee Chairman Fred Upton (R-MI) stressed, “we must exercise great caution
to avoid the slippery slope of the Internet of Things evolving into the Internet of Regulation.”
Cablevision to Launch Wi-Fi Phone Service
On Monday, Cablevision announced plans to market a mobile phone service that would be supported by the 1.1 million
Wi-Fi spots deployed by the company in the greater New York region since 2007. The first service of its kind to be
marketed by a U.S. cable operator, Cablevision’s new “Freewheel” service would capitalize on the growth of Wi-Fi access
points and on the desire of consumers to trim smart phone data charges through the use of Wi-Fi hot spots. Starting next
month, current Cablevision subscribers will be able to sign up for unlimited Wi-Fi-based voice, data and text service at a
monthly rate of $9.99. The same service will be offered to non-Cablevision customers at a monthly rate of $29.99.
Freewheel will be sold initially to customers in the New York market and will be expanded nationwide at a later date.
Although the service is designed to work with only one smart phone model—the Motorola Moto G—Cablevision is said to
be developing a smart phone app that would extend the service eventually to other wireless devices. Cablevision Chief
Operating Officer Kristin Dolan told reporters that Freewheel will be targeted to customers who access Wi-Fi primarily
through their offices or homes and to subscribers in search of low-cost wireless service options. Observing, “the big
picture for us is the fundamental transformation in how people use their devices,” Dolan said, “we’re riding the wave, and
Wi-Fi is the clear winner.”
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For information about any of these matters, please contact Patrick S. Campbell (e-mail: [email protected]) in
the Paul, Weiss Washington office. To request e-mail delivery of this newsletter, please send your name and e-mail
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