Current Telecom
Developments
March 3, 2017
FCC Stays Implementation of Broadband
Privacy Rules
In This Issue:
 FCC Stays Implementation
Of Broadband Privacy
Rules more
 OneWeb, Intelsat
Announce Merger more
 Pai Stresses Importance Of
"Regulatory Humility" In
Speech To Mobile World
Congress more
 Broadcaster Tells Senate
Panel Time, Money
Reserved To Complete
Post-Incentive Auction
Transition May Not Be
Sufficient more
 FCC, Telecom Regulatory
Authority Of India Forge
Cooperative Agreement
more
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Over the objections of FCC Commissioner Mignon Clyburn and some Senate
Democrats, the FCC voted 2-1 Wednesday to issue a temporary stay of certain
data security regulations that were adopted by the FCC in its October 2016
order on broadband privacy. FCC Chairman Ajit Pai and his Republican
colleague, FCC Commissioner Michael O’Rielly, had dissented against the FCC’s
3-2 decision last fall to approve rules that would require broadband Internet
service providers (ISPs) to obtain affirmative “opt-in” permission from their
customers before sharing sensitive personal data with advertisers and other
third parties.
Although the FCC built the rules upon the “sensitivity” model that is used by the
Federal Trade Commission (FTC) in its oversight of websites and other edge
providers, Pai, O’Rielly and opponents of the rules contend that the FCC
exceeded the FTC’s framework by including web browsing data, app usage
history, and the content of e-mail communications in the category of sensitive
information that requires opt-in consent. As stated in an FCC news release, the
rules to be stayed—which otherwise would have gone into effect yesterday—
would have “subjected [ISPs] to a different standard than that applied to other
companies in the Internet ecosystem by the FTC.” Other rules promulgated
under the October 2016 order that have already been implemented or are
scheduled to go into effect later this year are not affected by the temporary stay,
which will remain in place “until the Commission is able to act on pending
petitions for reconsideration.” The FCC further noted that ISPs will continue to
be subject to the requirements of Section 222 of the Communications Act as
well as “other applicable federal and state privacy, data security and breach
notification laws.”
In a joint statement with acting FTC Chairwoman Maureen Ohlhausen, Pai
cited the FTC’s “long track record of protecting consumers’ privacy and security
throughout the Internet ecosystem” in arguing that ultimate jurisdiction over
broadband ISP privacy and data security “should be returned to the FTC.”
Emphasizing that the FCC and the FTC “are committed to protecting the online
privacy of American consumers,” Pai and Ohlhausen pledged to work together
during the temporary stay in “harmonizing the FCC’s privacy rules for
broadband providers with the FTC’s standards for other companies win the
Current Telecom
Developments
digital economy,” adding: “it does not serve consumers’ interests to create two distinct frameworks—one for [ISPs] and
one for all other online companies.”
However, while wireline and wireless carriers and other broadband service providers applauded the FCC’s move, Clyburn
lamented in a dissenting statement that the stay leaves “broadband customers without assurances that their providers will
keep their data secure.” Writing to Pai Tuesday in an unsuccessful effort to persuade the FCC against proceeding with the
stay, Senators Ed Markey (D-MA), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA) and Al Franken (D-MN)
advised that “privacy protections and data security simply cannot be put on hold” as they pointed to “the mounting
number of data breaches impacting consumers throughout the country.”
OneWeb, Intelsat Announce Merger
On Monday, OneWeb—the U.S. satellite venture backed by SoftBank Corp. of Japan—announced plans to merge with
Luxembourg-based Intelsat in a share-for-share transaction through which Softbank will also invest $1.7 billion in newlyissued common and preferred stock shares of the combined entity.
SoftBank, the parent company of national U.S. wireless carrier Sprint, recently paid $1 billion for a 40% stake in OneWeb,
which aims to deploy a constellation of 640 low-earth orbit (LEO) satellites that would expand broadband connectivity
worldwide by the early 2020s. As stated in a press release announcing Monday’s transaction, the proposed combination
of Intelsat and OneWeb, combined with the investment by Softbank, is “intended to create a financially stronger company
with the flexibility to aggressively pursue new growth opportunities resulting from the explosion in demand for broadband
connectivity for people and devices everywhere.” Noting that the deal will “significantly strengthen Intelsat’s capital
structure” through the reduction of debt, and citing the complementary advantages of OneWeb’s LEO satellite network
and Intelsat’s geosynchronous (GEO) satellite system, Intelsat CEO Stephen Spangler, who will be the CEO of the
combined company, predicted that the union of Intelsat and OneWeb “will create an industry leader unique in its ability to
provide affordable broadband anywhere in the world.”
Contingent upon receipt of shareholder and regulatory approvals, the parties expect to close the transaction late in the
third quarter of 2017. As Greg Wyler, the executive chairman of OneWeb, declared, “we are very excited at the prospect of
working with Intelsat,” Softbank CEO Masayoshi Son heralded the merger as “consistent with SoftBank’s strategy of
investing in disruptive, foundational technologies that are building the infrastructure for tomorrow.”
Pai Stresses Importance of “Regulatory Humility” in Speech to
Mobile World Congress
Addressing an international audience of wireless industry executives and regulators at the Mobile World Congress in
Barcelona, FCC Chairman Ajit Pai declared Tuesday that “regulatory humility” is the key to opening the door to network
investment that, in turn, will unlock the potential of future fifth-generation (5G) wireless services. At his first major
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Current Telecom
Developments
conference as FCC Chairman, Pai told listeners that “the torch at the FCC has been passed to a new generation” which will
avoid imposing “heavy-handed decrees” in its quest to preserve “a free and open Internet.” Toward that end, Pai signaled
his intention to roll back the Title II regulatory model that was adopted by the FCC two years ago in its Open Internet
order, confirming that the FCC is “on track” to return to its previous approach to broadband network governance.
Lamenting the FCC’s decision at that time to “apply utility-style regulation to today’s broadband networks,” Pai said the
result is that “infrastructure spending is lower today than in 2015.” Pai also spotlighted the effects of the FCC’s decision
during the past month to terminate its ongoing investigation into wireless carrier zero-rating practices that exempt certain
web traffic from counting against subscriber data allowances. Observing, “in the days following our decision, all four
national wireless providers in the United States announced new unlimited data plans or expanded their existing ones,” Pai
proclaimed that “consumers are now benefiting from . . . offers made possible by a competitive marketplace” in which
“government regulation did not produce that result.”
Pai therefore stressed that “America’s approach to broadband policy will be practical, not ideological,” as he explained that
the FCC’s recent action on zero-rating “simply respected consumers’ preferences.” Declaring, “our approach will not be
zero regulation, but light-touch . . . rules that are backed by long-standing principles in competition law,” Pai argued:
“that means taking targeted action to address real problems instead of imposing broad preemptive rules to address
hypothetical harms.” Nevertheless, in comments regarding Pai’s speech, Free Press policy director Matt Wood countered
that the claim that the FCC’s net neutrality rules are utility style regulations that are hurting broadband deployment has
been debunked,” as he cited “not just the actual language of the FCC order which explicitly forbears from the bulk of Title
II, but the actual impact that Title II reclassification has had on the market.”
Broadcaster Tells Senate Panel Time, Money Reserved to
Complete Post-Incentive Auction Transition May Not be
Sufficient
An executive of a media firm testifying on behalf of the National Association of Broadcasters (NAB) informed panelists at a
Senate hearing yesterday that both the FCC’s 39-month timetable for completing the post-incentive auction channel
repacking process and the $1.75 billion in funds earmarked by Congress to cover broadcast station relocation costs may
not be enough to guarantee the successful transition of affected broadcasters to new channels. Meanwhile, as he
maintained that the wireless industry remains committed to working with broadcasters to ensure a smooth transition,
Scott Bergman, the vice president of regulatory affairs for wireless association CTIA, countered: “we have confidence the
FCC will be able to stick to its 39-month schedule.”
Pat LaPlatney, the president and CEO of Raycom Media, was featured at yesterday’s Senate Communications
Subcommittee hearing alongside Bergman and other witnesses from the satellite, Internet and technology sectors. In
addition to covering issues that impact the post-incentive auction transition, yesterday’s hearing on spectrum policy also
focused on preparations for upcoming fifth-generation (5G) wireless services and on ways in which the federal
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Current Telecom
Developments
government can free up additional spectrum for both licensed and unlicensed wireless operations in the 5G environment
of the future.
As ranking subcommittee member Brian Schatz (D-HI) voiced concern that television viewers could lose access to local
news and other programming if the post-incentive auction repacking process is not accomplished efficiently, LaPlatney
acknowledged these concerns in stating that his company alone would have to move 22 stations with frequency transitions
in some markets that require placing “an antenna weighing potentially thousands of pounds more on an existing tower.”
Asked by new subcommittee member Catherine Cortez Masto (D-NV) whether radio stations could also be affected by the
TV station repacking process, LaPlatney replied in the affirmative, noting that some radio stations co-located on TV
transmission towers might have to be powered down for hours or days to accommodate mast removals or new mast
placements.
Estimating that as many as 1,100 TV stations nationwide will be affected by the repacking process, LaPlatney called for
continued Congressional oversight as he told the panel he had doubts as to whether the time and money allocated for that
process will be sufficient. Nevertheless, as LaPlatney assured lawmakers that broadcasters will do everything in their
power to finish the job in a timely manner, Bergman reiterated the importance of broadcast industry adherence to the 39month transition schedule. Testifying that CTIA members have invested more than $300 billion in network deployment
over the past decade and that wireless carriers stand ready “to invest another $275 billion to deliver 5G networks that will
be faster, more responsive and connect more devices,” Bergman told lawmakers that even the 39-month transition period
prescribed by the FCC represents “an eternity” to wait.
FCC, Telecom Regulatory Authority of India Forge Cooperative
Agreement
In a second development this week at the Mobile World Congress, FCC Chairman Ajit Pai signed a non-binding letter of
intent Wednesday with R.S. Sharma, the Chairman of the Telecom Regulatory Authority of India (TRAI). The agreement
aims to strengthen the existing relationship between the FCC and TRAI by establishing “a framework for the mutually
beneficial exchange of ideas.” India’s telecommunications market currently ranks as the second largest on earth. Driven
by strong adoption of data consumption, total wireless market revenues in India are expected by the India Brand Equity
Foundation to reach US$37 billion this year. A report issued by the Market Research Store also projects that India’s
telecom sector will grow by a 10.3% year-on-year rate to reach US$103.9 billion by 2020.
The cooperative arrangement encompasses activities that include the sharing of best practices, bilateral workshops and
digital videoconferences. To guide these efforts, the FCC and the TRAI have agreed on topics of shared interest that
include, among others, the acceleration of broadband deployment and the “alignment of spectrum policy to meet
increasing mobile broadband demand.”
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Current Telecom
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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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