May 27, 2011 FCC Again Concludes That Broadband Deployment Is Lagging For the second year in a row, the FCC reported to Congress that broadband services are not being deployed “in a reasonable and timely fashion,” based on findings that upwards of 26 million Americans “live in areas unserved by broadband capable of originat[ing] and receiv[ing] high quality voice, data, graphics and video telecommunications.” Issued last Friday, the report comprises the FCC’s seventh annual report to Congress under Section 706 of the 1996 Telecommunications Act. Should the FCC conclude that advanced telecommunications services are not being deployed in a reasonable and timely fashion, Section 706 directs the agency to “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by FCC Again Concludes That promoting competition in the telecommunications market.” Like last year, the FCC Broadband Deployment Is based its determination of broadband availability on minimum benchmark speeds of Lagging read more 4 Mbps downstream and 1 Mbps upstream. Under that standard, the FCC found that about one-third of the U.S. population does not subscribe to broadband services despite Leap Wireless Cites carrier efforts to “bring better and faster broadband to most Americans.” That problem, Spectrum Concentration As according to the FCC, is magnified among low-income Americans, senior citizens, and Top Concern With AT&T- minorities, who tend to be affected by barriers to adoption that include high cost and low T-Mobile Merger read more digital literacy. To remove such barriers, the FCC said it would continue its work on ISSA Requests Further implementing National Broadband Plan proposals that address (1) the cost of deploying Details On Baker networks in rural and underserved areas, (2) low broadband service quality, (3) lack of Resignation read more affordable broadband services, and (4) lack of access to computers and other broadband- capable equipment by low-income consumers. Although the FCC pledged to “improve Experts Urge Congress To our data collection to facilitate assessment of broadband deployment,” FCC Leave Details Of Incentive Commissioner Robert McDowell charged that the data used by the FCC to compile the Auctions To FCC read more report does not support the conclusion that broadband deployment is lagging. In a dissenting statement, McDowell noted that the “report’s only metric that permits year-to- Microsoft To Launch year comparison finds that the percentage of U.S. households served by terrestrial Updated Platform For Smart broadband grew from 92% in December 2008 to 96% in June 2010.” Asserting, “the Phones read more Commission’s own research shows that 95% of U.S. homes have access to high-speed French President Calls For broadband service and more than 90% of consumers are satisfied with the speed of their Tighter Web Governance service,” National Cable & Telecommunications Association president and former FCC read more Chairman Michael Powell termed the FCC’s conclusions as “regrettable and wrong.” Leap Wireless Cites Spectrum Concentration As Top Concern With AT&T-T-Mobile Merger In remarks to the press on Tuesday, executives of Leap Wireless outlined their concerns with AT&T’s proposed $39 billion acquisition of T-Mobile USA, not the least of which is “spectrum concentration and impaired access to spectrum by competitive carriers.” Leap Wireless, a regional carrier with 5.8 million customers in 35 states, operates pre- paid mobile services under the “Cricket” brand name that require no subscriber contract. The company’s remarks follow on similar pronouncements by J. Braxton Carter, the chief financial officer of pre-paid wireless carrier MetroPCS, at an analyst conference last week. At that event, Carter warned about the “concentration of spectrum that [the transaction] gives AT&T,” as he described spectrum as “the lifeblood of our business.” Some analysts have suggested that Leap and MetroPCS could benefit from divestitures of overlapping AT&T and T-Mobile spectrum that the FCC is likely to require as a condition of merger approval. Leap said, however, that the harmful effects of concentrating spectrum in the hands of two carriers—AT&T and Verizon Wireless—that would control more than 80% of the nation’s wireless market would far outweigh the benefits of any required divestiture. Adding that Verizon and AT&T would also control nearly 90% of the industry’s post-merger revenues, Russ Merbeth, the vice president of government affairs for Leap, argued: “it then becomes a dicier proposition for us to access the capital we need to buy spectrum and to invest in our networks and continue to compete.” Reiterating his company’s belief that the merger will not harm competition or consumers, a spokesman for AT&T replied, “we are confident that regulatory approvals will be obtained after a thorough review of the facts and the law.” ISSA Requests Further Details On Baker Resignation While acknowledging that outgoing FCC Commissioner Meredith Baker does not appear to have “violated any of her legal or ethical obligations in accepting a position with Comcast,” House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) wrote to FCC Chairman Julius Genachowski last week to request further information on the circumstances surrounding Baker’s departure from the FCC. Two weeks ago, Baker, a Republican, announced her plan to resign her FCC post to become the senior vice president for government affairs at Comcast’s NBC Universal (NBCU) unit effective on June 3. Explaining her decision to join Comcast just four months after the FCC approved the cable firm’s acquisition of NBCU, Baker said last week that she had broken no laws and that she had not spoken to Comcast officials about the job while FCC proceedings on the Comcast-NBCU deal were in progress. In the letter, Issa asked Genachowski to respond to questions that concern (1) FCC regulations, policies and procedures that apply to Baker’s departure, (2) actions undertaken by Baker and other FCC officials to ensure compliance with such rules, (3) the date on which Baker notified the FCC’s general counsel of the Comcast job offer, and (4) pending FCC proceedings from which Baker has recused herself and the date on which she began to recuse herself from such proceedings. (Under rules enacted by the Obama Administration, Baker is barred from lobbying FCC officials for the remainder of the president’s term, but she is allowed to lobby lawmakers and members of their staffs.) Although the FCC declined comment, a spokesman for Free Press applauded Issa for “[responding] to the many Americans who are deeply troubled by the revolving door between Comcast and the FCC.” Experts Urge Congress To Leave Details Of Incentive Auctions To FCC At a technology forum on Monday, industry consultants and academic experts cautioned Congress against enacting specific auction requirements as it considers legislation that would authorize the FCC to conduct incentive auctions of broadcast TV spectrum. One FCC official stressed: “we need a lot of flexibility.” Attendees at the luncheon event, sponsored by the Technology Policy Institute, included Lawrence Ausubel and Peter Crampton, both economics professors at the University of Maryland, senior FCC economic advisor Evan Kwerel, and Karen Wrege, a senior consultant for Power Auctions and former auctions manager for the FCC. Noting that Congress allowed the FCC great flexibility to design the auction process when it first authorized the FCC to conduct spectrum auctions in 1993, Kwerel said that actual auction plans enacted by the FCC were often vastly different from initial proposals, owing largely to input that the FCC received from academic experts during “an evolutionary process.” Agreeing that the same flexibility is needed for incentive auctions, Ausubel advised that legislation mandating such auctions “needs to be intentionally vague,” as he emphasized: “there are a lot of delicate aspects of this operation, and poorly drafted legislation could simply stop this valuable program dead in its tracks.” While urging lawmakers and the FCC to refrain from “impos[ing] restrictions on which broadcasters should participate in the auction,” Crampton said that repacking should be mandated as a requirement of the auction process, as voluntary repacking “would destroy the auction.” Although Crampton stressed that broadcaster participation in the incentive auction process should be voluntary, Wrege observed that many broadcasters “don’t want to do this” at this time. Nevertheless, because “there’s a price” at which PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 2 broadcasters would be willing to participate, Wrege maintained it is important for Congress and the FCC to make the process “simple for broadcasters” to understand. As such, Wrege said any rules adopted by the FCC should clarify how broadcasters will be compensated and how the repacking process would work. Wrege also urged the FCC to conduct a mock auction with “a working prototype” of the repacking software so “everybody gets more comfortable.” Microsoft To Launch Updated Platform For Smart Phones Two weeks after bidding $8.5 billion to acquire global web calling firm Skype, Microsoft took further steps to boost its competitive position against Google and Apple, Inc. with the launch of “Mango,” an updated version of the Windows Phone 7 wireless operating system. Despite receiving critical acclaim from technology experts, Windows Phone 7 has been