ARTICLE
19 December 2007

Communications Law Bulletin, November 2007 - Part 1

MF
Morrison & Foerster LLP

Contributor

Known for providing cutting-edge legal advice on matters that are redefining industries, Morrison & Foerster has 17 offices located in the United States, Asia, and Europe. Our clients include Fortune 100 companies, leading tech and life sciences companies, and some of the largest financial institutions. We also represent investment funds and startups.
Happy Holidays to Our Loyal Readers - This edition of our Bulletin is the last for 2007. A combined December – January Bulletin will be published in the new year.
United States Information Technology and Telecoms
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Happy Holidays To Our Loyal Readers

This edition of our Bulletin is the last for 2007.  A combined December – January Bulletin will be published in the new year. 

New Calls For Net Neutrality

Comcast’s reported blocking or delaying of BitTorrent file sharing software (see related article in the October issue of this Bulletin) has continued to reverberate, leading to additional calls for net neutrality.  A new organization – the Network Neutrality Squad – has been created as a clearinghouse for net neutrality complaints.  The group reportedly has already received complaints by Internet users about traffic control measures allegedly used by several cable companies and Internet Service Providers. 

On the Hill, perhaps fueled by the Comcast incident and Democratic presidential candidate Barack Obama’s pledge to enact net neutrality laws if elected, Rep. Edward Markey (D-Mass.) is reportedly planning to introduce a revived version of his previous net neutrality bill in the next few weeks.

In addition, web video distributor Vuze.com has filed a petition for rulemaking at the Federal Communications Commission ("FCC" or "Commission").  The Vuze.com petition is broader than the specific complaint filed against Comcast last month, as discussed in a related article in the October issue of this Bulletin.  Specifically, Vuze.com asks the FCC to define the "reasonable network management" exception to its 2005 Internet policy statement, so that the industry and the public will better understand the scope of permitted traffic management and forbidden network discrimination.  The FCC now has several possible vehicles for addressing net neutrality, but it remains to be seen if the FCC will choose to act on any of the complaints or petitions in the near term.

In a move toward wireless open access, Verizon Wireless announced in late November that it will permit any CDMA mobile device tested and approved by Verizon Wireless (but not GSM devices) and any software application on its network beginning in the second half of 2008.  These so-called "bring your own" customers will be responsible for technical support for these devices, and the pricing for these customers and services has not yet been announced.  This announcement may signal Verizon Wireless’ seriousness about the upcoming 700 MHz C-block auction, which has an open access condition.  Google also recently announced a plan (called "Android") to develop an open technological platform for mobile phones, in which T-Mobile and Sprint Nextel are participating. 

EC Proposes New European Telecom Regulatory Authority

The European Commission ("EC") in November proposed a substantial overhaul of the EU’s telecommunications regulatory regime by creating a single European telecom regulatory authority to apply rules consistently throughout Europe.  Its new powers would include the ability to hold national regulatory authorities ("NRAs") to a timetable and the ability to veto remedies ordered by NRAs.  The specific substantive proposals are intended to free up additional wireless spectrum, deregulate certain competitive markets, strengthen consumer rights, and include new Voice over Internet Protocol ("VoIP") emergency service requirements and the ability to set net neutrality standards.  NRAs would continue to have a role, which is intended to focus on remaining bottlenecks, and would have the new remedy of imposing functional separation (wholesale versus retail operations) for dominant national telecom operators.  The proposals, which are the subject of heated debate, still must be approved by the European Parliament and the EU Council of Ministers, a process that is expected to take a few years, after which it must be adopted by all 27 member countries into national law.

AT&T-Dobson Consent Marks Change In FCC Approach To Merger Review

The FCC’s recent decision consenting to the merger of AT&T Inc. ("AT&T") and Dobson Communications Corporation ("Dobson") represents a shift in the how the FCC reviews mergers of wireless carriers, which will affect how carriers view and enter into transactions in the future.  Most significantly, the FCC adopted a higher spectrum threshold to screen transactions for potential competitive harm.  The FCC, as well as the Department of Justice ("DOJ"), conditioned the approval of the merger on the divestiture of certain wireless operations.

Although the FCC no longer applies a cap to wireless carriers’ spectrum holdings, it does apply a screening test to determine whether the combined spectrum holdings of merging companies could raise competitive concerns.  The FCC increased its previous spectrum screen of 70 MHz to 95 MHz or more.  The 70 MHz represented approximately one-third of the 200 MHz of cellular, broadband personal communications service ("PCS") and specialized mobile radio ("SMR") service spectrum the FCC had deemed available for mobile telephony on a nationwide basis. 

The FCC concluded in the AT&T-Dobson proceeding, however, that it also would include 80 MHz of 700 MHz spectrum that has or will soon be auctioned.  The new 95 MHz threshold represents approximately one-third of the 280 MHz spectrum that would be suitable for mobile telephony.  Although 62 MHz of the 700 MHz spectrum is not scheduled to be auctioned until January 2008, the FCC stated that the spectrum is ideally suited for the provision of nationwide mobile telephony services and that it is "confident… that it will be licensed and available on a nationwide basis in the sufficiently near-term – less than a year and a half – that the prospect of its availability will discipline current market behavior."  

The FCC also concluded that it was premature to include advanced wireless service ("AWS") or broadband radio service ("BRS") spectrum in the initial screen because neither AWS nor BRS spectrum is available on a nationwide basis.  According to the FCC, the spectrum currently is committed to other uses that effectively preclude its use for mobile telephony, and it is unclear whether it will be available for mobile use in the sufficiently near-term.  The FCC, however, also stated that it would consider AWS and BRS spectrum in its case-by-case analyses to the extent the spectrum is available in any local market not eliminated by the 95 MHz screen. 

Commissioners Copps, Adelstein and McDowell expressed concern about changing the 70 MHz screening test, noting that it was premature to revise the test before determining how competition in the wireless marketplace would be impacted by the 700 MHz auction in particular.

In addition, AT&T and Dobson voluntarily agreed to an interim cap on the amount of high cost universal service fund ("USF") support they receive as competitive eligible telecommunications carriers ("ETCs"), based upon the level of support as of June 2007.  The cap will not apply, however, if AT&T and Dobson: (1) file cost data showing their own per-line costs of providing service in a supported service area upon which their high-cost USF support would be based, and (2) demonstrate that their networks are in compliance with the FCC’s new Public Safety Answering Point ("PSAP") -level E911 location accuracy requirements.  This condition, which is substantially identical to a condition adopted in the recent private equity fund acquisition of Alltel Corporation, indicates that the FCC may continue to use the merger review process to help control the growth of the USF.

The FCC concluded that the AT&T-Dobson merger overall will serve the public interest, but that competitive harm likely will result in certain markets in Kentucky, Oklahoma, and Texas.  To remedy these competitive concerns, the FCC required AT&T and Dobson to divest certain cellular licenses and related operational and network assets in these markets.  AT&T and Dobson also entered into a settlement agreement with the DOJ to resolve other competitive concerns.  In addition to the FCC-ordered divestures, under the settlement agreement AT&T must divest its minority interest in two partnerships in Texas and Missouri, as well as Dobson’s interests in the "Cellular One" brand.

FCC Proposes To Extend Do-Not-Call Registrations

At its November 27 open meeting, the FCC announced its intention to make registrations of residential telephone numbers on the national do-not-call ("DNC") registry perpetual.  Under current regulations, registrations expire after five years, and the earliest listings would start to expire in June 2008.

Although the full text of the Commission’s notice of proposed rulemaking ("NPRM") is not yet available, all of the commissioners issued statements in support of the proposal.  As some commissioners also noted, the DNC list is regulated jointly by the FCC and the Federal Trade Commission, and the proposed rulemaking will be part of a collaborative effort between the two agencies.

In 2003, when the FCC placed the five-year limit on registrations, it pointed out that changes in telephone number assignments would degrade the value of the list over time, requiring re-registrations every several years.  The separate statements of the commissioners do not address this concern, and the NPRM presumably will offer an explanation for the apparent change in the FCC’s thinking.

FCC Seeks More Information On XM-Sirius Merger

The FCC made extensive requests for more information from XM Satellite Radio Holdings Inc. ("XM") and Sirius Satellite Radio Inc. ("Sirius").  The two subscription satellite radio companies have agreed to merge, and the deal is under review by both the FCC and the Department of Justice.  The merger is opposed by broadcasters, who have argued that the merger of the two largest satellite radio companies will create an entity with excessive market power.

According to an article in Business Week, analysts are divided as to the significance of the request.

FCC Extends Pleading Cycle On Verizon/RCC Merger

The comment cycle before the FCC on the proposed merger of Verizon Wireless and Rural Cellular Corporation ("RCC"), was scheduled to close November 30, 2007, but now has been extended for 90 days by the Wireless Bureau.

The extension was prompted by a motion filed with the FCC by the Vermont Public Interest Research Group ("VPIRG"), which claimed that the merger would eliminate wireless competition in some areas and severely reduce it in others.  VPIRG also contends that the merger would force RCC subscribers to make a rapid transition from GSM to CDMA technology and "would affect millions of customers of other carriers who use GSM technology."

Under the revised schedule, petitions to deny the merger are due February 11, 2008, and replies are due February 28, 2008.

Missouri Takes Another Swing At VoIP Providers While Text Of FCC Decision Imposing LNP Requirements On VoIP Providers Is Released

VoIP service providers have lost another battle in the on going conflict with state regulators regarding authority to regulate VoIP services.  The Missouri Public Service Commission ("MPSC") ordered Comcast IP Phone, LLC ("Comcast") to apply by December 31 for state operating authority.  Despite Comcast’s arguments to the contrary, the MPSC concluded that it has authority to regulate Comcast’s fixed Digital Voice VoIP service.  According to the MPSC, Digital Voice service fits within the state definition of a telecommunications service.  Moreover, the service is available only over the fixed coaxial cable that is connected to a customer’s home or business, permitting Comcast to determine whether a call is intrastate, interstate, or international in nature.  The fact that the FCC preempted state regulation of VoIP services similar to those of Vonage Holdings Corporation is irrelevant because the Vonage service was "nomadic" and its jurisdictional nature could not be determined.

The MPCS rejected Comcast’s request to reconsider its decision, concluding that Comcast presented no new information to justify a rehearing.  Comcast intends to appeal the MPSC decision in court. 

In addition, the FCC released the text of its order ("Order") and NPRM that extended local number portability ("LNP") requirements to interconnected VoIP providers.  Going forward, consumers will be able to keep their current local phone number when moving to or from an interconnected VoIP provider.  The Order concludes that the FCC has authority under Section 251 of the Communications Act to impose these requirements on interconnected VoIP providers, as well as on the local exchange carriers from whom they receive telephone numbers.  The FCC also concluded that interconnected VoIP providers must contribute to the costs associated with number administration.  All of the FCC commissioners supported the Order, noting that it further leveled the playing field by removing a known disincentive that kept consumers from switching carriers.

The Order also addresses various non-VoIP-related LNP issues.  Specifically, the FCC concluded that service providers cannot impede number porting by demanding excess information from the customer’s new provider.  According to the FCC, LNP validations for simple number ports should be limited to four fields: (1) a 10-digit telephone number; (2) the customer account number; (3) a five-digit zip code; and (4) a pass code, if applicable.  In response to a D.C. Circuit stay of a prior FCC order and mandate that the FCC analyze the impact of LNP on small entities, the Order also re-imposes LNP requirements on small wireline carriers.

The NPRM seeks comment on whether other LNP requirements and numbering-related rules, including compliance with "N11 code" assignments, should be extended to interconnected VoIP providers.  The NPRM also questions whether the FCC should specify the length of all porting intervals (wireline-to-wireline, wireless-to-wireless, and intermodal ports) and tentatively proposes to reduce the porting interval for wireline-to-wireline and intermodal simple port requests to a 48-hour porting interval.

In other matters, the governor of New Jersey recently signed into law a bill (HB-4339) that prohibits state agencies from regulating the rates and terms of VoIP and other IP-enabled services.  The law, however, preserves the state’s authority to regulate VoIP for purposes of 911 service, telecommunications relay service, and universal service compliance.

Joint Board Releases USF Reform Recommendations While USF Items Circulate At The FCC

The Federal-State Joint Board on Universal Service ("Joint Board") released its long-awaited recommendations regarding reform of the high-cost support mechanism of the USF.  The recommendations call for major modifications to the allocation of high-cost support and, if adopted by the FCC, would have a significant effect on the communications industry.

The Joint Board recommends that the existing high-cost support mechanism be replaced by three separate funds – the Broadband Fund, the Mobility Fund and the Provider of Last Resort ("POLR") Fund.  The Broadband Fund would primarily facilitate construction of facilities for new broadband services to unserved areas, and secondarily support enhancing broadband services in areas with substandard service.  Monies from the Broadband Fund would be allocated to the states, which then would award grants to service providers.

The Mobility Fund would first support expanding wireless voice services to unserved areas.  A secondary purpose of the fund would be to provide assistance to wireless carriers where mobile service is essential but where usage is so slight that a plausible economic case cannot be made to support construction in the area.  Monies from the Mobility Fund would also be first allocated to the states for distribution to service providers.

The Provider of Last Resort ("POLR") Fund would support wireline carriers that act as providers of last resort.  The Joint Board recommends that the five major high-cost support mechanisms (high-cost loop, local switching, interstate common line, interstate access, and high-cost model) be combined through the POLR Fund, but could not reach consensus on specific changes that should be made to the legacy USF mechanisms that support incumbent wireline carriers.

Under the Joint Board’s recommendations, high-cost support would transition from the old support mechanism to the three new funds over a set period of time.  The existing high-cost support mechanisms would be separately capped at their 2007 levels.  Once the transition is complete, the three restructured funds together would be capped at $4.5 billion, $1 billion of which would be allocated to the Mobility Fund and $300 million of which would be earmarked for the Broadband Fund.  The Joint Board further suggested that the FCC adopt policies encouraging states to provide matching funds for Broadband and Mobility Fund support.

The Joint Board also recommended eliminating the "identical support" rule, which allows competitive ETCs, including wireless ETCs, to receive support based upon the per-line support that incumbent carriers receive rather than the competitive ETCs’ own costs.  Post-transition, one wireline, one wireless, and one broadband provider would ultimately receive high-cost support in any given area.

In addition, the Joint Board noted that reverse auctions may offer advantages over the existing method for distributing high-cost support and that the FCC should explore which auction mechanism would be most appropriate.  The Joint Board further suggests that the FCC seek comment on various issues relating to its reform efforts, including: (1) how high-cost monies should be allocated among states, (2) how unserved areas would be identified; (3) how broadband should be defined for purposes of support; (4) how the new support mechanism would affect the Lifeline and Link-Up USF programs; and (5) other implementation and transition issues.

FCC Chairman Martin also is reportedly circulating several items that raise issues similar to those in the Joint Board’s recommendations.  Chairman Martin is circulating an order that would cap high-cost USF payments at June 2007 levels, which is similar to a condition recently imposed in two wireless mergers (the recent acquisition of Alltel Corporation by two private equity groups and the merger of AT&T Inc. and Dobson Communications Corporation).  In addition, Chairman Martin is circulating rulemakings regarding the use-reverse auctions to distribute high-cost support and to eliminate the identical support rule.

FCC Wireless Bureau Permits Filing of Applications For Nationwide, Non-Exclusive Licenses In The 3650-3700 MHz Band

The FCC’s Wireless Bureau issued a public notice announcing that, as of November 15, companies may file applications for nationwide, non-exclusive licenses in the 3650-3700 MHz band.  The Bureau also established a procedure allowing licensees to register their fixed and base stations.  In 2005, the FCC adopted licensing and service rules permitting wireless broadband services in the 3650-3700 MHz band, but companies could not apply for licenses until the Bureau established licensing and registration procedures.  In June 2007, the FCC generally reaffirmed on reconsideration its original decision to permit nationwide, non-exclusive licenses in the band.  The order on reconsideration cleared the path for the Bureau to establish procedures allowing companies to apply for licenses and to register their fixed and base stations.

The House Of Representatives Overwhelmingly Passes E-911 And Broadband Mapping Bills

In mid-November, the House of Representatives, on a 406-1 vote, passed a bill (HR-3403) requiring VoIP providers to offer E-911 service.  The bill was previously amended to clarify that existing FCC rules governing VoIP and 911 would remain effective and that VoIP providers would have the same interconnection rights as wireless carriers.

Additionally, the House unanimously approved a bill (HR-3919) authorizing the creation of a map of broadband services nationwide.  The bill is intended to promote nationwide broadband deployment by requiring the collection of data that would allow regulators and others to identify unserved or underserved areas.  The Senate version of the bill (S-1492) has bipartisan support and is expected to be passed by the Senate shortly.  Differences between the two bills are expected to be worked out in conference, and analysts predict that a final bill could be sent to the President before the session ends.

Wireless Developments

Text of FCC Decision Adopting PSAP-Level E911 Location Accuracy Testing Requirements Is Released

More than two months after the FCC adopted new wireless enhanced 911 ("E911") location accuracy testing rules at its September open meeting, the FCC released the text of its decision.  As reported in the September edition of the Bulletin, the new rules require wireless carriers to demonstrate location accuracy compliance on an Economic Area basis within one year.  Within three years, wireless carriers will have to demonstrate location accuracy compliance on a Metropolitan Statistical Area and Rural Service Area basis and demonstrate PSAP -level compliance in 75% of the PSAPs they serve.  Wireless carriers must have full PSAP-level compliance within five years. 

The text of the decision failed to allay industry concerns that it is technologically impossible to comply with the location accuracy requirements, or at least the compliance deadlines.  It is widely anticipated that the wireless industry will challenge the decision.

FCC Waives Designated Entity Restrictions For 700 MHz D-Block

On its own motion, the FCC decided to waive certain small business designated entity ("DE") rules for the 700 MHz D-Block license that is scheduled to be auctioned in January 2008.  The D-Block license will make up the commercial portion of a shared private-public nationwide broadband network on 700 MHz spectrum.  Specifically, the FCC waived its "impermissible material relationship" requirement, which prevents an entity from qualifying as a DE if it leases or resells more than 50% of its spectrum capacity.

According to the FCC, "the unique regulations governing the D Block license, which require the establishment of the 700 MHz Band Public-Private Partnership subject to a Commission-approved Network Sharing Agreement – together with the application of the Commission’s other designated entity eligibility requirements – eliminate for the D Block license the risks that led the Commission to adopt the impermissible material relationship rule."  The waiver is considered a victory for Frontline Wireless LLC, which lobbied the FCC vigorously to allow DE’s to bid on the D Block license.

The 700 MHz Public Safety Broadband Licensee Named

The FCC named the Public Safety Spectrum Trust Corporation ("PSST") as the 700 MHz public safety broadband licensee.  The nomination was not unexpected, as the PSST was the only entity to apply for the position.  In its role as the public safety broadband licensee, the PSST will oversee the 10 MHz of 700 MHz public safety spectrum that will work with the 700 MHz D Block licensee to construct a nationwide public-private broadband network.  The PSST is comprised of representatives from a wide range of public safety groups, including law enforcement, fire and medical emergency responders, forestry conservation and transportion.

Fixed Wireless Industry Requests Wireless Backhaul Allocation

The Fixed Wireless Communications Coalition petitioned the FCC for a rulemaking to modify its rules to make two channel pairs available in the 23 GHz band for backhaul service.  The rule modification would implement a recommendation by the National Telecommunications and Information Administration ("NTIA").  The spectrum is considered well suited for wireless backhaul over short distances and is shared between federal and non-federal users.  However, the Coalition argued the modification would amount to a pro forma rule change because NTIA already endorsed it.

CTIA Continues To Fight New Back-Up Power Rules And  Interference From Wireless Jammers, Boosters And Repeaters

CTIA continues to battle the FCC’s new rules that require wireless carriers to have an emergency back-up power source for all assets necessary to provide communications services, including eight hours of back-up power for cell sites.  The FCC initially adopted back-up power rules in May, but faced significant opposition from service providers that were concerned that it was not possible to comply with the new rules.  CTIA subsequently appealed the new rules and sought a stay pending judicial review.  Shortly thereafter, the FCC in October modified the initial back-up power requirements to provide limited exceptions.  Believing that the modifications do not fully address the concerns previously raised by the wireless industry, however, CTIA filed a new judicial appeal with the U.S. Court of Appeals for the District of Columbia Circuit.  CTIA claims that adoption of the back-up power rules exceeded the FCC’s statutory authority, violated the Administrative Procedures Act, and is otherwise contrary to law.

In addition, CTIA requested that the FCC take immediate steps to protect wireless carriers from harmful interference from cellular jammers and wireless boosters and repeaters.  According to CTIA, the FCC’s Enforcement Bureau has been diligently responding to case-by-case interference complaints, but the FCC must make clear that such interference with wireless communications is unlawful.  Specifically, CTIA petitioned the FCC for a declaratory ruling that: (1) the sale and use of cellular jammers (except by the federal government) is unlawful; and (2) the unauthorized sale and use of wireless boosters and repeaters is unlawful.  CTIA further requests that the FCC deny any pending petitions that seek authorization to use and sell jamming equipment in contravention of the Communications Act and FCC rules.

FCC Weighing Ban On Exclusive Apartment Building Telecommunications Service Contracts

It was reported on November 5 that, in the course of approving the Report and Order banning exclusive video service contracts in multiple dwelling units ("MDUs") and other real estate developments on October 31 ("Cable-MDU Order"), the FCC commissioners agreed in principle to a similar ban on exclusive telecommunications service contracts in MDUs.  Other commissioners reportedly wanted the October 31 Report and Order to go further and ban exclusive MDU service contracts beyond the category of cable TV services.  Instead, Chairman Martin agreed to ban exclusive telecommunications service contracts in a separate order that supposedly will be released two months after the Cable-MDU Order is published in the Federal Register.  The Cable-MDU Order was released on November 13, but an erratum was released on November 27, so it is not clear whether Federal Register publication might occur by the end of the year.

Commissioner Copps signaled the agreement on telecommunications service contracts in his statement supporting the Cable-MDU Order, in which he stated that "I’m pleased that my colleagues have agreed to conclude within the next two months the open proceeding examining the permissibility of exclusive contracts for telecommunications services in residential MDUs."  In that "open proceeding," the FCC banned telecommunications carriers from entering into exclusive service contracts with commercial building owners in 2000 and requested comment on whether a similar ban should be imposed on residential buildings.  The FCC asked parties to refresh the record on the exclusive residential MDU service issue earlier this year.    

Commissioners are reportedly eager to act now on the issue because an exclusive contract to provide telecommunications service to a residential MDU could lock out a cable provider attempting to sell competing VoIP service.  A ban on exclusive telecommunications contracts thus could spur competition in providing service bundles.  One industry observer pointed out, however, that the practical effect of such a ban could be limited because telecommunications carriers and cable TV providers use different wiring, requiring that a cable provider rewire a building in order to serve tenants there.

Enforcement Bureau Enters Into Two Noteworthy Consent Decrees

On November 9, the FCC’s Enforcement Bureau ("Bureau") released an order adopting a consent decree with NOS Communications, Inc. ("NOS"), a telecommunications reseller, resolving an investigation of NOS’s compliance with the FCC’s "Do-Not-Call" prohibitions.  NOS telemarkets its services through an in-house staff as well as third-party telemarketing companies.  In 2005, the FCC and the Federal Trade Commission received numerous complaints from consumers allegedly receiving unwanted telephone marketing calls from NOS.  In March 2006, the Bureau sent a letter of inquiry to NOS regarding its telemarketing and compliance with the Do-Not-Call rules, to which NOS responded. 

Under the consent decree, NOS agreed to make a voluntary contribution to the U.S. Treasury of $500,000 and implement a compliance program in order to ensure that no telemarketing calls are made on behalf of NOS, either by in-house staff or third-party telemarketers, to consumers listed on the national Do-Not-Call Registry.  The program includes: the preparation of written policies and procedures to ensure compliance, requiring that no marketing call be made to a consumer whose number has not been cross-checked against the Do-Not-Call Registry within the past 31 days; training for in-house and third-party marketing personnel; an annual compliance certification process; mandatory Do-Not-Call compliance provisions in all contracts with third-party telemarketers; implementation of audit procedures, including "seeding" call lists with the names of NOS representatives listed on the Do-Not-Call Registry to check on telemarketers’ "scrubbing" procedures; establishment of a process to investigate and resolve complaints of unauthorized telemarketing; implementation of a quality control monitoring program, including the random monitoring of at least 7% of all telemarketing calls; and written compliance reports to the Bureau within 60 days of the release of the order and every six months thereafter.  The plan expires three years after the release date, except that all records of the quality control monitoring program must be retained for four years after the release date.

On November 21, the Bureau released an order adopting a consent decree with CBS Corporation ("CBS") and KUTV Holdings, Inc., the licensee of station KUTV in Salt Lake City, Utah ("KUTV"), terminating an investigation of their compliance with a previous consent decree involving the Indecency Laws.  The investigation began in 2006 when two Parents Television Council members filed petitions to deny KUTV’s license renewal application because of its airing of an episode of Without a Trace, which they alleged contained indecent content ("Objections").  They cited an FCC Notice of Apparent Liability for Forfeiture ("NAL") against all CBS-owned and operated and affiliated stations airing that episode deeming it indecent ("Without a Trace NAL").  They also alleged that CBS violated the terms of a previous consent decree entered into in 2004 by CBS’s predecessor-in-interest, Viacom, Inc. ("2004 Consent Decree"), requiring it to suspend all employees involved in the airing of any programming that is the subject of an indecency-related NAL and to investigate the decision to air such programming ("Suspension Provision").  The episode in question was broadcast a few weeks after the 2004 Consent Decree.  Following the filing of CBS’s opposition to the Objections, the Media Bureau issued a letter directing CBS to answer a series of questions relating to its compliance with the 2004 Consent Decree.  CBS’s response explained that it was not readily apparent to CBS that the Suspension Provision in the 2004 Consent Decree might apply in the case of scripted shows such as Without a Trace.

The November 21 consent decree settled the investigation of CBS’s compliance with the 2004 Consent Decree and dismissed the Objections, as well as any similar pleadings pertaining to compliance with the 2004 Consent Decree in relation to the Without a Trace NAL.  CBS, however, acknowledged "that it inadvertently failed to comply with the remedial steps specified in [the Suspension Provision] as contemplated by the Commission following issuance of the Without a Trace NAL" and that it has taken steps to ensure that such "oversights do not recur."  The parties also agreed to amend the 2004 Consent Decree to continue in effect the CBS plan ensuring its compliance with the Suspension Provision for an additional three years, until November 23, 2010.  CBS also agreed to make a voluntary contribution to the U.S. Treasury of $300,000.  On the same day, the Media Bureau released an order denying the Objections and granting KUTV’s license renewal application.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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