Client Alert

On March 16, 2010, the Federal Communications Commission delivered the National Broadband Plan (“the Plan”) to Congress. The Plan was mandated by the American Recovery and Reinvestment Act in February of 2009 and was developed by an FCC task force. About half of the recommendations in the Plan are directed toward the FCC, while the remaining recommendations are directed toward Congress, the Executive Branch, and state and local government. The Plan is a roadmap for the long-term development of and access to broadband over the next decade. In its current state, the Plan does not include any items that would require immediate action on the part of cable operators; rather it is a compilation of recommendations geared toward future implementation. Those recommendations specifically applicable to cable operators are as follows:

Set-Top Boxes

The FCC recommends the initiation of a proceeding to require all multichannel video programming distributors (MVPDs) to install a gateway device (or other device of this nature) in all new subscriber homes and in all homes requiring new set-top boxes, starting on or before December 31, 2012. According to the Commission, the device should be simple and inexpensive and allow consumer electronics manufacturers to develop, sell and support their products independently from MVPDs. Specifically, the device should: (1) use open, published standards for interacting with retail devices; (2) permit retail devices to access all MVPD content and services and to display such content and services openly and freely; (3) not require “restrictive licensing, disclosure or certification;” and (4) allow video content to pass through with copy protection flags.

Further, the FCC recommends the adoption, on an expedited basis, of rules for cable operators to fix specific CableCARD issues during the development of the gateway devices. The timeline for adoption of these rules is the Fall of 2010. Specifically, the rules would: (1) ensure access to all linear channels in cable systems with Switched Digital Video, unless cable operators give customers a separate set-top box to serve as an SDV tuning adapter; (2) ensure that cable customers see true CableCARD charges and receive a discount off packages when the customer chooses to use a retail set-top box rather than a cable-operator leased set-top box; (3) establish standard installation policies for CableCARD devices to ensure that customers who purchase retail devices are not at a disadvantage over those customers who lease set-top boxes; and (4) ease the certification process for retail CableCARD devices.

The Commission recommends the establishment of lower and relatively uniform rental rates for pole attachments consistent with Section 224 of the Communications Act of 1934. In order to achieve this goal, the Commission plans to reevaluate the telecommunications carrier rate formula in order to arrive at rates that are closer to cable rates. The Commission also plans to implement rules lowering the cost of the pole attachment “make-ready” process, including: (1) establishing a schedule of charges for common categories of work; (2) codifying the requirement that attachers have the right to use space-saving and cost-saving techniques; (3) permitting prospective attachers to use independent contractors for engineering work and independent surveys; (4) requiring existing attachers to act within a specified period of time to accommodate new attachers; and (5) directly tying the payment schedule for make-ready work to actual performance of work, rather than requiring payment prior to the commencement of work.

The Commission is also determined to establish a full timeline for the Section 224 process and to enhance the process for resolving disputes relative to access. The FCC plans to update information about utility poles and conduits and to ensure that it is current and accessible. In order to achieve a more uniform policy, the Commission has also requested that Congress amend Section 224 of the Act to establish an even-handed policy that states would be free, but not required, to enforce. Included in the requested reforms are: (1) federal criteria regulating all poles, ducts, conduits and rights-of-way; (2) providing all broadband providers (wholesale and retail) access to pole attachments, ducts, conduits and rights-of-way based on certain terms, rates and conditions; (3) providing the Commission with the authority to create a timeline for access and to award damages in the case of non-compliance; and (4) authorizing the Commission to create and update a database of “physical infrastructure assets.”

Lastly, the FCC recommends the establishment of a joint task force with local, state and Tribal officials to create rates, terms and condition for access to rights-of-way. The goal of the task force would be to review state and local rights-of-way practices, to identify those practices that would enhance or align with the Commission’s goals and to recommend guidelines and processes for constituting appropriate rights-of-ways practices and fees. According to the Plan, the task force will make its recommendations within six months of its creation, at which time the Commission will hold a proceeding seeking comment on its findings.

Certain of the initiatives outlined in the Plan for the reallocation of spectrum may have an indirect or direct effect on cable operators. For example, the FCC recommends that Congress consider expanding the FCC’s authority to allow the Commission to conduct “incentive auctions” to permit incumbent licensees to reassign unused spectrum to other parties or the FCC. Incumbent licensees would theoretically be incentivized to reassign their spectrum by receiving a share of the proceeds from the auction of their licenses. The FCC further recommends that Congress grant to the Commission and NTIA the authority to impose spectrum fees on spectrum that is not licensed for flexible use. Under flexible use licenses, licensees are permitted to choose what services to offer and to “transfer, lease or subdivide their spectrum rights.” The FCC also plans to evaluate the use of secondary market policies and rules to promote access to “unused and underutilized” spectrum, including the use of positive and negative incentives for ensuring more productive use of spectrum in underserved areas.

Recommendations relative to the reallocation of spectrum from broadcast television bands could also affect the cable industry. Specifically, the Commission is calling for a proceeding to implement a reallocation of 120 megahertz from broadcast television bands. Included in the proceeding would be changes to the broadcast TV technical rules and channel assignments to redefine TV service areas and the required distance separations between stations. The Commission would also consider changing channel assignments to fit more stations into fewer channels. Further, the Commission plans to create a licensing framework to allow stations to share a 6 megahertz channel. Once additional spectrum becomes available due to these changes, the Commission, upon authorization by Congress, would auction off the newly opened spectrum and give stations a share of the proceeds from the spectrum they directly contributed. To ensure that consumers are not negatively affected by the spectrum “repackaging,” the Commission proposes a rulemaking proceeding to provide compensation to those consumers who might lose access to broadcast stations. For example, the Commission notes that consumers could be eligible for a “lifeline” video service from MVPDs. In order to increase the efficiency of broadcast TV spectrum, the Commission also recommends assessing spectrum fees on commercial, full power broadcast TV licensees and the establishment of a 2015 deadline for the LPTV DTV transition.

While touting the success of the E-rate program in bringing Internet access to the nation’s schools and libraries, the Commission notes that changes to the program are necessary to resolve issues such as insufficient connectivity speeds, necessary future upgrades to improve and sustain bandwidth and home broadband access. The Commission focuses on three main goals to: (1) “improve flexibility, deployment and use of infrastructure;” (2) “improve program efficiency;” and (3) “foster innovation.”

To achieve the first goal, the Commission recommends adoption of the pending Notice of Proposed Rulemaking to remove restrictions limiting the use of E-rate-funded resources for educational purposes only. Suggested non-educational uses include broadband use for adult job-training programs and community activities. The Commission also recommends initiating a new rulemaking proceeding to set minimum broadband connectivity levels for schools and libraries based upon factors such as the number of peak users during a given time and the type of use. The rulemaking also would address additional funding options for schools and libraries using dial-up to assist with the transition to broadband and for schools and libraries with low-tier broadband services. The Commission also plans to look for ways to increase funding for internal connections within schools and libraries and to reduce barriers to purchasing the lowest cost broadband solutions available, e.g. permitting the use of dark fiber.

In order to achieve the second E-Rate goal of increasing programming efficiency, the Commission recommends new rulemaking proceedings to raise the cap on funding for E-rate to account for inflation and to streamline the E-rate application process. Moreover, the Commission plans to collect and publish more data regarding applicants’ use of E-rate funds. The Commission also recommends ways to reduce broadband-related expenses by encouraging greater communication and interaction between schools and libraries and regional, Tribal and local networks. Lastly, the Commission recommends that Congress amend the Communications Act to permit Tribal libraries to become eligible for the E-rate program if they are eligible to receive funding from either a state library administrative agency or a Tribal government under the Library Services and Technology Act.

In order to achieve the third E-rate goal of fostering innovation, the Commission recommends a new rulemaking proceeding to initiate funding for wireless connectivity for portable devices. In addition, the Commission suggests awarding some of the E-rate funds on a competitive basis to stimulate and foster growth and new ideas.

A complete copy of The National Broadband Plan is available on the FCC’s website at http://download.broadband.gov/plan/national-broadband-plan.pdf. Please let us know if you would like to discuss the impact of any of these recommendations.

If you have any questions or would like us to assist you with the required notification or application, contact Peter Gutmann (202-857-4532) or any member of the firm’s Communications Law Group.