WASHINGTON December 14, 2011 – The FCC, the Hill and the Telecom industry has been busy over the last couple of weeks. Here is a wrap-up of the most important events.
House Passes Spectrum Auction Incentive Bill
After a 234-193 vote, the House Payroll Tax Extension Bill incorporated the full version of the Republican Incentive Auction bill. Last week the House Communications Sub Committee headed by Rep Greg Walden (R-OR) voted 17-6 to approve the Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act of 2011. This spectrum incentive auction bill would give the FCC authority to pay broadcasters for the voluntary release of their spectrum that could then be used for broadband build out.
The bill would set aside up to $3 billion in revenue that would go to the broadcasters from the predicted $15 billion that the auction will bring in. Walden noted that the bill has the potential to create up to 100,000 jobs.
The the bill would require the FCC to preserve the spectrum and coverage areas of the broadcasters that do not volunteer to give up spectrum, compensate cable operators for cost of re configuring broadcast signals and prevent UHF channels from having to move to VHF which is not as ideal for DTV.
An amendment that was added to the Bill by Rep Marsha Blackburn (R-TN) has been labeled a “poison pill” by Ranking Member of the House Energy and Commerce Committee Henry Waxman (D-CA). The Blackburn amendment would prohibit the FCC from imposing Net Neutrality conditions on wireless companies that purchase the new spectrum.
FCC Chairman Genachowski addressed the passage of the incentive auction bill by remarking,
“Over the last weeks and months, we have conveyed to Members of Congress and their staff concerns about provisions that would reduce FCC flexibility to maximize the overall value of freed-up spectrum, enhance spectrum efficiency, and promote robust innovation and investment. Several provisions of the House bill would tie the agency’s hands in ways that could be counterproductive, reducing economic value and hindering innovation and investment. One important example is the legislation’s seeming limitation on the Commission’s ability to accommodate new technologies, including those that use unlicensed spectrum, like super WiFi or machine-to-machine Internet connected devices. I encourage Congress to leave no doubt that the FCC can continue its policies to promote unlicensed spectrum use alongside licensed uses.”
The Democrats have announced that aside from the net neutrality provision they do not support the current legislation for a number of reasons. The bill 1) “establishes an overly bureaucratic, costly and cumbersome governance model that places significant authority in a private for-profit entity that lacks meaningful oversight” for public safety broadband networks, 2) impedes the FCC from allocating future spectrum reclaimed from incentive auctions for unlicensed use, 3) restricts the Commission’s ability to craft auction rules that ensure communications markets remain competitive, 4) does not provide enough funds to build public safety network sand does not fund research and development in public safety communication 5) provides broadcasters with 3 times the amount of compensation for relocation expenses than the Democratic proposal and 6) could put state and local investment in public safety 700MHz narrow band at risk by forcing premature return of this spectrum.
Telecom Companies Challenge the FCC on USF and ICC Reform
Following up on our POST from last week, AT&T and National Telecommunications Cooperative Association (NTCA) joined suit against the FCC’s overhaul of the Universal Service Fund and Intercarrier Compensation Systems.
AT&T’s challenge comes on the grounds that the FCC overstepped their authority. An AT&T spokesman said they appealed on a very narrow inter-carrier compensation issue.
The NTCA also filed suit against the Commission’s Order and FNPRM stating:
“There are several specific provisions of the order, however, that we are concerned fail to comport with the fundamental mandates of the Communications Act and the core principles of universal service. These provisions threaten to undermine the carefully constructed regulatory balance that has proven successful thus far in bringing telecommunications and advanced services to ruralAmerica. They put at risk the ability of small, rural, community-based providers to access capital and invest in broadband-capable networks in their hometowns and the surrounding countryside. Provisions mandating an ultimate price of zero for all switched access and reciprocal compensation services, imposing retroactive and dynamically changing caps on USF-supported costs and blurring the lines between regulated and nonregulated operations are inconsistent with law. These provisions will harm rural communities, and will not help to advance the availability and affordability of services for all rural consumers.”
Verizon Finds Better Way to Get More Spectrum
BroadbandBreakfast.com and others have been paying attention to the problems AT&T is experiencing with its T-Mobile proposed merger.
Verizon made its own move last week to scoop up an additional $3.6 billion worth of spectrum from the cable industry. The coalition of cable companies, SpectrumCo, made up of Comcast, Time Warner and Bright House Networks are selling 122 of their Advanced Wireless Services (AWS) licenses which cover much of the cable companies’ territory in the 48 states. Verizon Wireless is paying 1.2 billion over what the cable companies paid for the licenses in 2006.
The deal apparently stipulates that the cable companies will be able to use Verizon’s sales channels to promote their products and Verizon will be able to sell content owned by the cable companies thought it’s own channels. Furthermore the companies have also agreed to focus on developing technologies that will better integrate wireless and wireline products and services.
The deal will have to be approved by the FCC and the DOJ but with the FCC slated to apparently approve AT&T’s acquisition of Qualcomm’s 700 MHz spectrum it does not seem likely that this deal will face anything harsher than some possible conditions.
LightSquared Interference Leaks
Last week an NTIA proposed government test was leaked to the public showing that LightSquared Inc’s wireless services caused interference in 75% of GPS receivers examined. LightSquared Inc plans to develop a wholesale 4G LTE wireless broadband communications network integrated with satellite coverage across the United States.
The tests conducted between Oct. 31 and Nov. 4 apparently show that “LightSquared signals cause harmful interference to majority of GPS receiver tested.” National Space-Based Positioning, Navigation, and Timing (PNT) Systems Engineering Forum conducted the testing on devices which include those used for automobile and boat navigation.
Martin Harriman, Executive Vice President of LightSquared Inc. was outraged at the leak of what he considers incomplete government data. Harriman noted that LightSquared is proposing to operate at a power level much lower than those used in the test and believes that operations would only affect about 10% of devices.
“It is important for the public to understand the purposeful manipulation at hand here: The NTIA, not the leakers of this raw data, will make the final determination about how many devices passed or failed. And that assessment has not yet been made. The government must launch a full investigation of the premature disclosure of this raw data to ensure the credibility of the process is not damaged, and question the motives of those who have leaked this incomplete information,” said Harriman.
FCC Gets Tough on Waste Fraud and Abuse in Lifeline Program
The FCC has sent out an Enforcement Advisory to state eligible telecommunications carriers (ETCs) who provide Lifeline services, reminding them of their obligation to properly confirm consumer’s eligibility and assure that consumers are not receiving Lifeline support from another provider. The FCC warns that violators of these Lifeline rules face stiff penalties and even possible revocation of their ETC designation.
Chairman Genachowski has made it clear that he wants the state Public Utility Commissions to take a more active role in policing the program. In a letter to the state commissions earlier this week the Chairman wrote, “I encourage all of you to join the FCC in our efforts to reform the Lifeline program by closely scrutinizing the requests for ETC designation pending before you, to be on guard for abuse by ETCs designated to provide Lifeline service in your states, and to take swift and strong action when necessary to protect the program.”
Broadband Breakfast on October 27, 2021 — When ‘Greenfield’ Fiber Meets ‘Brownfield’ Multiple Dwelling Units
What options do owners of, operators in, and tenants within MDUs have for better-quality broadband?
Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. You can watch the October 27, 2021, event on this page. You can also PARTICIPATE in the current Broadband Breakfast Live Online event. REGISTER HERE.
Wednesday, October 27, 2021, 12 Noon ET — “When Greenfield Fiber Meets Brownfield Multiple Dwelling Units”
Bringing fiber to the premises is sometimes only half the battle. For example, bringing fiber to an MDU may not mean that every tenant will get better-quality broadband. In the case of multiple dwelling units or multi-tenant housing, it isn’t easy to completely rewire an existing building with fiber-to-the-unit. Further, the Biden Administration and the Federal Communications Commission are pushing real estate owners to eliminate or minimize exclusive MDU broadband contacts. What options do the owners of, operators in, and tenants within MDUs have to enjoy both competitive and better-quality broadband?
- Kevin Donnelly, Vice President, Government Affairs, Technology and Strategic Initiatives, National Multifamily Housing Council
- Jenna Leventoff, Senior Policy Counsel, Public Knowledge
- Pierre Trudeau, President and Chief Technology Officer, Positron Access
- Other Guests have been invited
- Drew Clark (moderator), Editor and Publisher of Broadband Breakfast
Kevin Donnelly is Vice President for Government Affairs, Technology and Strategic Initiatives at the National Multifamily Housing Council (NMHC) and represents the interests of the multifamily industry before the federal government focusing on technology, connectivity, risk management and their intersection with housing policy. Kevin is a part of NMHC’s Innovation and Technology team and leads its Intelligent Buildings and Connectivity Committee. Kevin has spent over 15 years in the public policy arena at leading real estate trade associations and on Capitol Hill. Kevin received his BA from Rutgers University and his Masters in Public Management from Johns Hopkins University.
Jenna Leventoff is a Senior Policy Counsel at Public Knowledge, where she focuses on broadband deployment and adoption. Prior to joining Public Knowledge, Jenna served as a Senior Policy Analyst for the Workforce Data Quality Campaign (WDQC) at the National Skills Coalition, where she led WDQC’s state policy advocacy and technical assistance efforts on state data system development and use. She also served as an Associate at Upturn, where she analyzed the civil rights implications of new technologies, and as Manager and Legal Counsel of the International Intellectual Property Institute, where she led the organization’s efforts to utilize intellectual property for international economic development. Jenna received her J.D, cum laude, and B.A from Case Western Reserve University.
Pierre Trudeau is President and Chief Technology Officer, Positron Access.
Drew Clark, Editor and Publisher of Broadband Breakfast, also serves as Of Counsel to The CommLaw Group. He has helped fiber-based and fixed wireless providers negotiate telecom leases and fiber IRUs, litigate to operate in the public right of way, and argue regulatory classifications before federal and state authorities. He has also worked with cities on structuring Public-Private Partnerships for better broadband access for their communities. Drew brings experts and practitioners together to advance the benefits provided by broadband. He is also the President of the Rural Telecommunications Congress.
As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.
National Non-Profit to Launch Joint Initiative to Close Broadband Affordability and Homework Gap
EducationSuperHighway is signing up partners and will launch November 4.
WASHINGTON, October 18, 2021 – National non-profit Education Super Highway is set to launch a campaign next month that will work with internet service providers to identify students without broadband and expand programs that will help connect the unconnected.
On November 4, the No Home Left Offline initiative will launch to close the digital divide for 18 million American households that “have access to the Internet but can’t afford to connect,” according to a Monday press release.
The campaign will publish a detailed report with “crucial data insights into the broadband affordability gap and the opportunities that exist to close it,” use data to identify unconnected households and students, and launch broadband adoption and free apartment Wi-Fi programs in Washington D.C.
The non-profit and ISPs will share information confidentially to identify students without broadband at home and “enable states and school districts to purchase Internet service for families through sponsored service agreements,” the website said.
The initiative will run on five principles: identify student need, have ISPs create sponsored service offerings for school districts or other entities, set eligibility standards, minimize the amount of information necessary to sign up families, and protect privacy.
The non-profit said 82 percent of Washington D.C.’s total unconnected households – a total of just over 100,000 people – have access to the internet but can’t afford to connect.
“This ‘broadband affordability gap’ keeps 47 million Americans offline, is present in every state, and disproportionately impacts low-income, Black, and Latinx communities,” the release said. “Without high-speed Internet access at home, families in Washington DC can’t send their children to school, work remotely, or access healthcare, job training, the social safety net, or critical government services.”
Over 120 regional and national carriers have signed up for the initiative.
The initiative is another in a national effort to close the “homework gap.” The Federal Communications Commission is connected schools, libraries and students using money from the Emergency Connectivity Fund, which is subsidizing devices and connections. It has received $5 billion in requested funds in just round one.
Steve Lacoff: A New Standard for the ‘Cloudification’ of Communications Services
The cloudification of communications services makes it easy to include voice, data, SMS, and video within any existing service.
The line of demarcation between what has traditionally been considered a telecommunications service was once very clear. It was tangible – there were wires, end points, towers, switches, facilities. Essentially, there was infrastructure required to relay voice or data from point A to point B.
Today that line is fuzzy, if not invisible. The legacy infrastructure remains, but an industry of cloud-based services that don’t require the physical connections has exploded. Voice, data, SMS, and video conferencing can now be conveniently delivered OTT. Enabled by simple API integrations, businesses can embed just one of these services or a complete communications platform-as-a-service (CPaaS) into an app, service, or product.
Cloudification is a game changer
This “cloudification” of communications services makes it easy to include voice, data, SMS, and video within any existing application, product, or service. These are essential components for many business models.
Consider these services we have come to rely on in our daily lives: food or grocery delivery, ride services, and business and personal communications. These require multiple methods of communication with shoppers, drivers, co-workers, watch party groups, and external business partners.
The exciting news is there is no end in sight. Use cases will continue to evolve and growth will continue to skyrocket. The scale cloud delivery accommodates is massive. These untethered, easy to embed communications services are a critical differentiator for both business-to-business and business-to-consumer buyers, and the lifeblood of the businesses providing both the end user subscriptions and the APIs.
In fact, one industry juggernaut saw H1 YoY video application service demand grow nearly 600% in 2020.
Not surprisingly, as business demand for these services increases smaller CPaaS players continue to enter the market to quickly snag market share. According to a recent IDC study, “the global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.”
Merger and acquisition activity is aligned with this hockey stick growth forecast. Large telcos, SaaS providers, and even other CPaaS providers are all on the hunt. Whether they want to add additional features to punch up their products or eliminate the competition in a very tight, nuanced market, the end game is clear – as the market expands, the players will ultimately contract leaving only the most competitive offerings.
Don’t let communications tax take you by surprise
One of the least understood risks when adding cloud-based voice, data, SMS, or video conferencing to an existing product or service is new eligibility for and exposure to the complex world of communications taxation. Making mistakes can get costly very quickly.
Here are some of the key pitfalls to keep an eye on:
- Expanded nexus: Understanding communications tax nexus is different – and exceptionally more complicated – than sales tax. There are approximately 60,000 federal, state, local, and special taxing jurisdictions, each with uniquely complex rules that tend to change at their own pace. Rules are very different for each service.
- More complex calculations: The more communications services you provide via API, the more complicated communications taxes will be. Each feature can be taxed at different rates in each individual jurisdiction, or the whole bundle can be taxed at one rate. It’s critical to monitor monthly to avoid audit issues.
- Maintaining overall compliance: Just as tax rates and rules need to be maintained, so must tax and regulatory filing forms in each jurisdiction. Some of these are very long and require significant detail. They must be filed in a timely, accurate cadence to avoid additional audit risk.
Bottom line: Don’t assume, be prepared! As these communications services become more pervasive a larger swath of technology providers will find themselves liable for communications tax. The more your business falls behind, the more it can cost you.
It pays to be proactive and prepared. Tax and legal advisory experts can help determine your level of risk, and tax and compliance software providers can help you keep up with changing rules and regulations. Don’t underestimate the ongoing value of networking with peers who are either struggling to answer the same questions or have already overcome the hurdles you’re facing today.
Steve Lacoff is General Manager of Avalara for Communications. With a focus on data, VoIP, and video streaming, Steve has spent 15 years in various product and marketing leadership roles in communications and technology industries, including Disney’s streaming services and Comcast technology solutions. Steve now drives business strategy on today’s changing industry landscape and associated tax impacts. This piece is exclusive to Broadband Breakfast.
Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to email@example.com. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.
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