I. Legislative Branch Activity

A. Inouye Introduces Broadband Deployment Bills.

On May 24, Sen. Inouye (D-HI) presented a bill (S.1492), which seeks to improve upon the quality of data collection used for FCC broadband status reports. Instead of the current standard use of 5 digit zip codes, the bill calls for expansion to 9 digit codes, thus highlighting underserved areas more precisely. Sen. Inouye’s bill demands that the FCC reevaluate its 200 kbps definition of high-speed service, and it would create a "2nd generation" level that has enough bandwidth for uses like streaming video.

B. Legislative Calendar.

The House and Senate will reconvene from Memorial Day break on June 4.


II. Federal Communications Commission (FCC) Activity

A. May FCC Meeting.

1. FCC Implements Katrina Panel Recommendations.

The Commission adopted an Order (FCC 07-107) that implements several recommendations of the FCC’s Independent Panel Reviewing the Impact of Hurricane Katrina on Communications Networks. This panel was intended to improve emergency response capabilities of first responders and ensure all levels of government can communicate effectively during a crisis. The Order extends Special Temporary Authorizations that exempt Bells from enforcement of section 272 by one year. This would allow them to share non-public network information with their section 272 and other affiliates when planning for a disaster.

The Order also states that LECs and CMRS providers must have emergency back-up sources for infrastructure powered by local commercial power (including cell sites, central offices, remote switches, and digital loop carrier system remote terminals). These LECs and CMRS providers, as well as some VoIP providers, will have to submit reports to verify the strength and resiliency of their 911 systems.

2. FCC Seeks to Enhance 911 Accuracy and Reliability.

The Commission approved a Notice of Proposed Rulemaking (FCC 07-108) on possible alterations to 911 accuracy and reliability requirements for wireless carriers and for VoIP providers. Among other matters, the NPRM tentatively concludes that wireless carriers should be required to meet Phase II location accuracy standards under Section 20.18(h). The Commission also asks whether wireless carriers should be afforded a delay to implement any such rule change.

3. Commission Attempts to Strengthen EAS.

The FCC adopted a Second Report and Order and Further Notice of Proposed Rulemaking (FCC 07-109) that hopes to strengthen the nation’s emergency alert system ("EAS"). The Order promotes the development of fully digital technologies and delivery systems. Specifically, it requires that EAS participants accept text, audio, and video messages on a common platform, to ensure more efficient transmission.

The FNPRM seeks comment on methods to deliver better warnings to persons with disabilities and non-English speakers.

4. Disability Access Requirements Extended to VoIP Services.

Also at the May open meeting, the Commission sought to extend the disability access requirements of Sections 225 and 255 of the Communications Act, which currently apply to traditional phone services, to providers of VoIP services and to manufacturers of specially designed equipment used to provide those services. The full text of the Report and Order (07-110) has not yet been released.

5. Changes to Multi-Unit Building Service Rules.

The Commission amended its inside wiring rules with the intent of increasing competition for telephone and video services in multi-unit dwellings. Specifically, the FCC clarified that video service competitors need not cut through sheet rock to connect cable wiring and that competing telephone companies must be allowed access to incumbent’s inside wire subloops at the terminal block in order to install service. Multi-unit buildings may still, however, sign contracts with one carrier to provide sole access, excluding competitors. The full text of the Report and Order and Declaratory Ruling (FCC 07-111) has not yet been released.

B. Other May FCC Activity.

Joint Board Recommends Universal Service Changes.

On May 1, the Federal-State Joint Board on Universal Service advocated that the Commission take action to inhibit the growth of high-cost universal service support payments. Specifically, the Board recommended an immediate cap be imposed to limit what eligible telecommunications carriers may receive. On May 14, the Commission issued a Notice of Proposed Rulemaking (FCC 07-88) seeking comment on this topic.

C. Next Commission Meeting.

The next open Commission meeting is scheduled for June 28, 2007. The agenda is not yet available.


III. Litigation

A. Vonage, Verizon Battle in Courts over Patent Dispute.

On May 3, the U.S. Court of Appeals, Federal Circuit, refused to remand Vonage’s patent infringement case against Verizon back to U.S. District Court Judge Claude Hilton. Vonage had asked for the remand after the Supreme Court decision in KSR v. Teleflex, which modified the standard used by judges in reviewing patent claims. Meanwhile, the appeals court is considering a broader appeal by Vonage challenging Judge Hilton’s initial ruling. Vonage’s brief on that appeal was filed May 9 and the oral arguments are scheduled for June 25.

B. FCC Indecency Policy Takes Hit.

On June 5, the U.S. Court of Appeals for the Second Circuit sided with the broadcast networks by striking down FCC policy concerning "fleeting expletives." The divided panel of judges sent the case back to the Commission to be rewritten, arguing that such fleeting expletives may be used out of frustration or excitement, and do not always have obscene connotations. They cited uses of such language by President Bush and Vice-President Cheney, examples also given by the network lawyers.  Chairman Martin expressed disappointment with the ruling and stated that the FCC is considering whether to appeal the case before all the judges of the appeals court, or to take the case directly to the Supreme Court.


IV. Antitrust Agency Activity/Deal Announcements

Private Equity Firms to Acquire Alltel for $27.5 Billion.

On May 21, the private equity firms TPG Capital and GS Capital Partners made a $27.5 billion bid to purchase telecom company Alltel. Conditioned on the approval of the Justice Department and FCC, the buyout will be one of the largest in telecom history, behind only the Cingular/AT&T and Sprint/Nextel mergers. Merger approval is seen as likely.