“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road” – Stewart Brand

Last week, the FCC released a Notice of Proposed Rulemaking (NPRM) proposing guidelines and procedures designed to “breathe life” into Section 7 of the Communications Act. A somewhat obscure part – or, as Chairman Ajit Pai prefers, the “neglected stepchild” – of the Communications Act, Section 7 requires the FCC to make a public interest determination on proposals for new technologies or services within one year. Although a one-year timeframe may seem like quite a lengthy period for regulatory approval, it represents an increase to warp speed for an FCC that sometimes can take many years to approve challenging new technologies.

How Does the FCC Plan to Implement Section 7?

Specifically, the FCC proposes to implement Section 7 by requiring applicants to, among other things:

  • Expressly request consideration under Section 7, including a description of how the proposed new technology or service differs from existing technologies or services;
  • Include both qualitative and quantitative analyses demonstrating how the proposed new technology is in the public interest; and
  • Demonstrate that the new technology or service is both technically feasible and available for commercial use, and in the public interest (by, for example, providing a new competitive choice or enabling accessibility to people with disabilities).

Who Will Review Section 7 Petitions and Applications and How Will They Be Processed?

The NPRM proposes Section 7 applications can be resolved at either the Bureau level (on delegated authority) or by the Commission itself. The NPRM offers a glimpse at how applications requesting Section 7 treatment may be processed:

  • Initially, the Office of Engineering and Technology (OET), along with the agency responsible for overseeing the proposed technology or service, will initially review the application or petition. The one-year clock begins running when the application is deemed “complete as filed;”
  • OET and the relevant office or bureau will then issue a public notice addressing the application itself and the Section 7 request. Any party opposing Section 7 treatment will bear the burden to demonstrate that the new technology or service is not in the public interest;
  • Within 90 days of the release of the public notice, a team led by OET will determine whether the technology or service qualifies for processing under Section 7 and notify the applicant or petitioner as such; and
  • An initial negative determination as to whether or not Section 7 treatment is warranted is not necessarily dispositive; as the Bureau or Office conducts its more complete evaluation of the application, it may later determine that the filing does in fact merit Section 7 consideration. However, the FCC proposes not to entertain petitions for reconsideration or applications for review of the 90-day determination.

Can Applicants With Currently Pending Applications Apply for Section 7 Treatment?

Yes. Those applicants would need to supplement their existing filing with a specific Section 7 request.

What are the Practical Implications of the NPRM?

Although the proposed framework for implementing Section 7 is still a work in progress, the NPRM represents an explicit acknowledgment by the FCC that its existing regulatory processes can often be a barrier to innovation. However, breaking through the regulatory inertia will require more than an acknowledgment of the problem; it will require an implementation framework that provides clarity, certainty, and flexibility to entrepreneurs and innovators.

Some parts of the Commission’s proposed framework are not without potential pitfalls. For example, in her dissent to the NPRM, Commissioner Jessica Rosenworcel noted the difficulty of determining what a “new” service or technology is and unflatteringly compared the NPRM to the FCC’s Pioneer’s Preference Program, which generated significant litigation.

For now, we recommend that applicants who are interested in utilizing the FCC’s Section 7 framework voice their opinions in the record that the FCC intends to develop (Comments are due 45 days after the NPRM is published in the federal register, which has not yet occurred). We cannot overstate how important it is for the Commission to hear how these proposed rules will impact the companies who are operating on the front lines of technological innovation today.

If you have any questions about the FCC’s NPRM, or want to know more about how the FCC regulates new technologies and services, please do not hesitate to contact one of Sheppard Mullin’s communications attorneys.