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Telecom Business Alert -- Vol. VIII Issue 51

Date: Dec 19, 2011

YEAR IN REVIEW

During 2011, Congress dabbled with spectrum allocations while the FCC dealt with LightSquared, narrowbanding, mergers and other issues. Before turning our attention to the Presidential election and narrowbanding deadline that await in 2012, we take a quick look back at the highs and lows of 2011.

LightSquared Interference

The Commission granted LightSquared a conditional waiver to test a terrestrial wireless network in the L-Band, previously allocated solely for mobile satellite service. The company conducted tests during the summer 2011, and the tests caused interference to GPS users. In what would prove to be one of the most contentious proceedings at the FCC this year, the Coalition to Save our GPS and its members filed thousands of comments opposing LightSquared's proposed operations. In September, the Commission issued a Public Notice requiring LightSquared to conduct additional tests and LightSquared responded by claiming the interference was caused by GPS manufacturers ignoring government standards when developing GPS receivers. As the year winds down, the dispute continues and has spread to Capitol Hill, where a vote on two FCC nominees may be held-up until the agency explains whether it treated LightSquared too favorably by approving the conditional waiver.

Spectrum As Revenue Source

As the economy sputtered in 2011, Congress viewed wireless spectrum as a relatively easy way to generate revenue for the government and to create jobs. In September, President Obama unveiled the JOBS Act, which would allocate the 700 MHz D-Block to public safety, fund network construction through spectrum auctions and impose additional fees on licensees. In October, four lawmakers sent a letter to the President requesting a review of federal spectrum that could be auctioned to support consumer wireless broadband deployment and generate revenue for the government. In November, the House introduced its own JOBS Act that would allocate the D-Block to public safety and provide the FCC with authority to hold incentive auctions for TV Broadcast spectrum. These proposals have not yet been enacted into law.

Pole Attachment Order

On April 7, the FCC released a Report and Order in the Pole Attachment proceeding largely discounting or ignoring arguments raised by electric utilities. Among other things, the Report and Order imposes onerous new make-ready deadlines and new attachment rates that could undermine operations and cost utilities and their ratepayers hundreds of millions of dollars per year. In June, the Coalition of Concerned Utilities, represented by Keller and Heckman LLP, filed a Petition for Reconsideration with the FCC asking the Commission to reduce make-ready expenses, endorse safety violation penalties, limit pole top antennas, ease notification requirements and address joint pole owner concerns. Also in June, the Coalition intervened in the pending appeal with the U.S. Court of Appeals for the D.C. Circuit, seeking to overturn the FCC's decisions to lower rates and to regulate attachments by ILECs.

Narrowbanding Deadline Approaches, Bill Introduced to Delay Conversion

As of January 1, 2013, the FCC will require land mobile licenses held by critical infrastructure entities and other licensees in the VHF (150-174 MHz) and UHF (421-512 MHz) bands to operate on narrowband channels (12.5 kHz-wide channels). Failure to comply with this requirement likely will result in license termination and financial penalties. The Commission spent 2011 continuing to educate licensees about the upcoming deadline. In July, the Commission released the strict criteria that must be met to secure a waiver of the narrowbanding deadline. In November, the House introduced a bill to delay the narrowbanding deadlines by two years, but it does not appear that the bill has much support in Congress.

One Merger Approved (Comcast/NBC) as Another Languishes (AT&T/T-Mobile)

Two major mergers serve as bookends to 2011. In January, the FCC approved a merger of the country's largest cable operator (Comcast) with a broadcasting company (NBC Universal). In March, AT&T proposed to acquire rival T-Mobile for $39 billion. In August, the Justice Department filed a civil antitrust lawsuit to block the proposed ATT/T-Mobile deal. By November, it appeared unlikely the deal would proceed as the parties withdrew their applications from the FCC and the Commission released its Staff's Analysis and Findings opposing the deal. In mid-December, AT&T secured a temporary stay of the antitrust litigation until mid-January to assess its options.

FCC Revises USF and Intercarrier Compensation

Perhaps the biggest policy accomplishment of 2011 was the FCC's adoption of a Report and Order and Further Notice of Proposed Rulemaking ("Report and Order") calling for far-reaching reforms of the Universal Service Fund ("USF") and Intercarrier Compensation rules. The changes will direct USF funds to support broadband service in addition to voice service.

Wayne Vincent Black, 1937-2011

Our firm lost a dear friend and colleague in 2011. Wayne Vincent Black, a partner at Keller and Heckman from 1964-2007, passed away at his home in Dewey Beach, Maryland, on November 9, 2011. He was 74 years old.

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In an attempt to address in our weekly Telecom Business Alert the issues of most importance to the clients and friends of Keller and Heckman LLP, we invite you to submit suggestions on topics of interest to you. To make suggestions, please send an e-mail to TelecomAlert@khlaw.com.

Keller and Heckman LLP's Telecom Business Alert is a complimentary weekly electronic update created by the Telecommunications and the Business Counseling and Transactional practice groups of Keller and Heckman LLP.

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