Communications: regulation and outsourcing in United States: overview

A Q&A guide to communications regulation and outsourcing law in United States.

The Q&A gives a high level overview of communications law, including authorisation and licensing, universal service obligations, spectrum use, access and interconnection, data protection and security, price regulation, subscriber management, and outsourcing and telecommunications.

To compare answers across multiple jurisdictions, visit the Communications: Regulation and Outsourcing Country Q&A tool.

This Q&A is part of the Communications: Regulation and Outsourcing Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/communications-guide.

Sam Feder, Leah Tulin and David Wishnick, Jenner & Block LLP
Contents

The telecommunications market

1. Give a brief overview of the structure of the telecommunications market in your jurisdiction. Briefly set out any major recent developments, such as mergers and acquisitions, restructurings and insolvencies.

Market structure

The telecommunications market in the US can be viewed as comprised of three separate categories of services: wireline voice, wireless mobile, and broadband.

Wireline voice services. On the residential side, fixed voice services in the US are largely dominated by:

  • The companies that held local telephone monopolies prior to the advent of competition in 1996, known as incumbent local exchange carriers (ILECs).

  • Cable video companies that now also provide fixed voice services.

The primary companies in these categories are Verizon, AT&T, CenturyLink, Comcast, TimeWarner Cable, and Charter Communications.

On the enterprise side, the same companies dominate (although cable is less significant), but there is additional competition from competitive local exchange carriers (CLECs).

Mobile wireless. There are four major nationwide mobile wireless providers in the US: Verizon Wireless, AT&T, T-Mobile, and Sprint. The mobile wireless market is dominated by AT&T and Verizon Wireless, which together account for about two-thirds of the mobile wireless connections.

In addition to those nationwide providers, there are numerous regional and local providers across the country. Their reach is quite limited, however, accounting for only about 3% of the total mobile wireless connections.

Broadband services. Internet services in the US are largely provided by incumbent telephone companies and cable companies. 14 providers, including AT&T, Verizon, CenturyLink, Qwest, Comcast, TimeWarner Cable, Charter, and Cox, account for over 80% of US residential broadband connections.

Recent developments

The trend towards consolidation in the US telecommunications market has continued unabated over the past few years. Since early 2014, a number of mergers and acquisitions involving large communications providers have been announced and/or completed. Companies seeking to assign a Federal Communications Commission (FCC) licence or acquire a company holding such a licence must obtain regulatory approval of the transaction at the federal level and generally also at the state level. A number of these proposed transactions are still pending regulatory approval:

  • Comcast-TimeWarner-Charter. In February 2014, Comcast and TimeWarner announced a proposed merger of the two largest cable companies in the US. Under the terms of the US$45 billion transaction, Comcast was slated to acquire TimeWarner and, simultaneously, to divest some of TimeWarner's subscribers to Charter Communications. In April 2015, Comcast terminated its agreements with TimeWarner and Charter in the wake of concerns expressed by regulators at the FCC and the Department of Justice. Those same concerns, particularly the effect of consolidation on competition in the online video market, are likely to inform regulatory decisions regarding future proposed transactions in the industry.

  • AT&T-DirectTV. In July 2015, the FCC approved a merger between AT&T, the largest telecommunications company in the US, and DirectTV, a satellite video provider with about 20 million US subscribers. The FCC imposed a number of conditions on its approval of the merger, requiring the newly merged entity to increase its deployment of high speed internet access services, and to adopt a programme to encourage the adoption of broadband in low-income households by offering discounted services throughout its wireline footprint.

  • Charter-TimeWarner-Bright House Networks. Following closely on the heels of the terminated Comcast-TimeWarner transaction, in May 2015 Charter announced a deal to acquire TimeWarner and Bright House Networks, a smaller regional cable provider. That transaction is currently under review by the FCC, with a decision expected in early 2016.

  • Altice-Cablevision. In September 2015, European telecommunications company Altice and Cablevision, the fifth largest cable company in the US, announced a deal under which Altice will buy Cablevision for US$17.7 billion. Altice is also seeking regulatory approval to obtain a 70% stake in Suddenlink, the seventh largest US cable company. Both proposed acquisitions are currently pending before the FCC, with decisions expected in the first half of 2016. Approval of both transactions would make Altice into the fourth largest cable operator in the US.

 

Restrictions on foreign ownership

2. Are there any restrictions on foreign companies entering the telecommunications market in your jurisdiction?

Under section 214 of the Communications Act, carriers seeking to provide common carrier services between the US or its territories and a foreign point must obtain prior authorisation from the Federal Communications Commission (FCC). Likewise, a carrier that has obtained such an authorisation must notify the FCC if the carrier becomes "affiliated" with a foreign carrier authorised to operate in the foreign destination market. Affiliation requiring notice to the FCC occurs where one of the carriers (US or foreign), or an entity that controls one of them, directly or indirectly owns or controls more than 25% of the capital stock of the other one. The FCC's rules delineate whether notice to the FCC must be provided before such a transaction is consummated. Under certain circumstances, the FCC can impose conditions on the affiliation or proceed to an authorisation revocation hearing.

In addition, section 310 of the Communications Act places restrictions on foreign ownership of certain types of communications licences. With respect to common carrier licensees (that is, companies that provide fixed or mobile telecommunications services) the following restrictions apply:

  • A foreign company is prohibited from holding a common carrier licence.

  • A foreign company can invest in a common carrier licensee or the controlling US parent of a licensee, so long as the foreign company's equity and/or voting interests do not exceed 20%.

  • Likewise, a foreign company can invest in a common carrier licensee or the controlling US parent of a licensee if both:

    • the foreign company's equity and/or voting interests would exceed 20% in an entity that does not directly or indirectly control a common carrier licence, or 25% in an entity that directly or indirectly controls the licence; and

    • the FCC determines that the foreign investment is in the public interest.

In 2013, the FCC amended its rules for reviewing foreign investments in common carrier licensees. Although prior approval by the FCC is still required before foreign ownership reaches the statutory threshold levels identified above, the changes to the rules were intended to streamline and simplify the process by which companies can seek approval for foreign investments.

 

Regulatory framework

Legislation and regulatory authorities

3. Give a brief overview of the regulatory framework for telecommunications in your jurisdiction. Which authorities regulate telecommunications services in your jurisdiction? Is there a separate regulator for competition law issues in this sector?

Regulatory framework

Telecommunications services are governed at the federal level primarily by the Communications Act of 1934 as amended (Communications Act). The Communications Act provides a comprehensive national framework for governing telecommunications services and competition in the telecommunications market. The Communications Act also gives the Federal Communications Commission (FCC) broad authority to issue rules, regulations, and orders regarding telecommunications services.

Telecommunications services are also regulated by individual states and localities, although the Communications Act gives the FCC the authority to pre-empt state and local laws and regulations under certain circumstances. Individual laws and administrative regulations relating to wireline voice services vary widely by state and locality, but can cover a variety of issues relating to telecommunications services. Areas of regulation may include:

  • Consumer protection.

  • Emergency calling.

  • Rights of way.

  • Universal service.

Although they are generally less regulated than wireline voice services, wireless and broadband services may also be subject to state and local regulation. For example, a number of states have passed laws encouraging broadband deployment, and at least one state regulatory agency is currently considering a request to expand universal service fees to wireless providers.

Regulatory authorities

At the federal level, the main regulatory authority in the telecommunications sector is the FCC (www.fcc.gov), an independent agency responsible for regulating interstate and international communications by radio, television, wire, satellite and cable. It is responsible for a wide range of activities, including:

  • Managing and licensing spectrum for commercial users and non-commercial users, including state, county, and local governments.

  • Ensuring the reliability of telecommunications systems during emergencies.

  • Regulating rates and charges for certain services, inter-carrier compensation, access charges, and universal service fees.

  • Administering universal service programmes.

  • Enforcing the acts and the FCC's rules and regulations, including through enforcement actions and the adjudication of disputes involving regulated parties.

The National Telecommunications and Information Administration (NTIA) (www.ntia.doc.gov) is the federal agency responsible for managing the federal government's use of spectrum and for identifying additional spectrum available for commercial use. In addition, the NTIA advises the President of the US on policy issues relating to telecommunications.

At the state level, public utility commissions are generally responsible for regulating the telecommunications sector. The jurisdiction and organisation of these bodies varies by state.

The FCC and the US Department of Justice exercise overlapping authority in competition law issues in the telecommunications sector. The FCC considers issues of competition in its public-interest review of proposed transactions involving telecommunications services. The Department of Justice is responsible for the enforcement of federal anti-trust laws, and can bring suit in federal court to block a transaction that it concludes would violate those laws.

 

Authorisation and licences

4. What notification, authorisation and licences are required to provide telecommunications services? What is the licence application procedure and fee?

Licence and authorisation requirements for US telecommunications providers are varied. At the federal level, companies employing wireless spectrum must apply for licences from the Federal Communications Commission (FCC).

At the state and local level, wireline providers must receive authorisations to lay wires in a public right-of-way.

In addition, traditional switched access voice providers generally must obtain state authorisation to operate in a state, though state authorisation is generally not required to operate as a broadband service provider or VoIP provider.

Though the procedures associated with each of these forms of licensure vary, as do the relevant application fees, they typically involve an administrative review of the applicant company's finances, stated intentions, and technical skills.

 
5. How long does a telecommunications licence typically last and what are the usual conditions attached to it? Can conditions be varied? Are licences available for public inspection?

As a general matter, wireline licences in the US do not contain stated end-dates. Wireline licences may specify the range of services that the holder of the licence can provide with their equipment.

Wireless licences generally do have fixed-end dates (which vary), but there is an expectation of renewal. Wireless licences often require that infrastructure be built and covered population be served within a specific time frame. Licences are typically available for public inspection, often through searchable internet databases maintained by the federal and state regulators who have issued them.

 

Penalties for non-compliance

6. What are the consequences of non-compliance with the telecommunications regulations?

Federal law provides a variety of mechanisms to enforce laws and regulations governing telecommunications services. These include:

  • Forfeitures. The Federal Communications Commission (FCC) can impose forfeiture penalties against anyone who violates the Communications Act or an FCC rule, although non-regulated parties must first be given a citation before a forfeiture can be imposed. If the violator fails to pay the penalty, the FCC can refer the matter to the Department of Justice for recovery through an action in federal court.

  • Non-monetary enforcement tools. In addition to fines and forfeitures, the FCC has a number of non-monetary tools at its disposal. These include the issue of admonishments, cease and desist orders, or (under extreme circumstances) licence revocations.

  • Injunctive relief. The FCC, or the Department of Justice acting at the request of the FCC, can file a civil action in federal court to enjoin non-compliance with the Communications Act or an FCC order.

  • Criminal prosecution. The Department of Justice can bring a criminal prosecution in federal court where there has been a wilful and knowing violation of the Communications Act or an FCC rule or regulation. First-time conviction under this provision is a misdemeanour carrying a maximum fine of US$10,000 and/or imprisonment for up to one year. Repeat offenders may be subject to longer terms of imprisonment.

There can also be consequences for violating state and local laws and regulations relating to telecommunications. Penalties and enforcement mechanisms for such violations vary by jurisdiction and by type of violation.

 

Appeals

7. Can decisions of the regulators be appealed and on what grounds?

The Federal Communications Commission (FCC)'s regulatory decisions and orders are subject to judicial review, with the federal courts of appeals exercising exclusive jurisdiction over challenges to the validity of such decisions and orders.

In contrast, the federal district courts have exclusive jurisdiction to review the FCC's forfeiture orders in the first instance. Generally, the courts of appeals sit in review of decisions by the district courts, and decisions by the appeals courts are subject to discretionary review in the US Supreme Court through the certiorari process.

At all levels of review in federal court, insofar as an FCC decision is based on an interpretation of a provision of the Communications Act or the FCC's rules, federal courts must defer to the FCC's interpretation, so long as it is a reasonable interpretation of an ambiguous provision.

Decisions by state public utility commissions can generally be appealed through the state court system or in federal district court.

 

Universal service obligations

8. Is the incumbent provider or other large providers with significant market power subject to specific regulations? Do universal service obligations apply? Are there provisions for the structural separation of a network?

Under the Communications Act, incumbent local exchange carriers (ILECs) providing voice services are subject to a range of specific regulations not applicable to other providers. These obligations include:

  • Unbundled resale access. ILECs must lease access to their network elements on an unbundled basis at cost-based rates.

  • Direct Interconnection. ILECs must allow direct interconnection for voice services at cost-based rates.

  • Good faith negotiation. ILECs must negotiate in good faith with any party seeking interconnection, services, or access to network elements.

  • Universal service. ILECs generally must meet universal service requirements such as acting as a carrier of last resort and offering to serve all customers in their service areas. In return, they are eligible to receive various subsidies. Competitive local exchange carriers (CLECs) can in some instances voluntarily undertake such obligations in exchange for subsidies.

Generally, broadband providers are not subject to these types of regulations. However, voice providers receiving universal service subsidies must provide broadband as well, if they supply service to certain populations who lack competitive internet options. The speed requirements for this service reflect the speeds that are commercially available in well-served urban areas.  

There are no provisions requiring structural separation.

 

General conditions

9. What general conditions apply to telecommunications services? Which other regulations must be complied with?

All telecommunications carriers must interconnect directly or indirectly with other carriers and must allow resale of services (except for wireless providers). Carriers must also make their equipment and services accessible to persons with disabilities. Telecommunications services are also subject to general bodies of federal and state-level contract and consumer protection laws and regulations.

Of particular significance are the FCC's Truth-In-Billing Policy, its policies regarding the treatment of customer data and personally identifiable information, and the Telephone Consumer Protection Act of 1991, as amended.

 

Spectrum use

10. Which authorities allocate spectrum use and how is it managed?

Two authorities co-ordinate to allocate and license spectrum in the US.

The NTIA regulates the allocation and use of spectrum by the agencies of the federal government, for instance, the US military and the Federal Aviation Administration (see Question 3).

The Federal Communications Commission (FCC) allocates and regulates spectrum for use by all other parties, including state and local governments, businesses, and individual citizens. The FCC's decisions regarding spectrum allocations (that is, acceptable uses for defined bands of spectrum) and licences (that is, approved users within specific bands) are governed by a broad public interest standard. Currently, the FCC's main method of allocating commercial spectrum licences is by public auction.

 
11. Can spectrum use be traded or sublicensed?

Federal Communications Commission (FCC) rules permit spectrum licences to be leased, transferred, or partitioned under the terms of the original licence, or according to receipt of approval from the FCC.

 

Infrastructure and network management

12. Do communications providers have any powers to place their equipment on third party sites?

Utility companies that own or control poles, ducts, conduits, or rights-of-way used for wire communications must allow non-discriminatory access for attachments by telecommunications carriers and cable companies. Entities that are required to provide such access include local exchange carriers and electric, gas, water, steam, and other public utilities. Governmental entities are exempted from these attachment requirements.

 

Access and interconnection

13. Does access to infrastructure and a network have to be given to other providers?

Incumbent local exchange carriers (ILECs) are subject to both physical and virtual collocation requirements, that permit competitive local exchange carriers (CLECs) to collocate and use any equipment necessary for interconnection or access to unbundled network elements. Collocation must be provided on rates, terms, and conditions that are just, reasonable, and non-discriminatory. Federal regulations also provide detailed standards that ILECs must meet to comply with their collocation obligations.

 
14. Is the interconnection of networks required? Are interconnection prices regulated and how are interconnection disputes resolved?

Incumbent local exchange carriers (ILECs) must provide direct interconnection to the facilities and equipment of any requesting carrier for voice service. All common carriers must interconnect with other carriers providing voice services, but can do so directly or indirectly.

Interconnection prices are regulated for all common carriers providing voice services, but the rates for ILECs are regulated more carefully than other carriers. Specifically, interconnection rates for ILECs are calculated based on forward-looking economic costs using the total element long-run incremental cost (TELRIC) methodology.

In contrast, interconnection prices for other common carriers are subject to the more general, less well-defined requirement that the rates be just and reasonable.

The Communications Act permits either party to an interconnection dispute to bring the issue to compulsory arbitration before the state public utility commission or, if the state commission fails to act, the Federal Communications Commission (FCC). Determinations regarding interconnection made by a state commission can be appealed to federal district court, while a determination made by the FCC is subject to the exclusive jurisdiction of the federal appeals courts.

Until recently, broadband providers did not have explicit interconnection obligations under the Communications Act. In its February 2015 Open Internet Order, the FCC reclassified broadband providers as common carriers under Title II of the Communications Act, but declined to impose prescriptive regulations governing their interconnection obligations. The FCC did, however, reserve the authority to review interconnection disputes involving broadband providers on a case-by-case basis, under the general requirement that a carrier's charges and practices be just, reasonable, and non-discriminatory.

 

Data protection and security

15. What data protection regulations apply to the telecommunications sector? Are communications providers required to retain communications data? If yes, which data and for how long?

The following relates to data preservation and retention obligations. For obligations to maintain confidentiality and data security, see Question 17.

Toll telephone service records

A common carrier that bills toll telephone service must retain billing information regarding toll telephone calls for 18 months. The following information must be retained:

  • Name, address, and telephone number of the caller.

  • Telephone number called.

  • Date, time and length of the call.

Other common carrier records

With respect to records other than toll telephone records, common carriers are required to keep an index that identifies which records are retained, the related retention period, and the locations where the records are maintained. The Federal Communications Commission has the right to inspect a carrier's records and can require the addition of records retained or lengthen retention periods set by the carrier.

Interexchange price and service information

Non-dominant interexchange (that is, long-distance) carriers are required to maintain price and service information, including documents showing rates, terms, and conditions, regarding all of the carrier's international and interstate, domestic, interexchange service offerings.

Wireless carriers meeting certain criteria are also required to maintain this information.

The required retention period for this information is two and a half years, following the date that the carrier ceases to provide services under those rates, terms, and conditions.

Some states have laws governing the retention of communications data and/or general data retention requirements. The nature of the information required to be retained and the applicable retention periods under these laws vary by state.

 
16. What are the rules relating to the interception of calls? How and on what grounds can authorities require disclosure of communications data? What are the penalties for breach of these rules?

Calls are protected from interception by the Fourth Amendment to the US Constitution, and further protected by the Wiretap Act and the Electronic Communications Privacy Act.

Government agencies (and telecommunications companies operating based on government instructions) can intercept calls in certain circumstances under those laws and the Foreign Intelligence Surveillance Act, the PATRIOT Act, and the Communications Assistance for Law Enforcement Act.

The grounds governing required disclosure or interception of communications data depend on the context, that is, the:

  • Technology used.

  • Identities of the communicating parties.

  • Locations of the communicating parties.

  • Purpose of the desired disclosure or interception.

Interception of calls also implicates state laws, which vary.

 
17. Are there any network security obligations imposed on communications providers?

Telecommunications carriers are subject to section 222 of the Communications Act. This limits when and how a carrier can use or disclose customer proprietary network information (CPNI) received or obtained through the provision of a telecommunications service. CPNI is a statutorily defined term that includes (among other things) the quantity, type, and amount of use of a telecommunications service.

There are detailed regulations governing the use and disclosure of CPNI in the context of voice services. In view of the Federal Communications Commission (FCC's) decision to reclassify broadband as a telecommunications service, section 222 also obligates providers to protect the CPNI of their broadband customers. The FCC is expected to issue broadband-specific regulations relating to CPNI.

In a series of recent actions, the FCC has interpreted section 222 to impose an obligation to protect information beyond what is defined in the statute as CPNI. It is not yet exactly clear the scope of information that might be covered under that interpretation of the Act or whether, if challenged, that interpretation will withstand judicial review. In the absence of further guidance, telecommunication providers must ensure that they comply with the FCC's regulations relating to CPNI and decide whether additional steps may be necessary to protect other categories of customer information.

Section 631 of the Cable Communications Policy Act (section 631) requires cable operators to take certain actions to prevent unauthorised access to the personally identifiable information of their subscribers and arguably even for subscribers to non-cable services, such as voice and broadband. The Federal Communications Commission has recently invoked both section 222 and section 631 to impose liability on companies for lapses in data security practices, that resulted in third parties using the internet to obtain access to customers' personal information.

Under the Federal Trade Commission Act (FTCA), the Federal Trade Commission (FTC) has the authority to seek civil liability against companies that engage in unfair and deceptive acts and practices. The FTC has used this provision in the past to bring legal actions against organisations for violating consumers' privacy rights or failing to maintain security for sensitive consumer information. The FTCA, however, has an exception that strips the FTC of jurisdiction over common carriers. Accordingly, the FCC's decision to reclassify broadband providers as common carriers is likely to have the effect of further limiting the FTC's ability to impose data security requirements on telecommunications providers.

Although there is currently no generally applicable federal law governing cybersecurity, both chambers of the US Congress have passed cybersecurity legislation that would encourage private entities to share information regarding cybersecurity threats, and provide liability protection for companies that monitor such threats and share cyber threat indicators with other private entities and the federal government. Before Congress can move forward, a conference committee comprised of members of both chambers of Congress must confer in an effort to reconcile the two different versions of the legislation. A vote by the full Congress is anticipated in early 2016.

 

Price regulation

18. How are prices and charges regulated?

Incumbent wireline phone carriers' rates are generally regulated by state agencies and the Federal Communications Commission (FCC) pursuant to a dual-jurisdiction regulatory compact. State agencies regulate retail rates so that, generally, large incumbents' retail rates are regulated via price caps, while smaller incumbents' retail rates are more likely to be subject to rate-of-return regulation. Competitive local exchange carriers' rates are not typically regulated, and even incumbent local exchange carriers' rates are not regulated in some states. The FCC in turn regulates access charges imposed on long-distance carriers for the handling of long-distance calls.

Fixed charges, such as installation charges, late payment fees, and the like, are generally regulated at the state level. The FCC also sets monthly rates known as subscriber line charges that carriers may charge to recoup costs associated with interstate service-provision.

Neither wireless voice services nor broadband services are rate regulated.

 

Telephone number and subscriber management

19. How are telephone numbers allocated and managed in your jurisdiction?

The US uses North American Numbering Plan (NANP) telephone numbers, which are allocated and managed by the North American Numbering Plan Administrator (NANPA). NANPA is an independent non-governmental entity that assigns NANP telephone numbers based on the FCC's rules and industry guidance. The NANPA is selected by the Federal Communications Commission (FCC) through a competitive bidding process.

To obtain a telephone number, an entity must show that it is authorised to provide telephone service in the area for which the number is being requested. Interconnected VoIP providers often cannot meet the technical requirements for making such a showing, so until recently such providers were required to obtain telephone numbers through an intermediary. In June 2015, however, the FCC announced that interconnected VoIP providers will now be permitted to obtain NANP telephone numbers directly, provided that they comply with certain numbering administration requirements.

 
20. Does access have to be provided to certain services, such as the emergency services and directory enquiries?

Telecommunications providers that offer voice services must provide access to emergency (911) services and telecommunications relay services. In addition, telecommunications service providers must comply with regulations designed to ensure that the service offered is accessible to individuals with disabilities.

Carriers providing telephone exchange services are not required to offer directory services. A carrier providing such a service is, however, required to provide subscriber list information that it has gathered to a person seeking it for the purpose of publishing a directory. The information must be provided:

  • On a timely and unbundled basis.

  • Under non-discriminatory and reasonable rates, terms, and conditions.

Incumbent local exchange carriers must meet universal service requirements, and all carriers participating in the programme must meet certain requirements in order to be eligible for Universal Service Fund support from the federal government (see Question 8). States may have additional access requirements.

 
21. Are there regulations relating to specific consumer services, such as acquiring and transferring subscribers, number portability, complaint handling, and nuisance and silent calls?

There are a variety of Federal Communications Commission (FCC) rules regulating how common carriers handle consumer services. These include:

  • Local number portability. A telephone customer who changes service provider but remains in the same geographic area is entitled to retain his or her existing phone number. Service providers are required to process valid porting requests expeditiously.

  • Equal access/anti-slamming. Telephone subscribers can choose one or more authorised telephone companies to handle their local and long-distance calls from traditional wireline telephones. FCC rules prevent telephone companies from switching a subscriber from one authorised company to another without authorisation (slamming). Wireless telephone companies are not required to provide equal access and are therefore not subject to the FCC's slamming rules.

  • Call blocking technology. The FCC recently clarified that common carriers can offer call-blocking technology that enable consumers to block unwanted robocalls. Carriers are not obligated to offer this service. If a carrier does offer such a service, however, it is required to disclose to the consumer the risk of inadvertent blocking of wanted calls.

The Telephone Consumer Protection Act of 1991 amended the Communications Act to impose civil liability for unwanted telemarketing and unauthorised uses of automated telephone equipment. Liability for such acts lies with the entity making the call, not the service provider.

 
22. Are consumer telecommunications contracts subject to specific regulations?

The Communications Act requires that common carriers' practices be just and reasonable, which includes the service terms of telecommunications contracts. A patchwork of state and federal regulations govern the forms of contracts offered by companies providing local exchange service and long distance service.

Regarding broadband, companies offering broadband internet access service must promise to deliver data to and from substantially all endpoints of the public internet. Telecommunications contracts are also subject to the Federal Communications Commission (FCC)'s truth-in-billing regulations and to generally applicable state and federal laws and regulations governing consumer contracts.

 
23. Are there restrictions on the use of Voice over IP technology in your jurisdiction?

Although there are no restrictions on the use of VoIP technology in the US, Voice over IP (VoIP) services are subject to many of the same federal rules and regulations as traditional voice services, such as the rules governing the provision of emergency services. Generally, VoIP services are not regulated by state law.

 
24. Are there regulations relating to the maintenance of net neutrality in your jurisdiction?

The Federal Communications Commission (FCC) has attempted to address issues relating to net neutrality in several different ways over the past decade, but a number of these efforts have been invalidated on appeal. In February 2015, the FCC adopted an order (the Open Internet Order) in which it reclassified broadband internet access service as a telecommunications service, and announced new net neutrality rules. The rules announced in the Open Internet Order prevent both fixed and wireless broadband providers from engaging in the following activities:

  • Blocking. Broadband providers cannot block lawful content, applications, services, or non-harmful devices. Providers can engage in blocking to the extent required for reasonable network management.

  • Throttling. Broadband providers cannot pair or degrade lawful internet traffic on the basis of internet content, application, or service, or use of a non-harmful device. As with the no-blocking rule, the ban on throttling is subject to an exception for reasonable network management.

  • Paid prioritisation. Broadband providers cannot manage their networks to directly or indirectly favour some traffic over other traffic, in exchange for consideration by a third party or to benefit an affiliated entity. The paid prioritisation ban is not subject to a reasonable network management exception.

The net neutrality rules also include a catch-all provision that prevents broadband providers from unreasonably interfering with or unreasonably disadvantaging the activities of either end users or edge providers. The catch-all standard is subject to an exception for reasonable network management.

The FCC's net neutrality rules include a transparency provision that requires broadband providers to disclose a variety of information about the services they offer. Some of these requirements were already upheld against challenge in court and have been in effect since 2011. The Open Internet Order announced certain enhancements to these rules.

The Open Internet Order is currently being challenged in federal court. The majority of the rules announced in that Order, however, went into effect in June 2015 and will remain in effect unless an appeals court invalidates the FCC's order.

 

Outsourcing and telecommunications

25. Are there specific regulations for the outsourcing of telecommunications services or the management of these services?

There are no specific regulations governing the outsourcing of telecommunications services in the US, although certain outsourcing arrangements may trigger regulatory approval requirements in cases where important facilities or services come under the control of third parties. When these third parties are foreign entities, national security approvals may be necessary.

 
26. Briefly set out the current trends in outsourcing transactions in the telecommunications sector.

US telecommunications companies are increasingly outsourcing human resources, customer care and billing, and logistics activities. They are also outsourcing specialised network design and management operations.

For their part, enterprises are increasingly seeking out custom management and support services for communications networks and applications. These types of arrangements may include outsourced solutions for any or all of the following:

  • Transitioning from legacy systems to IP-based systems.

  • Operation of existing networks.

  • Implementation of cloud-based computing solutions, including unified communications.

In the wireless context, mobile virtual network operators (MVNOs) continue to operate in the US, and have become one locus for experimental technology and new service offerings.

 
27. Who are the key providers of outsourced telecommunications?

Numerous companies provide outsourced communications, with their participation and offered services depending heavily on which market segment they operate in.

 
28. What are the current technologies influencing or affecting outsourcing by telecommunications operators?

Cloud computing represents a major area for growth in the US, with some reports indicating that North American enterprises account for more than half of new spending on cloud computing services.

Mobile virtual network operators (MVNOs) have been experimenting with new technologies and services. For example, in April 2015 Google announced a new MVNO service (Project Fi) that uses technology to provide coverage through a combination of cellular coverage from T-Mobile and Sprint and local Wi-Fi networks. That service, however, continues to be quite limited in its scope, operating by invitation only and available on only a limited number of smartphones. Some MVNOs, including Project Fi and Republic Wireless, are also beginning to provide refunds or credits to customers with unused data.

 
29. From a contractual perspective, what are the key issues in a typical telecommunications outsourcing transaction in your jurisdiction?

Key contractual provisions vary depending on the type of outsourcing transaction at issue. Managed network arrangements, for example, require the negotiation of detailed service level agreements that include the length of the engagement and termination provisions. Privacy and data protection are especially important in the cloud computing context, and will become increasingly important in all transactions involving communications, as both cyber attacks and cybersecurity regulation continue to evolve.

 

Online resources

Federal Communications Commission (FCC)

W www.fcc.gov

Description. Official website containing up-to-date information regarding FCC rules, regulations, proceedings, and orders.

Electronic Code of Federal Regulations

W www.ecfr.gov

Description. Federal website containing a searchable version of the current Code of Federal Regulations. Title 47 contains regulations relating to telecommunications.

Legal Information Institute

W www.law.cornell.edu

Description. Website maintained by non-profit group promoting open access to law. Includes the US Code and Code of Federal Regulations.



Contributor profiles

Sam Feder, Partner

Jenner & Block LLP

T +1 202 639 6092
F +1 202 661 4999
E sfeder@jenner.com
W www.jenner.com

Professional qualifications. District of Columbia and Maryland State Bars, Member; admitted to practice in the US Supreme Court and the US Courts of Appeals for the Second, Third, Sixth, Eighth, and District of Columbia Circuits; University of Michigan Law School, JD.

Areas of practice. Communications; internet and technology; media and First Amendment; litigation.

Non-professional qualifications. AB in Philosophy, College of William and Mary.

Recent transactions

  • Representing cable, wireless, and other telecommunications companies before federal and state regulators in mergers and other transactions requiring government approval. Recent transactions include Charter-TimeWarner Cable, Comcast-TimeWarner Cable-Charter, Sprint-T-Mobile, AT&T-Leap Wireless, and AT&T-Cellular Properties.
  • Representing clients in agency proceedings and enforcement actions relating to video regulation, the internet and other advanced services, spectrum and wireless issues, and telephone competition, including program access and program carriage disputes, media ownership, net neutrality, and broadband classification.
  • Representing clients in litigation relating to spectrum licences, media ownership, video programming and media content, inter-carrier compensation, and Administrative Procedure Act challenges to FCC orders.
  • Advising on compliance with a wide range of communications law and regulations, including those governing net neutrality, data privacy, E911 and other emergency services, and local number portability.

Professional associations/memberships. Federal Communications Bar Association, Member and Past Co-Chair of the Judicial Practice Committee.

Publications. Recent publications include:

  • Data Security Has a New Sheriff in Town (Daily Journal).
  • Verizon Settlement Signals FCC's Growing Privacy Focus (Law360).
  • City of Arlington v. FCC: The Death of Chevron Step Zero? (Federal Communications Bar Journal).

Leah J Tulin, Associate

Jenner & Block LLP

T +1 202 639 6058
E ltulin@jenner.com
W www.jenner.com

Professional qualifications. District of Columbia and Maryland State Bars, Member; Admitted to practice in the US District Courts for the Eastern District of Wisconsin and the District of Columbia; Georgetown University Law Center, JD.

Areas of practice. Communications; internet and technology; complex commercial litigation; government controversies and public policy litigation.

Non-professional qualifications. BA in American History, University of Pennsylvania.

Recent transactions

  • Advising on compliance with a wide range of communications law and regulations, including those governing net neutrality, data privacy, E911 and other emergency services, and local number portability.
  • Advising on issues relating to spectrum allocation and use, including use of LTE technology in unlicensed spectrum.
  • Representing clients before the FCC in rulemaking proceedings relating to the universal service programme.
  • Representing clients in investigations before the FCC's Enforcement Bureau, relating to the use of wireless technologies and devices.
  • Representing clients in federal court litigation over inter-carrier compensation and challenges to FCC orders.
  • Advising an enterprise client on options for termination of a cloud computing services contract.

David Wishnick, Associate

Jenner & Block LLP

T +1 202 637 6325
E dwishnick@jenner.com
W www.jenner.com

Professional qualifications. Illinois State Bar, Member; Yale Law School, JD.

Areas of practice. Communications; internet and technology; litigation.

Non-professional qualifications. AB in Urban Studies, Brown University.

Recent transactions

  • Representing cable, wireless, and other telecommunications companies before federal and state regulators in mergers and other transactions requiring government approval. 
  • Advising on compliance with net neutrality rules.
  • Advising an enterprise services provider in negotiating an access contract with a large commercial real estate manager.
  • Advising a retail telecommunications provider on procedures regarding customer privacy compliance.
  • Advising on issues relating to spectrum allocation and use, including use of LTE technology in unlicensed spectrum.
  • Representing a defendant cable company in federal court litigation over inter-carrier compensation.

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