Source: http://www.techlawjournal.com/alert/2004/12/16.asp
Timestamp: 2019-04-22 10:27:56+00:00

Document:
TLJ Daily E-Mail Alert No. 1,039, December 16, 2004.
December 16, 2004, 9:00 AM ET, Alert No. 1,039.
12/15. The Federal Communications Commission (FCC) adopted, but did not release, an Order on Remand regarding incumbent local exchange carriers' (ILECs) obligations under 47 U.S.C. § 251 to make their network elements available on an unbundled basis.
The FCC issued only a short release [2 pages in PDF], and four Commissioners wrote brief separate statements. This item is FCC 04-290 in WC Docket No. 04-313 and CC Docket No. 01-338.
Background. This Order on Remand is the FCC's fourth set rules regarding the unbundling requirements of ILECs. The previous three were overturned in part by the federal courts.
The FCC announced its third set of rules on February 20, 2003, but did not release the text of this triennial review order [576 pages in PDF] until August 21, 2003, six months later. See, story titled "Summary of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 725, August 25, 2003. See also, stories titled "FCC Announces UNE Report and Order", "FCC Order Offers Broadband Regulatory Relief", "FCC Announces Decision on Switching", "Commentary: Republicans Split On FCC UNE Order", and "Congressional Reaction To FCC UNE Order" in TLJ Daily E-Mail Alert No. 609, February 21, 2003.
On March 2, 2004, the U.S. Court of Appeals (DCCir) issued its opinion [62 pages in PDF] in USTA v. FCC, overturning key parts of the FCC's triennial review order (TRO), and remanding the proceeding to the FCC. See also, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 848, March 3, 2004.
The just announced item is the FCC's order on remand.
Section 251. This order addresses the Section 251 unbundling obligations of ILECs. Unbundled network elements (UNEs) are those portions of telephone networks that the ILECs, such as Verizon, BellSouth, SBC and Qwest, must make available to competing carriers seeking to provide telecommunications services. The Telecommunications Act of 1996 provides that ILECs must provide access to certain of their network elements at regulated rates.
Just Announced Order on Remand. The FCC has not released the text of the Order on Remand. It has only issued a press release describing the Order on Remand.
This FCC release states that "We clarify the impairment standard adopted in the Triennial Review Order in one respect and modify its application in three respects. First, we clarify that we evaluate impairment with regard to the capabilities of a reasonably efficient competitor. Second, we set aside the Triennial Review Order’s “qualifying service” interpretation of section 251(d)(2), but prohibit the use of UNEs for the provision of telecommunications services in the mobile wireless and long-distance markets, which we previously have found to be competitive. Third, in applying our impairment test, we draw reasonable inferences regarding the prospects for competition in one geographic market based on the state of competition in other, similar markets. Fourth, we consider the appropriate role of tariffed incumbent LEC services in our unbundling framework, and determine that in the context of the local exchange markets, a general rule prohibiting access to UNEs whenever a requesting carrier is able to compete using an incumbent LEC’s tariffed offering would be inappropriate."
The FCC release further states that "Competing carriers are impaired without access to DS1 transport except on routes connecting a pair of wire centers, where both wire centers contain at least four fiber-based collocators or at least 38,000 business access lines. Competing carriers are impaired without access to DS3 or dark fiber transport except on routes connecting a pair of wire centers, each of which contains at least three fiber-based collocators or at least 24,000 business lines. Finally, competing carriers are not impaired without access to entrance facilities connecting an incumbent LEC’s network with a competitive LEC’s network in any instance. We adopt a 12-month plan for competing carriers to transition away from use of DS1- and DS3-capacity dedicated transport where they are not impaired, and an 18-month plan to govern transitions away from dark fiber transport. These transition plans apply only to the embedded customer base, and do not permit competitive LECs to add new dedicated transport UNEs in the absence of impairment. During the transition periods, competitive carriers will retain access to unbundled dedicated transport at a rate equal to the higher of (1) 115% of the rate the requesting carrier paid for the transport element on June 15, 2004, or (2) 115% of the rate the state commission has established or establishes, if any, between June 16, 2004 and the effective date of this Order."
The release further states that "Competitive LECs are impaired without access to DS3-capacity loops except in any building within the service area of a wire center containing 38,000 or more business lines and 4 or more fiber-based collocators. Competitive LECs are impaired without access to DS1-capacity loops except in any building within the service area of a wire center containing 60,000 or more business lines and 4 or more fiber-based collocators. Competitive LECs are not impaired without access to dark fiber loops in any instance. We adopt a 12-month plan for competing carriers to transition away from use of DS1- and DS3-capacity loops where they are not impaired, and an 18-month plan to govern transitions away from dark fiber loops. These transition plans apply only to the embedded customer base, and do not permit competitive LECs to add new high-capacity loop UNEs in the absence of impairment. During the transition periods, competitive carriers will retain access to unbundled facilities at a rate equal to the higher of (1) 115% of the rate the requesting carrier paid for the transport element on June 15, 2004, or (2) 115% of the rate the state commission has established or establishes, if any, between June 16, 2004 and the effective date of this Order."
Finally, the FCC release states that "Incumbent LECs have no obligation to provide competitive LECs with unbundled access to mass market local circuit switching. We adopt a 12-month plan for competing carriers to transition away from use of unbundled mass market local circuit switching. This transition plan applies only to the embedded customer base, and does not permit competitive LECs to add new switching UNEs. During the transition period, competitive carriers will retain access to the UNE platform (i.e., the combination of an unbundled loop, unbundled local circuit switching, and shared transport) at a rate equal to the higher of (1) the rate at which the requesting carrier leased that combination of elements on June 15, 2004, plus one dollar, or (2) the rate the state public utility commission establishes, if any, between June 16, 2004, and the effective date of this Order, for this combination of elements, plus one dollar."
The Commissioners split three to two, along party lines. The Democratic Commissioners, Michael Copps and Jonathan Adelstein, dissented.
FCC Chairman Michael Powell wrote in a separate statement [PDF] that "The rules have also been carefully designed to pass judicial muster, for I hope we have learned that illegal rules, no matter their other merits, are no rules at all."
Said Powell, "We can only hope that the fourth time is the charm."
FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that "I have great sympathy for carriers that crafted business plans in compliance with our rules, only to have the rug later pulled out from under them. The only responsible solution to this problem is to adopt rules that comply faithfully with the decisions of the D.C. Circuit and the Supreme Court, so that we can finally move forward with stable rules in place."
Abernathy (at right) wrote too that the proposals of the two dissenting Commissioners are "flatly inconsistent with the D.C. Circuit’s decision in USTA II. That decision is unquestionably the law of the land, and we are duty-bound to adhere to it."
FCC Commissioner Michael Copps wrote in a separate statement [PDF] that "What we have in front of us effectively dismantles wireline competition. Brick-by-brick, this process has been underway for some time. But today’s Order accomplishes the same feat with all the grace and finality of a wrecking ball. No amount of rhetoric about judicially sustainable rules and economically efficient competitors can hide the blockbuster job this Commission has done on competition. During its tenure, the largest long distance carriers have abandoned the residential market. And as a result of today’s decision, other carriers will follow suit. In their wake we will face bankruptcies, job losses and customer outages. Billions of dollars of investment capital will be stranded. And down the road consumers will face less competition, higher rates and fewer service choices."
FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that this order "officially cuts the cord on the local competition" and "relegates consumers to an inevitable future of higher rates and fewer choices."
Adelstein added that "Most stark is the Commission’s treatment of local loops, which carry telephone traffic from customers’ locations to a service provider’s network. These local loops act as the on and off ramps to reach the alternative facilities-based networks that competitors have constructed at considerable expense. In this Order, the Commission adopts unbundling rules for these elements that are strangely disconnected from the operational and economic barriers a competitor would face if it had to duplicate the incumbent’s legacy network. This blow to competition and choice comes with a certain slight of hand, couched by the majority as “inference tests” compelled by the courts. But “inferences” aside, there should be little doubt about the real-world implications of this Order."
12/15. The Federal Communications Commission (FCC) adopted, but did not release, a Notice of Proposed Rulemaking (NPRM) regarding rules prohibiting the use of cellular telephones on airlines.
The FCC issued only a short release [2 pages in PDF], and Chairman Michael Powell and Commissioner Michael Copps wrote brief statements. This item is FCC 04-288 in WT Docket No. 04-435.
Chairman Powell wrote in a separate statement [PDF] that "Although operation of wireless devices aboard aircraft remains subject to Federal Aviation Administration (FAA) rules and policies that restrict their use to ensure against interference to onboard communications and navigation equipment, the adoption of this NPRM will help ensure that the Commission’s rules do not unnecessarily restrict the availability of airborne wireless services should the FAA and aircraft operators permit the use of airborne wireless devices."
Commissioner Copps (at right) wrote in a separate statement [PDF] that "the way the FCC has decided to launch this new service risks creating a monopoly for broadband air-to-ground services. The Order creates an auction where one company can lock up the only license that can support a true broadband air-to-ground service. That means that if a company bids enough, it can exclude all other competitors, leaving airlines with only one possible supplier and passengers with no choice. Experience shows that if a company has the chance to buy a monopoly license, it will pay a premium for it. That is because it allows them, with one fell swoop, to ensure that competitors will not be able to keep prices down or force them to innovate."
The FCC's release states that this NPRM proposes "to permit the airborne operation of ``off the shelf´´ wireless handsets and other devices so long as the device operates at its lowest power setting under control of a ``pico cell´´ located on the aircraft, and the operation does not allow unwanted radio frequency emissions to interfere with terrestrial cellular systems."
The release states that the FCC seeks comments on "whether the proposal should apply only to devices operating in 800 MHz cellular spectrum, or whether devices operating on other spectrum bands, such as the PCS band or Advanced Wireless Services bands, should be included". The FCC also seeks comments on "ways that the 800 MHz cellular spectrum could be used to provide a communications ``pipe´´ between airborne aircraft and the ground", and on "whether to allow cellular carriers to provide service on a secondary basis to airborne devices subject to technical limitations aimed at preventing harmful interference".
12/15. The Federal Communications Commission (FCC) adopted, but did not release, a Second Report and Order and Second Memorandum Opinion and Order pertaining to Part 15 of its rules regarding ultra-wideband (UWB) transmission systems.
The FCC issued only a short release [2 pages in PDF]. None of the Commissioners wrote separate statements. This item is FCC 04-285 in ET Docket No. 98-153.
Michael Gallagher, head of the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA), stated in a release that "President Bush has charged us with creating an environment where entrepreneurs and innovators can flourish -- and today's FCC order does just that. The United States continues to lead the world in ultrawideband technology."
Gallagher (at left) added that "Ultrawideband devices have the power to change people's lives whether they are in their living rooms or their automobiles. Today's ruling speeds the arrival of the day when passenger cars come equipped with radars that prevent accidents. The FCC has provided the certainty new technologies need for growth and development, and at the same time maintains protection for restricted bands that serve vital and sensitive purposes, such as earth exploration and radio astronomy."
The FCC release states that the FCC "previously established regulations that permit the marketing and operation of certain types of new products incorporating ultra-wideband (UWB) technology." The FCC adopted its First Report and Order [119 pages in PDF] in 2002.
The FCC then received petitions for reconsideration of the First R&O. The FCC addressed these in its Memorandum Opinion and Order and Further Notice of Proposed Rulemaking [91 pages in PDF] adopted on February 13, 2003. The MO&O portion largely reaffirmed the procedures adopted in 2002 to authorize the unlicensed operation of UWB, but made some changes to further facilitate the operation of imaging devices. The FNPRM portion proposed numerous new rules. See also, story titled "FCC Announces UWB Report and Order and Further NPRM" in TLJ Daily E-Mail Alert No. 604, February 14, 2003, and FCC release [2 pages in PDF], and story titled "NTIA Submits Comment to FCC in UWB Proceeding" in TLJ Daily E-Mail Alert No. 819, January 20, 2004.
The FCC release states that the present item amends "its rules for general Part 15 unlicensed operations that use wide bandwidths but are not classified as UWB devices under its rules. It increased the peak power limits and reduced the unwanted emission levels for 3 frequency bands that were already available for unlicensed operation: 5925-7250 MHz, 16.2-17.2 GHz, and 23.12-29 GHz, and indicated that higher peak power limits in these bands would facilitate wideband operations such as short range communications, collision avoidance, inventory control and tracking systems. The Commission also amended its measurement procedures to permit frequency hopped, swept frequency, and gated systems operating within these bands to be measured in their normal operating mode."
The release adds that the FCC "did not make any major changes to the current UWB technical requirements".
The release also states that the FCC dismissed the Petition for Reconsideration filed by the Satellite Industry Association (SIA).
12/2. The U.S. Court of Appeals (7thCir) issued its opinion [14 pages in PDF] in Illinois Municipal Retirement Fund v. Citigroup, affirming the District Court's remand of a 1933 Securities Act case to the state court.
WorldCom went on to file for bankruptcy protection in U.S. Bankruptcy Court.
The plaintiff and appellee in this action, the Illinois Municipal Retirement Fund (IMRF), filed a complaint in state court in Illinois on June 18, 2003, alleging violation of the Securities Act of 1933 only (not the Securities and Exchange Act of 1934). The 1934 Act provides for exclusive federal jurisdiction, while the 1933 Act allows for concurrent federal and state jurisdiction and has an anti-removal provision.
The Securities Act of 1933 provides in Section 22(a), which is codified at 15 U.S.C. § 77v(a), that "no case arising under this subchapter and brought in any State court of competent jurisdiction shall be removed to any court of the United States."
On July 16, 2003, the defendants removed this action to federal District Court in Illinois on the grounds that this action is related to the bankruptcy action. The Bankruptcy Code provides, at 28 U.S.C. § 1452(a), that claims that are "related to" a bankruptcy case may be removed to the Bankruptcy Court. The defendants also requested that the case be transferred to the SDNY.
The JPML issued a conditional transfer order on September 3, 2003.
On September 9, 2003, the District Court in Illinois nevertheless remanded this action to Illinois state court.
The Court of Appeals affirmed. It wrote that the issue is "whether 28 U.S.C. § 1407, the multidistrict litigation statute, prohibits a district court from issuing a remand order in contravention of a potential transferee court’s earlier jurisdictional ruling." It held that it does not.
The Court concluded that "We will not require a district court that believes that it lacks subject matter jurisdiction over a case to facilitate a transfer under § 1407, a statute that does not itself confer jurisdiction. Rule 1.5, as applied in this case, does not conflict with the text, structure, or purpose of § 1407, and the district court did not exceed its authority in issuing a remand order."
It should be noted that on May 11, 2004, the U.S. Court of Appeals (2ndCir) issued its opinion [32 pages in PDF] in CalPERS v. WorldCom, a securities case involving the conflict between the removal provisions of the Bankruptcy Code and the Securities Act of 1933. The 2nd Circuit held that the bankruptcy removal provision controls. See also, story titled "2nd Circuit Affirms in CalPERS v. WorldCom" in TLJ Daily E-Mail Alert No. 896, May 12, 2004.
This case is Illinois Municipal Retirement Fund v. Citigroup, Inc., J.P. Morgan Securities, Inc., and Banc of America Securities, LLC, App. Ct. No. 03-3703, an appeal from the U.S. District Court for the Southern District of Illinois, D.C. No. 03 C 465, Judge Patrick Murphy presiding. Judge Flaum wrote the opinion of the Court of Appeals, in which Judges Cudahy and Posner joined.
The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (DMass) alleging violation of § 10b of the Securities Exchange Act and § 17 of the Securities Act of 1933, and rules thereunder, in connection with his alleged trading in the stock of Galileo on material, nonpublic information.
12/15. The U.S. Court of Appeals (9thCir) issued its opinion [35 pages in PDF] in Grupo Gigante v. Dallo, a trademark dispute between supermarket chains, involving the territoriality principle and the exception for famous or well known marks. This case is Grupo Gigante SA DE CV, et al. v. Dallo & Co., Inc., et al., App. Ct. No. 00-57118, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-99-07806-DDP-MAN, Judge Dean Pregerson presiding.

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