Since the Commission introduced A-CAM, the legislative landscape has changed. Congress has since passed both the Infrastructure Investment and Jobs Act (the “Infrastructure Act”) and the Broadband DATA Act. The Infrastructure Act created the largest-ever federal investment in broadband, with about $65 billion going toward expanding high-speed internet access. It also directed the Commission to improve its effectiveness in reaching universal broadband service goals and the National Telecommunications and Information Administration (NTIA) to establish a Broadband Equity, Access, and Deployment Program (BEAD). Through the BEAD program, NTIA will provide states $42.45 billion in grants to “bridge the digital divide.”
In addition to the Infrastructure Act’s impact on A-CAM, the Broadband DATA Act imposes new requirements on the Commission for mapping and tracking which communities are in need of high-speed broadband service, versus those already served by A-CAM I and II or through other programs.
As technologies and laws change, the Commission hopes to modernize, enhance, and streamline the A-CAM program. The ACAM Broadband Coalition (the “Coalition”) submitted a proposal to create an Enhanced A-CAM program through which current program recipients would deploy faster 100/20 Mbps broadband service, as required by the Infrastructure Act, to rural areas. As a result, the Commission is seeking comment on increased speed requirements, as well as on how the Enhanced A-CAM program could meet the legislative requirements in the Infrastructure Act, avoid duplicative broadband support, and maximize the use of available funds for broadband providers.
The Coalition’s proposal also seeks increased support payments to the providers, and an option to continue with the A-CAM I and II programs if a provider wishes to opt out of the Enhanced A-CAM program. In the case of electing in or out of the new program, the Coalition proposes that providers participating through A-CAM I and II be permitted to opt out without affecting their schedules for deploying high-speed internet, the length of time they are obligated to provide these services, or the amount of money they will receive through the program. The Commission seeks comment on this proposal for program eligibility or whether A-CAM I and II providers must either opt into the Enhanced A-CAM program or lose their funding.
The Commission also seeks comment on the administration of the program, including changes to annual service provider reporting requirements, the review process of merging service providers, the process to merge commonly owned study areas, and support and scheduling for Connect America Fund Broadband Loop Support (CAF BLS) recipients. In a final note, the Commission asks for input on how its proposals may promote or inhibit diversity, equity, inclusion, and accessibility, as a part of its efforts to advance “digital equity for all.”
Beyond comments on the Coalition’s proposals and administration of the program, the Commission is considering changing how to use updated Broadband DATA Act compliant mapping to determine eligible areas for Enhanced A-CAM funding. Because Broadband DATA Act compliant mapping will more accurately identify which communities need high-speed broadband access, the Commission proposes increasing the penalties against Enhanced A-CAM participants who do not meet their service obligations from the penalties creates under A-CAM I and II.
The Commission is in favor of the Enhanced A-CAM program and plans to take the “historic opportunity . . . to close the digital divide” seriously. Commission Chair Rosenworcel expressed that, “[t]o reach everyone, everywhere,” the Commission must update the A-CAM.
Commissioner Geoffrey Starks highlighted two major concerns with the expansion of broadband going forward: (1) ensuring that the Enhanced A-CAM system not cause overbuilding or waste where other programs, like BEAD, are already in place; and (2) that the subsidized networks be as secure as possible from cyber threats. Discussing the expansion of BEAD, Commissioner Starks stated that the stakes with the Enhanced A-CAM program are high because the Commission is “spending an enormous amount of ratepayer money, and the communities waiting for broadband infrastructure have been waiting too long.”
On cybersecurity, Commissioner Starks highlighted the Commission’s first ever request for comment on whether all A-CAM carriers receiving support should meet baseline cybersecurity management plans to protect the funded networks. Some groups like WTA – Advocates for Rural Broadband are concerned that heightened security requirements for small providers may be cost-prohibitive. In its comment, the WTA suggested that “the Commission [] be aware that cybersecurity entails very substantial burdens for . . . small service providers” like hiring, training, and retaining qualified cybersecurity professionals.
Still, many industry professionals agree with the Commission and are in favor of expanding and increasing the efficiency of A-CAM while avoiding overlapping coverage in high-cost areas.
2. FCC 22-37, Orders and Further NPRMs, In the Matter of Advanced Methods to Target and Eliminate Unlawful Robocalls, CG Docket No. 17-59, WC Docket No. 17-97 (Released May 20, 2022, Erratum Issued June 7, 2022) (Gateway Provider Report and Order, Order On Reconsideration, and FNPRM)
The FCC receives more complaints about unwanted calls, including illegal robocalls, than any other issue. Such unwanted calls are not merely irritating but can lead to serious harm in the form of identity theft and financial loss. Illegal robocalls that originate abroad are a significant part of this problem. The FCC previously imposed obligations on voice service providers and intermediate providers to implement STIR/Shaken in their IP networks. The FCC has also taken steps to empower and encourage domestic providers to voluntarily block illegal robocalls, including adopting safe harbors protecting providers from liability for blocking errors. In addition, the FCC requires providers to (1) “respond to all traceback requests from the Commission, law enforcement, or the industry traceback consortium, in a full and timely manner,” (2) “take steps to effectively mitigate illegal traffic when notified of such traffic by the Commission,” and (3) “adopt affirmative, effective measures to prevent new and renewing customers from using the network to originate illegal calls.”
Gateway Provider Report and Order: In this Order, the FCC took further steps to combat foreign-originated illegal robocalls by enlisting the help of gateway providers. A gateway provider is defined as a “U.S.-based intermediate provider that receives a call directly from a foreign originating provider or foreign intermediate provider at its U.S.-based facilities before transmitting the call downstream to another U.S.-based provider.” As used in the rule, “U.S.-based” means “that the provider has facilities located in the United States, including a point of presence capable of processing the call,” and “receives a call directly” from a provider means “the foreign provider directly upstream of the gateway provider in the call path sent the call to the gateway provider, with no providers in-between.” The FCC explained that gateway providers “serve as a critical choke-point for reducing the number of illegal robocalls received by American consumers” and “can stop illegal calls to customers before they reach terminating providers.”
The FCC’s new rules require gateway providers to submit a certification and mitigation plan to the Robocall Mitigation Database “describing their robocall mitigation practices and stating that they are adhering to those practices.” The rules require gateway providers to submit the same information to the Robocall Mitigation Database that voice service providers must submit under existing FCC rules, with some exceptions. The FCC explained that, under its new rules, downstream providers will be prohibited from accepting any traffic from a gateway provider not listed in the Robocall Mitigation Database.
The FCC’s new rules require gateway provider to implement STIR/SHAKEN to authenticate SIP calls that are carrying a U.S. number in the caller ID field, explaining that it “will reduce the incentive and ability of foreign providers to send illegal robocalls into the U.S. market” and “provide downstream intermediate and terminating providers and their call analytics partners with additional data to protect their customers.”
In addition, the FCC adopted several robocall mitigation proposals. First, gateway providers are required to “fully respond to traceback requests from the Commission, civil and criminal law enforcement, and the industry traceback consortium within 24 hours of receipt of such a request.” Second, gateway providers must comply with certain blocking mandates. For example, gateway providers must block illegal traffic when notified of such traffic by the FCC, and providers immediately downstream from a gateway provider must block all traffic from an identified provider when notified by the FCC that the gateway provider failed to do so. Gateway providers must block calls based on a reasonable do-not-originate list, although the FCC declined to mandate the use of any specific list. The FCC declined to impose an analytics-based blocking mandate. Consistent with the FCC’s prior rulings, gateway providers must not block 911 calls and must make reasonable efforts not to block calls from PSAPs and government emergency numbers. Third, gateway providers are required to “know” the foreign provider immediately upstream from the gateway provider and take steps “to ensure that the immediate upstream foreign provider is not using the gateway provider to carry or process a high volume of illegal traffic onto the U.S. network.” Fourth, the FCC adopted a general mitigation standard requiring all gateway providers to take “reasonable steps to avoid carrying or processing illegal robocall traffic.” Under this standard, providers must “implement a robocall mitigation program and file that plan along with a certification in the Robocall Mitigation Database.”
Order on Reconsideration
The FCC adopted rules in October 2020 that require U.S.-based provider to “only accept traffic carrying U.S. NANP numbers that was received directly from voice service providers, including foreign voice service providers, that are listed in the Robocall Mitigation Database.” The rule, by its terms, only applies to traffic received directly from the originating foreign provider; it does not require providers to reject foreign-originated traffic carrying U.S. NANP numbers that is received by a U.S. provider directly from a foreign intermediate provider. Carriers sought reconsideration of the order. The FCC decided that the requirement would not be enforced until a final decision was entered.
In the Order on Reconsideration, the FCC resumed enforcement of the requirement and expanded its scope so that domestic providers may “only accept calls directly from a foreign provider that originates, carries, or processes a call if that foreign provider is registered in the Robocall Mitigation Database and has not been de-listed pursuant to enforcement action.” The FCC found that expansion of the requirement “will better equip domestic providers to protect American consumers from foreign-originated illegal robocalls without causing widespread disruptions of lawful traffic.”
In reaching its decision, the FCC rejected petitions for reconsideration by CTIA and Von. For example, the FCC rejected CTIA’s concern that “the requirement will cause issues with international roaming that will harm American mobile wireless consumers,” finding that the concern was “overstated” and “[in]sufficient to outweigh the benefits of the requirement.” The FCC found unpersuasive the argument that existing requirements are more targeted and less disruptive and thus the FCC should continue to focus on those effort, explaining that the new requirement would not be disruptive and that the FCC needed to “use every tool at our disposal.” The FCC also rejected claims that it needed to solicit a more robust record regarding the requirement and its possible effects, stating that it did so in the Gateway Provider Notice. As for Von’s argument that the new requirement “violates the APA because the Commission failed to solicit and consider public comment on it,” the FCC rejected that claim as baseless and moot.
FNRM. Here, the FCC further proposed and sought comment on expanding some of its rules “to cover other providers in the call path, along with additional steps to protect American consumers from all illegal calls, whether they originate domestically or abroad.” Specifically, the FCC sought comment on proposed requirements (1) to extend the caller ID authentication requirement to cover domestic intermediate providers that are not gateway providers in the call path, and (2) to require all domestic providers, regardless of whether they have implemented STIR/SHAKEN, to comply with certain robocall mitigation requirements. The FCC also sought comment on “additional measures” to address illegal robocalls, including “ways to enhance the enforcement of our rules; clarifying certain aspects of our STIR/SHAKEN regime; and placing limitations on the use of U.S. NANP numbers for foreign-originated calls and indirect number access.”
3. FCC 22-54, Further NPRM, In the Matter of Updating the Inter-carriage Compensation Regime to Eliminate Access Arbitrage, WC Docket No. 18-155 (Released July 15, 2022) (“Access Arbitrage FNPRM”)
In its July 15 Access Arbitrage FNPRM, the FCC sought comment on several proposals to prevent certain companies from engaging in strategies designed to evade the FCC’s existing anti-traffic pumping, or access stimulation, rules. These proposals are the latest step in the FCC’s multi-year effort to eliminate bad actors in the communications industry from pursuing schemes designed to artificially stimulate, or pump, telecommunications traffic subject to the FCC’s access charge regime, thereby lining those bad actors’ own pockets while imposing unwarranted costs on U.S. telecommunications networks and harming consumers. In its most recent previous attempt to eliminate these arbitrage schemes, the FCC revised its Access Stimulation Rules in 2019 to prohibit local exchange carriers (LECs) and Intermediate Access Providers from charging interexchange carriers (IXCs) for terminating tandem switching and terminating tandem transport services – services used to deliver a call from the IXC to the called party – when those services are used to deliver calls to access stimulating LECs. Since those revised rules took effect, the FCC has received information about new ways that traffic pumping carriers are continuing their arbitrage schemes in response to the FCC’s 2019 Access Stimulation Rules. As FCC Commissioner Starks put it in a statement he issued in connection with the Access Arbitrage FNPRM, the FCC is engaged in a continual battle of “Whack-a-Mole” with bad actor carriers who manipulate their businesses to evade the FCC’s rules, harm consumers, and enrich themselves.
One of the principal ways these bad actor carriers have attempted to arbitrage the FCC’s 2019 Access Stimulation Rules is by integrating into terminating telecommunications call flows IP-enabled service (IPES) Providers, converting the traditional competitive LEC (CLEC) phone numbers to which the calls are placed to phone numbers obtained by the IPES Providers, and then asserting such calls are outside the scope of the FCC’s Access Stimulation Rules because these calls are not bound for LECs serving end users. In some of these schemes, the traffic passes through the CLEC before the IPES Provider delivers it to the end user, while in others, the Intermediate Access Provider (tandem service provider) delivers the traffic directly to the IPES Provider. In the Access Arbitrage FNPRM, the FCC proposes to eliminate arbitrage incentives for carriers to use either of these schemes, by clarifying its rules to prohibit Intermediate Access Providers from charging IXCs for terminating access tandem switching and terminating access tandem transport for traffic bound to an IPES Provider whose traffic exceeds the ratios set forth in the FCC’s Access Stimulation Rules used to define access-stimulating CLECs. In short, the FCC would revise the Rules’ current language to make clear they apply to both LECs and IPES Providers. Provisionally, the FCC’s proposes to require the IPES Providers to calculate their own traffic ratios, although the FCC also sought comment on requiring Intermediate Access Providers to calculate the traffic ratios of the IPES Providers to whom they deliver traffic, which requirement would include a presumption that, if the Intermediate Access Provider cannot perform this calculation because the IPES Provider will not share the needed traffic information, the IPES Provider would be presumed to be an access stimulator..
In addition, the FCC sought comment on specific associated rule changes, consisting principally of proposed language changes to the FCC’s use of the terms “end user” and “end office” in its Access Stimulation Rules defining when a LEC engages in access stimulation, in order to prevent LECs from evading financial responsibility for terminating access stimulation traffic when an IPES Provider is inserted into the call path.
As an alternative to revising the language of its 2019 Access Stimulation Rules, the FCC also sought comment of whether it should simply issue a declaratory ruling clarifying that IPES Providers are treated as LECs for the purposes of applying those 2019 Rules, and/or whether it should declare as an inherently unjust and unreasonable practice any attempt by a party to evade the FCC’s Access Stimulation Rules by moving terminating LEC end office traffic to an affiliated IPES Provider.
The FCC also sought comment on other proposed revisions to its 2019 Access Stimulation Rules, including the addition of an express prohibition on access-stimulating entities billing IXCs for intrastate terminating access tandem switching and intrastate terminating access tandem transport, the addition of a definition of the term IPES Provider, and revisions to its current definition of the term Intermediate Access Provider.
Parties have filed their initial comments with the FCC. Reply comments are due to be filed by October 3, 2022.
4. FCC 22-53, Report and Order and Second Further NPRM, In The Matter of Partitioning, Disaggregation, and Leasing of Spectrum, WT Docket No. 19-38 (Released July 18, 2022)
Congress directed the FCC to consider steps to increase the diversity of spectrum access and the availability of advanced telecommunications service in rural areas. In order to achieve these goals, the FCC modified the existing partitioning, disaggregation, and leasing rules by creating an enhanced competition incentive program (ECIP) to increase (1) small carriers and Tribal Nations access to the spectrum and (2) expand wireless deployment in rural areas. Additionally, the FCC sought further comments on potential expansion of the ECIP program and proposed alternative performance requirements.
In 2003, the FCC adopted the first comprehensive set of rules allowing “Wireless Radio Service” (WRS) licensees to enter into a variety of spectrum leasing arrangements. The 2003 rules included two different types of spectrum leasing arrangements: (1) spectrum manager leasing arrangements, in which the licensee/lessor retains de facto control of the licensed spectrum; and (2) de facto transfer leasing arrangements, in which the lessee is primarily responsible for ensuring that its operations comply with the Communications Act and FCC policies and rules. Through the MOBILE NOW Act, Congress directed the FCC to assess whether establishing a new or modified program allowing partition or disaggregation would promote the availability of telecommunications services in rural areas or spectrum availability for covered small carriers.
In 2021, the FCC proposed a range of incentives to increase spectrum access for small carriers and Tribal Nations and promote the availability of advanced telecommunications services in rural areas. The incentives included extending license terms by five years, extending construction periods by one year, and creating alternate rural-focused construction requirements. The FCC also requested comments on potential alternatives to population-based performance requirements, permitting reaggregation of previously partitioned and disaggregated licenses, the feasibility of implementing use or share models for opportunistic spectrum use, and other issues. Based upon the unanimous support of expanding spectrum access for small carriers and Tribal Nations and promoting availability in rural areas, the Commission adjusted and established the ECIP.
The FCC believes that the ECIP will facilitate competition-enhancing transactions that will increase spectrum access for small carriers and Tribal Nations and promote availability in rural areas. The ECIP permits any covered geographic licensee to offer spectrum to an unaffiliated entity through partition and/or disaggregation, and any covered geographic licensee eligible to lease in an “included service” may offer spectrum to an unaffiliated eligible entity through a long-term leasing arrangement. The FCC excluded site-based wireless licensees and any license with an existing shared performance obligation from participation in the ECIP.
There are two types of ECIP Qualifying Transactions: (1) those that focus on small carriers and Tribal Nations gaining spectrum access to increase competition; and (2) those that involve any interested party that commits to operating in, or providing service to, rural areas. Each party to a Qualifying Transaction must be unaffiliated using the FCC’s current definition of affiliate, which is a person holding an attributable interest in an applicant if such individual or entity directly or indirectly controls or has the power to control the applicant; or is directly or indirectly controlled by the applicant; or is directly or indirectly controlled by a third party or parties that also controls or has the power to control the applicant; or has an “identity of interest” with the applicant. And Qualifying Transactions can be both full assignments of covered geographic licenses or partitioning/disaggregation of a license.
For small carrier or Tribal Nation transaction types, assignor/lessor is the geographic licensee and the assignee/lessor is either a small carrier or a Tribal Nation. A small carrier has not more than 1,500 employees and offers services using the facilities of the carrier. A covered small carrier must be a common carrier, as the FCC rejected proposals to expand the definition of carrier to include non-common carriers. The FCC, however, recognized there may be potential public interest in expanding eligibility to non-common carriers and invited further comments. Tribal Nations are eligible, independent of whether they qualify as a small carrier.
For small carrier and Tribal Nations ECIP transactions, the FCC set a minimum threshold of 50% of the licensed spectrum to qualify for the ECIP in order to facilitate sufficient spectrum availability for the intended service and prevent de minimis lease transactions entered solely to obtain ECIP benefits. The FCC also set a minimum geographic size for a Qualifying Transaction as 25% of the licensed areas that contain 30,000 square miles or less, and 10% for licensed areas that contain more than 30,000 square miles.
For the rural-focused transactions, the FCC focused on tying ECIP benefits to construction and operation obligations, opening the ECIP to more entities than the small carrier and Tribal Nations prong. Any entity may participate as a lessee, including large or small carriers, common or non-common carriers, Tribal Nations, critical infrastructure entities, and other entities operating private wireless systems. The same minimum 50% spectrum threshold is required for a Qualifying Transaction.
For minimum geography, the FCC adopted the MOBILE NOW Act definition of “Rural Area,” but recognized waivers may be applicable in unusual circumstances. The Commission set the minimum geography as 300 contiguous square miles for licensed areas that are 30,000 square miles or less, and it adopted a scaled approach for larger licensed areas. The Commission also allowed Qualifying Transactions to include spectrum from multiple licenses, as long as the geography intersects and the total geography meets the minimum threshold. The Commission emphasized that there is no maximum geography for Qualifying Transactions, but that functionality must cover 100% of the minimum geography to qualify.
The FCC adopted three ECIP benefits to incentivize participation: (1) a five-year license term extension; (2) a one-year construction extension for both interim and final construction benchmarks; and (3) an alternate construction benchmark for rural-focused transactions. The alternate construction benchmark requires an assignee or lessee to meet the 100% coverage of the Qualifying Geography.
The FCC also adopted measures to protect the ECIP from waste, fraud, and abuse: (1) applicants must select either the rural-focused or the small carrier/Tribal Nation prong, but not both; (2) a five-year holding period for licenses assigned by partitioning or disaggregation, and a five year minimum for leasing arrangements; (3) an operational requirement of 100% coverage of the rural-focus minimum geography for three consecutive years; (4) automatic termination and bar from future participation for culpable parties; and (5) a one-time cap on ECIP benefits for each license.
The automatic license termination against an ECIP assignee is limited to the following actions: (1) failure to meet the five-year holding period; (2) failure to meet the relevant construction requirement for all the license(s) at issue, either interim or final deadline; and (3) failure to meet the 100% coverage and three-year operational requirement for the Qualifying Geography. The scope of actions resulting in a bar from future ECIP participation are: (1) prematurely terminating a lease within the minimum five-year term or entering into a sublease in violation of ECIP rules; (2) failure to meet the five-year holding period; (3) failure to meet the relevant construction requirement for the license(s) at issue, either interim or final deadline; (4) failure to meet the 100% coverage and three-year operational requirement for the Qualifying Geography; and (5) entering into a transaction in bad faith, solely for the purpose of obtaining program benefits.
Separate from the ECIP, the FCC allowed reaggregation up to the original geographic size and spectrum band(s) for the type of license because it will create more certainty regarding secondary market rules and encourage licensees to engage in partition/disaggregation transaction in the first instance. The FCC recognized that licensees may reacquire previously partitioned/disaggregated licenses and that a formal license reaggregation process provides administrative convenience of a single reaggregated license. Applicants for reaggregation must certify that each license to be reaggregated has met all performance requirements, been renewed at least once after meeting operational requirements, and not violated the permanent discontinuance rules.
In the Second Further Notice, the FCC sought further comment on expanding the definition of small carrier to include non-common carriers and the proposed metrics to measure the size of the entities. The FCC also sought further comment on alternate construction requirements in rural areas and for private enterprise networks less suited to population-based requirements. Specifically, the FCC proposed to use a demand-based initial construction approach with three zones: a core usage zone, an expansion zone, and a protection zone. The FCC sought comments on how to define the three zones to prevent spectrum warehousing. Additionally, the Commission seeks comments on whether a “use or offer to share” safe harbor metric is appropriate.
5. FCC 22-66, Notice of Inquiry, In the matter of Space Innovation, Facilitating Capabilities for In-Space Servicing, Assembly, and Manufacturing (Released August 8, 2022)
On August 5, 2022, the FCC issued a Notice of Inquiry and opened a proceeding to examine the economic potential and policy questions related to in-space servicing, assembly, and manufacturing (“ISAM”). In particular, the FCC requested comments on the status of ISAM: where the industry is today, how the FCC can best support its sustainable development, and what tangible economic and societal benefits may result from the development of these capabilities.
The FCC noted its belief that missions in this category – which can include satellite refueling, inspecting and repairing in-orbit spacecraft, capturing and removing debris, and transforming materials through manufacturing in space – have the potential to build entire industries, create new jobs, mitigate climate change, and advance our nation’s economic, scientific, technological, and national security interests.
ISAM refers to a set of capabilities that are used on-orbit, in transit, or on the surface of space bodies. Within the category of ISAM, “servicing” includes activities such as use of one spacecraft to inspect another, to dock with other spacecraft and provide support such as maintaining the station in its orbital location in order to extend the period of operations, or to repair or modify a spacecraft after its initial launch. These activities typically include the process of maneuvering close to and operating in the near vicinity of the “client” spacecraft. “Servicing” also involves transport of a spacecraft from one orbit to another and debris collection and removal. “Assembly” refers to the construction of a space system using pre-manufactured components, and “manufacturing” is the transformation of raw or recycled materials into components, products, or infrastructure in space.
On April 4, 2022, the White House Office of Science and Technology Policy (“OSTP”) released the ISAM National Strategy. As discussed therein, the United States plans to support and stimulate government, academic, and commercial development of ISAM capabilities. Through the Notice of Inquiry, the FCC sought comment on FCC actions that can address the needs of ISAM activities, including whether there are any regulatory changes the FCC should consider to facilitate ISAM.
The FCC requested comments on the variety of radiofrequency communications links that could be involved in ISAM missions, on potentially relevant international frequency allocations and allocations in the U.S. Table of Frequency Allocations, and on other considerations associated with spectrum licensing. Given the wide range of activities that could fall within the ISAM category, the FCC solicited comments on how to define the scope of “typical” spectrum usage for ISAM missions. The FCC also sought comments on relevant frequency allocations, including comments on what services are most critical for ISAM capabilities.
The FCC further requested comments on whether additional spectrum is necessary to support the types of missions that would fall under the category of ISAM. Additionally, the FCC solicited comments regarding communications links among spacecraft within or beyond Earth’s orbit in connection with ISAM missions, as well as communications among spacecraft and equipment or devices located on celestial bodies, or among equipment and devices located on a celestial body.
In addition, the FCC requested comments on any updates or modifications to the FCC’s licensing rules and processes that would facilitate ISAM capabilities. The FCC’s licensing for space stations is “facilities-based,” meaning that the license is associated with a specific radio station. That station includes “accessory equipment” necessary to conduct communications activities at a location. For facilities involved in ISAM activities the licensing process would typically involve an application filed under part 25 or part 5 of the FCC’s rules. The FCC sought comments on any updates to part 25 or part 5 for application processing to accommodate and facilitate ISAM missions.
The FCC also requested comments on additional licensing considerations unique to satellite servicing missions. Servicing missions typically consist of multiple spacecraft. In some cases, servicing missions may involve a single operator or licensee that is operating more than one spacecraft. The FCC expects, however, that servicing missions will also involve multiple spacecraft that are owned and operated by different entities. The FCC therefore solicited comments on the licensing process for these, or similar, missions.
The FCC also requested comments on any special considerations in licensing of assembly and manufacturing missions, as well as missions that involve interactions between operators under the jurisdiction of multiple nations. Additionally, the FCC sought comments on its debris mitigation rules and considerations regarding debris removal and remediation. The FCC further requested comments on specific considerations for ISAM missions that go beyond Earth’s orbit and the FCC’s role in planetary protection. Additionally, the FCC requested comments on ways to facilitate development of and competition in ISAM activities, provide a diversity of on-orbit service options, and promote innovation and investment in the ISAM field. Finally, the FCC, as part of its continuing effort to advance digital equity for all, invited comments on any equity-related considerations and benefits (if any) that may be associated with the topics discussed in the Notice of Inquiry.
Comments in response to the Notice of Inquiry may be filed electronically through the FCC’s electronic filing system at https://www.fcc.gov/ecfs. The deadline for initial comments is October 31, 2022, and the deadline for reply comments is November 28, 2022.
B. Judicial Developments
1. NetChoice et al. v. AG, State of Florida, 11th Circuit No. 21-12355 (May 23, 2022) (“NetChoice”) and NetChoice et al. v. Paxton, 5th Circuit No. 21-51178 (September 16, 2022) (“Paxton”) (social media platform legislation)
In NetChoice, a panel of the 11th Circuit unanimously affirmed a lower court decision preliminarily enjoining Florida’s 2021 statute S.B. 7072, which attempted to regulate the activities of most online social-media platforms doing business in Florida. S.B. 7072 regulated these privately-owned companies in three major ways: first, it imposed restrictions on those companies’ content moderation practices, i.e., what content those companies chose to make available to users of their platform and the manner in which they made such content available; second, it imposed disclosure obligations on those companies with respect to their editorial standards and practices, their rule changes, their users’ view counts, their provision of free advertising to political candidates, and their reasons for deplatforming, censoring, or shadow-banning any user; and third, it imposed a requirement that such companies allow any deplatformed user to access all of the user’s information, content, material, and data for at least 60 days after the user receives notice of deplatforming. With respect to the first of these three areas that S.B. 7072 regulated, the Florida law established prohibitions on deplatforming political candidates, on deprioritizing or shadow-banning content posted by or about political candidates, and on deplatforming or shadow banning a “journalistic enterprise” based on the content of the enterprise’s publication.
According to the Florida Governor’s office, the Florida legislature enacted S.B. 7072 to address what it perceived was an editorial bias by large social-media companies like Facebook, Twitter, Google, YouTube, and TikTok in favor of “liberal” political candidates and “liberal” political causes and against “conservative” political candidates and “conservative” political causes. S.B. 7072 itself was more measured in its findings, asserting that privately-owned social-media platforms played an important role in preserving First Amendment protections for all Floridians and that those platforms should be treated like common carriers.
The plaintiffs/appellees, several trade groups that represented social-media platform companies along with other Internet-based and technology-based companies, filed a motion with the federal district court for the Northern District of Florida seeking to preliminarily enjoin Florida’s enforcement of S.B. 7072. In their preliminary injunction papers, plaintiffs asserted that they satisfied each of the elements required to obtain preliminary injunctive relief – a likelihood of success on the merits, the irreparable harm they would suffer absent such relief, and the lack of harm to the public interest (if not the affirmative promotion of the public interest) that the requested preliminary injunctive relief would provide.
On the likelihood of success on the merits element, the plaintiffs argued that S.B. 7072 was unconstitutional on two grounds; it violated plaintiffs’ First Amendment rights, and its principal provisions were preempted by Section 230 of the Communications Act of 1934, as amended. Section 230, which Congress enacted as part of the Telecommunications Act of 1996, is a so-called “Good Samaritan” safe harbor that provides that “no provider or use of any interactive computer service shall be held liable on account of . . . any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”
The district court found that the plaintiffs satisfied their burden on each of these elements and granted the plaintiffs’ motion. Regarding the likelihood of success on the merits element, the district court held that Section 230 likely preempted the provisions of S.B. 7072 that imposed liability on social-media platform companies for their decisions to remove or deprioritize content, and further held that the Florida law was subject to strict First Amendment scrutiny because it restricted the social-media platforms’ exercise of “editorial judgment”, entirely for a viewpoint-based purpose – to combat the perceived liberal “big tech” bias of those social-media platforms. After applying strict scrutiny analysis to the Florida law’s provisions, the district court held that the law couldn’t survive such an analysis because the social-media platforms’ practices were expressive activity, or speech, protected by the First Amendment, the State did not have a legitimate interest in “leveling the playing field” for speech, the law’s provisions weren’t narrowly tailored, and the State hadn’t argued that the laws’ provisions satisfied the strict scrutiny test (the State had instead argued that the law’s provisions should not be subject to any First Amendment scrutiny). The district court further found that the law’s provisions likely could not survive intermediate scrutiny either, because the law’s provisions seemed designed not to achieve any governmental interest but to impose the maximum available burden on the social-media platforms it sought to regulate.
In its appeal to the 11th Circuit, the State focused most of its arguments on the district court’s First Amendment analysis. In particular, the State argued that S.B. 7072 didn’t implicate – let alone violate – the First Amendment because the social-media platforms to which S.B. 7072 applied weren’t engaged in protected speech. Rather, according to the State, the only thing the content-related provisions of S.B. 7072 required social-media platforms to do was to “host” third-parties’ speech, which the State argued was permissible under two Supreme Court decisions, Pruneyard Shopping Center v. Robins, 447 U.S. 74 (1980), and Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47 (2006). Alternatively, the State argued that S.B. 7072 didn’t trigger First Amendment scrutiny because it merely reflected the State’s permissible decision to classify and treat social-media platforms as common carriers.
The 11th Circuit panel did not reach the merits of the district court’s preemption analysis, because it concluded that its First Amendment analysis was sufficient to dispose of the State’s appeal. The panel rejected the State’s First Amendment-related arguments – namely, that S.B. 7072 didn’t implicate the First Amendment. The panel instead largely agreed with the plaintiffs’ arguments that the social-media platform activities that S.B. 7072 sought to restrict are expressive activity or “speech” and, in particular, are editorial judgments that are protected by the First Amendment under a long line of Supreme Court decisions, including Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241 (1974), Pacific Gas & Electric Co. v. Public Utilities Commission of California, 475 U.S. 1 (1986), Turner Broadcasting Systems, Inc. v. FCC, 512 U.S. 622 (1994), and Hurley v. Irish-American Gay, Lesbian & Bisexual Group of Boston, 515 U.S. 557 (1995). Accordingly, the panel held that S.B. 7072 triggered First Amendment scrutiny because it restricted social-media platforms’ exercise of editorial judgment and required them to make certain disclosures, that strict scrutiny applied to some of the Florida law’s content moderation restrictions while intermediate scrutiny applied to others, that it was substantially likely that the Florida law’s content-moderation restrictions would not survive even intermediate scrutiny, and that it was substantially likely that some, but not all, of the Florida law’s mandated disclosure provisions would not survive intermediate scrutiny.
In conducting its analysis, the panel concluded that social-media platform companies, even though they published very little of their own content other than terms of use, and instead served as a curator and moderator of the content of others, were more akin to newspapers, broadcasters, and other media outlets in terms of their expressive activities or speech than to common carriers such as traditional public utilities, transportation service providers, or telecommunications carriers. According to the panel, “[w]hen a platform selectively removes what it perceives to be incendiary political rhetoric, pornographic content, or public-health misinformation, it conveys a message and thereby engages in ‘speech’ within the meaning of the First Amendment.” The panel explained that this conclusion was supported not only by the Tornillo line of Supreme Court cases regarding the exercise of editorial judgment, but also by a separate line of 11th Circuit cases addressing what constitutes inherently expressive conduct. The panel then explained its reasons for concluding that the Pruneyard and Rumsfeld cases did not support the State’s assertion that S.B. 7072 did not implicate the First Amendment, as well as its reasons for rejecting the State’s assertion that social-media companies inherently were, or alternatively could be classified by the Florida legislature as, common carriers. At bottom, the panel rejected the State’s common carrier arguments on the ground that, despite their market power and the important role they played in public discourse, the social-media platform companies were not “dumb pipes” that indiscriminately serve the public.
In stark contrast to the 11th Circuit’s decision in NetChoice, the 5th Circuit, in its Paxton decision, recently upheld the constitutionality of Texas legislation that regulates certain practices of larger social media platform companies (whom the panel refers to as “Platforms”) that do business in Texas, in particular those companies’ censorship practices.
The Texas statute, known as House Bill 20 (“HB20”), prohibits social media platforms with more than 50 million monthly active users that conduct business in Texas from censoring a user’s speech based on the user’s viewpoint (with exceptions for certain categories of restricted speech). In particular, Section 7 of HB20 provides:
A social media platform may not censor a user, a user’s expression, or a user’s ability to receive the expression of another person based on:
- the viewpoint of the user or another person;
- (2) the viewpoint represented in the user’s expression or another person’s expression; or
- a user’s geographic location in this state or any part of this state.
Section 7 in turn defines “censor” to mean “to block, ban, remove, deplatform, demonetize, de-boost, restrict, deny equal access or visibility to, or otherwise discriminate against expression.” For Section 7 to apply, a user must reside in Texas, do business in Texas, or share or receive expression in Texas. Section 7 also has a narrow remedial scheme. While censored users may sue for declaratory and injunctive relief (as may the Texas Attorney General), no damages actions are permitted.
Similar to some of the provisions of the Florida statute that the 11th Circuit found to violate the First Amendment, Section 2 of HB20 imposes certain disclosure and operational requirements on social media platform companies, including requirements to (i) publish an “acceptable use policy” that explains the type of content the platform allows, how the platform enforces the use policy, and how users can report violations of the use policy; (ii) publish a “biannual transparency report” that provides various statistics related to the platform’s contact-moderation efforts; and (iii) establish a complaint-and-appeal system for its users.
As was the case with the Florida statute, NetChoice and another trade association representing computer and technology-based companies sought a preliminary injunction against HB20 in federal district court (for the Western District of Texas). NetChoice asserted that HB20 was facially unconstitutional, and could not be enforced against any person at any time, because it violated the platform companies’ free speech rights under the First Amendment. The district court agreed with the trade association plaintiffs.
The district court started its analysis with the premise that social media platforms are not common carriers, even though HB20 expressly classified such platforms as common carriers. It then held that Section 7 was facially unconstitutional because the platform companies’ “editorial discretion” was protected from state regulation by the First Amendment, as established by many of the same Supreme Court cases that the 11th Circuit relied on in its NetChoice opinion – Tornillo, Pacific Gas & Electric, and Hurley. The district court also found that Section 2 of HB20 was facially unconstitutional because the disclosure and operational requirements it imposed were inordinately burdensome and would chill the social media platforms’ speech by disincentivizing them from engaging in viewpoint-based censorship. The district court also found that HB20 discriminated against speech based on the content and speaker because it permitted censorship of some content (in its exceptions to its anti-censorship provisions) and because it only applied to large social media platforms.
In its 2-to-1 decision on the merits, the 5th Circuit panel rejected all of the district court’s holdings (Judge Southwick issued a separate opinion in which he dissented from the majority’s holding that Section 7 of HB20 is constitutional but concurred with its holding that Section 2 of HB20 is constitutional). Of particular note, the panel majority drew a sharp distinction between the types of speech protected by the First Amendment and the censorship activities of the social media platform companies that HB20 sought to regulate.
The panel majority began its analysis by criticizing the district court’s reasoning – or according to the panel majority, lack thereof – for finding that HB20 was facially invalid. After providing a refresher on the limits of the federal court’s authority under Article III of the Constitution, the panel majority concluded that the sole legal basis for the platform companies’ facial challenge to HB20 was the First Amendment overbreadth doctrine, which serves as an exception to the general Article III bar against federal courts vetoing state statutes before those statutes are enforced. The panel majority concluded that the overbreadth doctrine does not apply to Section 7 of HB20, for three reasons: First, Section 7 does not chill speech, which is the primary concern of the overbreadth doctrine; instead it chills censorship. Second, the overbreadth doctrine is meant to protect third parties who cannot undertake the burden of as-applied litigation and therefore whose speech is likely to be chilled by an overbroad law; that chilled speech concern was inapplicable here, because the plaintiff trade associations represent all of the platform companies affected by HB20, those platform companies are large, well-heeled corporations with an armada of attorneys hired to protect their censorship rights, and HB20 imposes no potential criminal sanctions or damages liability on those platform companies. Third, the platform companies’ principal challenges to the facial validity of HB20 consist of “whataboutisms” – speculations about the most extreme hypothetical applications of HB20. According to the panel majority, those hypothetical whataboutisms only reinforce the conclusion that Section 7 chills no speech whatsoever; it instead chills censorship, to the extent it chills anything. As the panel majority put it, “we cannot find any cases, from any court, that suggest a would-be censor can bring a First Amendment overbreadth challenge because a regulation chills its efforts to prevent others from speaking.”
The panel majority then analyzed the merits of the platform companies’ First Amendment claim. It provided an extensive historical analysis of the First Amendment and of the applicable Supreme Court case law, and held that HB20, and the activities that HB20 seeks to regulate, were more comparable to the state laws and activities addressed by the Supreme Court in the Pruneyard and Rumsfeld cases than the laws and activities addressed in the Tornillo, Pacific Gas & Electric, and Hurley cases, each of which the panel majority distinguished.
At bottom, the panel majority concluded that Section 7 of HB20 does not regulate speech at all; it regulates the platform companies’ censorship activities, which the panel majority concluded is, in many ways, the antithesis of speech. As the panel explained:
Section 7 does nothing to prohibit the Platforms from saying whatever they want to say in whatever way they want to say it. Well, the Platforms contend, when a user says something using one of the Platforms, the act of hosting (or rejecting) that speech is the Platforms’ own protected speech. Thus, the Platforms contend, Supreme Court doctrine affords them a sort of constitutional privilege to eliminate speech that offends the Platforms’ censors.
We reject the Platforms’ efforts to reframe their censorship as speech. It is undisputed that the Platforms want to eliminate speech, not promote or protect it. And no amount of doctrinal gymnastics can turn the First Amendment’s protections for free speech into protections for free censorship.
The panel majority further noted that Congress’ earlier enactment of the “Good Samaritan” provisions applicable to social media platform companies, codified at 47 U.S.C. § 230, eliminates any doubts that Section 7 of HB20 is constitutional, because Congress provided in Section 230 that Platforms “shall [not] be treated as the publisher of speaker” of content developed by other users. As the panel majority put it, “Congress’s judgment in Section 230 that the Platforms do not operate like traditional publishers and are not ‘speak[ing]’ when they host user-submitted content reinforces our conclusion that the Platform’s censorship is not speech under the First Amendment.” After examining the background and purpose of Section 230, the panel majority explained that, while a legislature cannot define what speech is or is not protected by the First Amendment, by creating an exemption to the defamation liability exception to the First Amendment protections for speech, Section 230 functions as a statutory patch for a gap in the First Amendment’s free speech guarantee. It does so by defining the Platforms’ hosting activities as not constituting speech, to which the courts should give deference in their First Amendment analysis.
Judge Oldham, the principal author of the panel’s decision, then turned to the district court’s threshold premise that social media platform companies are not common carriers, and pointedly rejected the district court’s analysis for that premise. After conducting his own extensive analysis, Judge Oldham concluded both that social media platform companies fall within the common carrier definition established by a body of common law extending back before the country’s founding, and that the Texas Legislature’s classification of Platforms as common carriers was permissible and easily justified based on the Platforms’ business activities, their role as enablers and hosts of the communications of third party users, their importance in that role to American social and economic life, and other related factors.
As Judge Oldham explained, the fact that social media platform companies qualify as common carriers further undermined their attempts to characterize their censorship activities as speech, and further buttressed the panel majority’s holding that HB20 constitutes a valid exercise of a state’s regulatory authority.
After Judge Oldham rejected the district court’s “no common carrier” premise, the panel majority then provided its analysis for its alternative holding that, even if Section 7 of HB20 did implicate the Platforms’ First Amendment rights, the Platforms still would not be entitled to facial pre-enforcement relief because (1) Section 7 is a content-neutral and viewpoint-neutral law and is therefore subject to intermediate First Amendment scrutiny at most and (2) Texas’ interests under Section 7 are sufficient to satisfy the intermediate scrutiny standard.
The panel then similarly rejected the platform companies’ contentions that they are entitled to facial pre-enforcement relief against the disclosure and operational requirements imposed by Section 2 of HB20.
Importantly, the Paxton panel majority expressly acknowledged and examined the 11th Circuit’s NetChoice decision, and declined to follow that decision for several reasons. First, and according to the Paxton panel majority, most fundamentally, the Florida statute (SB 7072) and the Texas statute (HB20) are dissimilar laws in many legally relevant ways, such that much of the 11th Circuit’s reasoning in NetChoice is consistent with, or irrelevant to, the Paxton panel majority’s analysis of HB20. Second, the Paxton panel majority disagreed with the 11th Circuit’s reasoning in NetChoice at three critical junctures. As the Paxton panel majority explained:
We part ways with the Eleventh Circuit, however, on three key issues. Unlike the Eleventh Circuit, we (1) do not think the Supreme Court has recognized “editorial discretion” as an independent category of First-Amendment-protected expression. And even if it had, we (2) disagree with the Eleventh Circuit’s conclusion that the Platforms’ censorship is akin to the “editorial judgment” that’s been mentioned in Supreme Court doctrine. Finally, we (3) disagree with the Eleventh Circuit’s conclusion that the common carrier doctrine does not support the constitutionality of imposing nondiscrimination obligations on the Platforms.
In light of the 5th Circuit panel majority’s express disagreement with the 11th Circuit’s decision in NetChoice on these three issues, it seems likely that the Supreme Court will decide the constitutional issues concerning the scope of states’ regulatory authority over social media platform companies and of the First Amendment’s protections of those companies’ curating and censorship activities, and will do so soon. On September 21, 2022, the state of Florida petitioned the Supreme Court for a writ of certiorari on the 11th Circuit’s NetChoice decision, and cited the circuit split between NetChoice and Paxton as one of the reasons the Supreme Court should grant its petition.
2. Panzarella et al. v. Navient Solutions, 3rd Circuit No. 20-2371 (June 14, 2022) (TCPA)
The Telephone Consumer Protection Act (“TCPA”) makes it unlawful “to make any call (other than a call made for emergency purposesor made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.” As more and more Americans began to rely on cellular telephones as their primary tool of communications over the last two decades, this provision became a frequently litigated one, especially since the TCPA provides for $500 in statutory damages for each call that violates 47 U.S.C. § 227(b)(1)(A)(iii), with the possibility of trebling for violations found to be willful or knowing.
In the past, these cases often hinged on whether the equipment used to place the calls constitutes an “automated telephone dialing system.” The statutory definition of an ATDS limits the term to “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator and (B) to dial such numbers.” But that definition is far from a model of clarity and is particularly unclear regarding whether the phrase “using a random or sequential number generator” applies to both of the verbs in part (A) of the definition (i.e., “to store” and “to produce”) or instead only applies to the second verb, making equipment that stores numbers and then dials them (like most modern devices, even potentially including “smart” mobile phones, used to dial a list of customers) an ATDS even if the system involves no random or sequential number generation.
In 2021, the Supreme Court resolved this issue in Facebook v. Dugoid. In that case, the Court unanimously adopted the narrower definition of ATDS. In doing so, the Court began its analysis with the text and found that “[u]nder conventional rules of grammar, ‘when there is a straightforward, parallel construction that involves all nouns or verbs in a series,’ a modifier at the end of the list ‘normally applies to the entire series.’“ It then applied this “series-qualifier” canon to conclude that in the statutory definition of ATDS, the phrase “using a random or sequential number generator” applies to both verbs—to store and to produce. The Court further noted that this construction of the statute also followed “the commands of its punctuation.” The phrase “using a random or sequential number generator” in the definition is separated from the rest of the sentence by a comma, which the Court found “further suggests that Congress intended” the phrase to apply to both preceding verbs.
The Facebook decision, then, gave considerable reassurance to companies who use list-based systems to contact their customers. But it did not resolve all of the issues regarding the definition of an ATDS. In particular, it left open what constitutes the “capacity” to generate numbers using a random or sequential number generator. In particular, many otherwise compliant dialing systems might connect to a database that could theoretically be programmed to generate numbers randomly or sequentially (including through something as basic as an Excel spreadsheet).
The 3rd Circuit recently confronted this question in Panzarella v. Navient Solutions Inc. In Panzarella, a student whose loans Navient serviced (Matthew Panzarella) listed his mother and brother as references for his loan, and provided their cellular telephone numbers on his loan application. When Mr. Panzarella defaulted on his student loans, Navient called his mother and brothers’ numbers as part of its debt collection efforts. The Panzarellas then filed a class action asserting that Navient called them on their cellular phones without their consent using an ATDS, in violation of 47 U.S.C. § 227(b)(1)(A)(iii).
Navient called the Panzarellas using a “ININ” dialer that could only place calls to numbers from lists. That dialer, however, could not generate numbers on its own, but rather required a connection to a database to provide it with numbers. Navient used a Microsoft SQL database for that purpose. The database stored the list of telephone numbers associated with Navient accounts that were in default. While the SQL database could generate random or sequential numbers in its table, it did not utilize that feature, which was never used to contact debtors. Instead, all of the numbers were pulled from Navient’s customer database.
Navient moved for summary judgment, which the district court granted. Notably, in doing so, the district court concluded that the ININ dialer and the SQL database were separate pieces of “equipment” and therefore whether or not the SQL database could generate random or sequential numbers was not relevant to determining if the Panzarellas were called using an ATDS. The Panzarellas then appealed.
The 3rd Circuit panel first reversed the district court’s conclusion as to whether the term “equipment” in the definition of an ATDS applied only to the dialer itself, or encompassed broader systems such as the databases those dialers pull from. Since “equipment” is not a defined term in the TCPA, the 3rd Circuit court reviewed plain language definitions and defined the term equipment to mean “the tools used to achieve a particular purpose or objective.” The 3rd Circuit court also focused on the statutory context in which the term equipment was used, noting that Congress had elected to regulate “automatic telephone dialing systems” and not just free-standing dialing machines. It also noted that over the last two decades, the FCC repeatedly interpreted the TCPA to regulate combinations of hardware and software (such as a dialer and a database) as a single system. The 3rd Circuit panel thus concluded that “an ATDS may include several devices that when combined have the capacity to store or produce telephone numbers using a random or sequential number generator and to dial those numbers.” The panel held that the district court’s decision to consider the ININ as a separate piece of equipment from the SQL database was thus incorrect and overruled.
The 3rd Circuit court next considered and rejected Navient’s argument that the Supreme Court’s decision in Facebook required equipment to actually use any latent capacity to generate random or sequential numbers to constitute an ATDS. Instead, the court reasoned that the decision in Facebook addressed a separate statutory issue (i.e., whether the phrase “using a random or sequential number generator” modified both verbs, to store and to produce), and did not address what it means to have the capacity to use a random of sequential number generator under the statute. Thus, under Panzarella, equipment constitutes an ATDS if it has the capacity to generate numbers using a random or sequential number generator, even if that capacity is not used. Since there was conflicting evidence on that point, the 3rd Circuit panel held that summary judgment was not appropriate as to whether the combined system used by Navient constituted an ATDS.
The 3rd Circuit panel, however, upheld the lower court’s decision on the alternative grounds that Navient did not make the calls “using” an ATDS that could constitute a TCPA violation under the statutory definition. It noted that the term “using an [ATDS]” in the definition was ambiguous, since use is an “elastic term” with multiple potential meanings. The appellate court, however, examined other provisions of the TCPA and found that the “touchstone” of TCPA’s regulations was “the actual recipient of an unwanted automated telephone communication.” This “touchstone” thus called for a narrower interpretation of the term “use” that only prohibited calls when ATDS were actually employed as autodialers.
The appellate court then addressed what it meant to make a call using the autodialing features of an ATDS. It noted that in Facebook, the Supreme Court had determined that the “defining feature” of an ATDS was the equipment’s “ability to employ random or sequential number generation to produce or to store telephone calls.” Thus, “to use an ATDS as an autodialer, one must use its defining feature–its ability to produce or store telephone numbers through random or sequential number generation.” Because the calls made by Navient did not use this feature, summary judgment was appropriate notwithstanding the broad definition of an ATDS promulgated by the court.
Panzarella, then, represents another win for companies that wish to use list-based systems to contact their customers without incurring substantial TCPA liability. However, future plaintiffs will no doubt seize on the court’s expansive definition of an ATDS to try to bring suits against these types of systems, while attempting to convince other circuits to ignore the 3rd Circuit’s conclusion about what it means to “use” an autodialer.
3. Drazen et al., GoDaddy.com v. Pinto, 11th Circuit No. 21-10199 (July 27, 2022) (TCPA, class certification) (Drazen)
In Drazen, the 11th Circuit overturned a class action settlement arising under the TCPA, holding the district court could not approve the settlement because it included absent class members who lacked Article III standing.
Plaintiffs (including Drazen) sued GoDaddy.com, alleging GoDaddy.com had sent marketing calls and texts to plaintiffs’ cell phones using an automatic telephone dialing system, in violation of the TCPA (47 U.S.C. § 227(a)(1), (b)(1)(A)). The parties ultimately reached a $35 million class settlement, covering the claims of all persons who had received a call or text on their cell phone from GoDaddy.com over a certain time period. Over the objections of an objecting class member, Pinto, the district court granted final approval of the class settlement. Pinto appealed.
On appeal, Pinto primarily attacked the award of attorney’s fees, asserting the settlement was a “coupon settlement” under the Class Action Fairness Act, hence requiring a different approach to attorney’s fees, because it gave class members the option of receiving $35 in cash or a $150 voucher to be used at GoDaddy.com. The court of appeals did not reach this issue. Instead, it vacated the approval of the settlement on the ground that the class definition did not meet Article III standing requirements.
Previously, in Salcedo v. Hanna, 936 F.3d 1162, 1172 (11th Cir. 2019), the 11th Circuit held that the receipt of a single unwanted text message was not sufficient to constitute concrete injury for Article III standing purposes. GoDaddy.com estimated that about 7% of the class had received only a single text message, but the district court concluded that some nevertheless had viable claims in their respective circuits – circuits that did not follow Salcedo – and hence could remain in the class. The appellate court disagreed.
The appellate court first observed that a federal court must “have Article III standing at every stage of the litigation,” which includes the settlement stage of a class action. And, the court concluded, under TransUnion LLC v. Ramirez, -- U.S. --, 141 S. Ct. 2190 (2021), this means both that the plaintiff must show the kind of concrete injury that satisfies TransUnion and that “‘[e]very class member must have Article III standing in order to recover individual damages.’“
This second principle, the court concluded, means that “when a class seeks certification for the sole purpose of a damages settlement under Rule 23(e), the class definition must be limited to those individuals who have Article III standing.” “TransUnion says that we can’t award damages to plaintiffs who do not have Article III standing,” and “[w]e cannot . . . check our Article III requirements at the door of the class action.”
Applying this principle to the Drazen settlement, the appellate court ruled that the class settlement could not stand because it included persons that, under its Salcedo precedent, had not suffered concrete injury because they had received only a single unwanted text message. The court also noted that the class included persons who received only a single telephone call. Salcedo “did not decide whether a single phone call to a cellphone was a concrete injury for Article III standing purposes,” so the court found that “the best course is to vacate the class certification and settlement and remand in order to give the parties an opportunity to redefine the class with the benefit of TransUnion.”
Plaintiffs filed a petition for rehearing en banc, asking the Court to revisit its ruling in Salcedo. That petition remains pending as of late September, 2022.
4. Intelligent Transportation Society of America et al. v. FCC, DC Circuit No. 21-1130 (August 12, 2022) (FCC 5.9 GHz Order)
In 1998, Congress passed the Transportation Equity Act for the 21st Century which, among other things, instructed the FCC to consider radio spectrum needs for intelligent transportation systems, which allow cars to communicate with each other to avoid accidents. Accordingly, the FCC allocated the 5.9 GHz band of the radio spectrum to intelligent communications systems.
Intelligent communications systems have not developed as anticipated and, twenty years later, no commercially-marketed vehicles use such a system. Thus, in 2019, the FCC began a new rulemaking process to reallocate the 5.9 GHz band. The FCC proposed to keep the upper 30 megahertz of the band for use by intelligent transportation systems and reallocate the lower 45 megahertz for use by unlicensed devices like wi-fi routers. After a notice and comment period, the FCC adopted that proposal.
The Intelligent Transportation Society of America and the American Association of State Highway and Transportation Officials (“Petitioners”) petitioned the United States Court of Appeals for the District of Columbia for review, arguing that the order was arbitrary and capricious because it violated the Transportation Equity Act, and urging that the lower 45 megahertz should not be reallocated. The D.C. Circuit affirmed the FCC’s order, reasoning that the Transportation Equity Act gave the FCC broad authority to manage the spectrum related to intelligent transportation systems and that it acted within that authority by reallocating the spectrum 20 years after the initial allocation with a considered rule supported by reasoned explanation.
Petitioners advanced several arguments that the court rejected. First, Petitioners argued the FCC lacks the Department of Transportation’s traffic-safety expertise, and therefore that the court should not defer to the FCC’s judgment that the remaining 30 megahertz will support intelligent transportation systems. The court reasoned that the FCC has statutory authority to allocate the spectrum to its best use and this allocation was therefore squarely within its mandate. Second, Petitioners argued that intelligent transportation systems need more than 30 megahertz for future technologies, but the court gave “great deference” to the FCC and determined that the agency’s conclusions were reasonable. Third, Petitioners claimed the FCC did not address a proposal from the auto industry that the FCC should require the industry to commit to building intelligent transportation systems. The court noted that even if that proposal had been adopted, the FCC did not believe that fully-developed intelligent transportation systems would require the entire 5.9 GHz band. Thus, this proposal was not a reasonable alternative that the FCC had to address. Fourth, Petitioners claimed that the FCC did not adequately explain its change of policy, but the court disagreed. Finally, Petitioners argued that the FCC failed to consider that the unlicensed devices authorized for use of the lower 45 megahertz of the 5.9 GHz band would interfere with communications in the upper 30 megahertz. The court observed that the FCC had in fact addressed that issue at length and imposed limitations on those 45 megahertz to minimize interference.
5. National Association of Broadcasters, et al. v. FCC, DC Circuit No. 21-1171 (July 12, 2022) (FCC Order imposing verification requirements for radio broadcasters)
Since 1927, Congress has tasked the FCC with granting licenses and administering the obligations that come with them. Section 317(a) of the Communications Act requires broadcasters to announce who “paid for or furnished” a sponsored program at the time of the program. To ensure that the broadcaster can make that identification, § 317(c) imposes an additional duty:
The licensee of each radio station shall exercise reasonable diligence to obtain from its employees, and from other persons with whom it deals directly in connection with any program or program matter for broadcast, information to enable such licensee to make the announcement required by this section.
Finally, Congress required the FCC to “prescribe appropriate rules and regulations to carry out the provisions of” § 317.
Announcements for sponsored radio broadcasts are required by the Communications Act of 1934. To make an announcement, the broadcaster must ask its employees and sponsors for information necessary to determine a sponsor’s identity. Recently, the FCC, in an effort to address concerns that Chinese and Russian governments have been secretly leasing airtime to broadcast propaganda on American radio, issued an order called “In the Matter of Sponsorship Identification Requirements for Foreign Government-Provided Programming” (“Order”). The Order requires broadcasters to undertake a five-step process whenever they lease airtime to a sponsor:
- Tell the sponsor about the § 317 disclosure requirement;
- Ask the sponsor whether it is a foreign governmental entity or an agent of one;
- Ask the sponsor whether anyone further back in the production or distribution chain is a foreign governmental entity or an agent of one;
- Independently confirm the sponsor’s status, at both the time of the lease and the time of any renewal, by checking the Department of Justice’s Foreign Agents Registration Act website and the FCC’s U.S.-based foreign media outlets reports; and
- Document those inquiries and investigations.
The National Association of Broadcasters (“Petitioners”) objected to the fourth step of the Order. The court found that the FCC had not identified statutory authority for the Order and had decreed a duty the FCC was not empowered to impose and not required under the statute.
The FCC attempted to defend the Order with two arguments. First, the FCC stated that verifying information’s accuracy is part of making a reasonably diligent effort to obtain that information from a source. The court held that § 317(c) imposes a duty of inquiry but does not make broadcasters responsible for investigating the truth of the information they obtain.
Second, the FCC argued that even if § 317(c) does not affirmatively authorize it to require searches of the federal sources, it can require the searches as part of its general authority to “prescribe appropriate rules and regulations to carry out the provisions” of § 317. The court disagreed that a generic grant of rulemaking authority to fill gaps allowed the FCC to alter the specific choices Congress made. Instead, the FCC must abide “not only by the ultimate purposes Congress has selected, but by the means it has deemed appropriate, and prescribed, for the pursuit of those purposes.”
The court held that the FCC cannot require radio broadcasters to check federal sources to verify sponsors’ identities. Although Petitioners had brought other APA arguments and a First Amendment claim, the court’s ruling resolved the parties’ dispute and these other arguments were not addressed.
This report was edited by Christian F. Binnig, from the Chicago, Illinois office of Mayer Brown LLP (who also contributed to its preparation). In addition, Hans J. Germann, Christopher S. Comstock, Kara K. Gibney, Kyle J. Steinmetz and Sara Norval, also from the Chicago, Illinois office of Mayer Brown, and Andrew C. Emerson, Aaron Shank, Timur Dikec, Gabrielle Wast, and Chris Riedel, from the Columbus, Ohio office of Porter Wright Morris & Arthur LLP, contributed to the preparation of this report.
