September 2009
Cable and Telecommunications Policy Newsletter
In This Issue
FCC CHAIR ANNOUNCES RULEMAKING ON NET NEUTRALITY
$450 MILLION IN MINNESOTA BROADBAND STIMULUS PROJECT APPLICATIONS
FACEBOOK SETTLES CLASS ACTION PRIVACY INFRINGEMENT SUIT
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FCC CHAIR ANNOUNCES INTENT FOR RULEMAKING ON NET NEUTRALITY
 
In a speech to the Brookings Institution on September 21, 2009, new FCC Chairman, Julius Genachowski announced that he would seek a Notice of Proposed Rulemaking on net neutrality.  Genachowski stated that the rulemaking would be based on the four principles outlined in the FCC's 2005 Internet Policy Statement.  Those principles state that network operators cannot prevent users from accessing lawful content, applications and services of their choice, nor can they prohibit users from attaching non-harmful devices to their network.  Genachowski would add two additional principles to the rulemaking.  First, Genachowski proposes to add a principle of non-discrimination - stating that broadband providers cannot discriminate against a particular Internet content or applications.  In his speech, Genachowski stated, "this means they cannot block or degrade lawful traffic over their networks, or pick winners by favoring some content or applications over others in the connection to subscribers' homes.  Nor can they disfavor an Internet service just because it competes with a similar service offered by that broadband provider."
 
The second principle Genachowski would add is "transparency" - stating that broadband providers must be transparent about their network management practices.  Genachowski stated that this principle needs to be implemented as a rule because new network management practices and technologies challenge the "original understanding" of the internet as a tool "whose user manual would be free and available to all."  Genachowski specifically cited the Comcast-Bit Torrent case as a basis for his call for a principle of transparency.
 
Genachowski stated that he would "ensure the rulemaking process would be fair, transparent, fact-based and data driven.  Genachowski stated that the FCC launched a new web site dedicated to a public discussion of net neutrality issues - www.openinternet.gov.
 
In a statement in response to Genachowski's speech, National Cable and Telecommunications Association (NCTA) President, Kyle McSlarrow expressed his support for a fair, open, and data-driven rulemaking process.  McSlarrow also expressed his appreciation for Genachowski's recognition of the "enormous investment made by internet service providers and their role in a broadband story that continues to be an unparalleled success for the economy and the American consumer."  McSlarrow added, "any regulation in this area should be approached with great caution and only in the most targeted way, and to advocate policies that avoid government entanglement in operational decisions that could undermine the very dynamism of the Internet we all seek to preserve."
 
NEARLY $450 MILLION IN FEDERAL BROADBAND STIMULUS PROJECTS APPLIED FOR IN MINNESOTA
 
Minnesota-based organizations applied for nearly $450 million dollars in federal broadband stimulus funding under the broadband stimulus programs created by the American Recovery and Reinvestment Act of 2009 (ARRA).  Twenty-six (26) applications were filed with the National Telecommunications and Information Administration (NTIA).  An additional seventy (70) applications were made by firms not based in Minnesota, but whose projects would serve some portion of Minnesota.
 
Of the 26 projects from Minnesota-based organizations, the three largest are:
 
  • Central Minnesota Rural Broadband Access Project.  A 4G WiMax project that would serve a 1600 square mile area with wireless broadband coverage and 150 square mile area in Todd, Morrison, and Mille Lacs counties in central Minnesota.  This application requests $65.2 million in grants and $65.2 million in loans.  The project would provide residential and business services, as well as managed services to government and community anchor institutions, such as schools, health care facilities, and public safety agencies.  The project application lists 33,628 households within the three counties, and asserts that 9,567 of those households are unserved, and 18,913 underserved households.
  • Cook County.  A fiber-to-the-premises (FTTH) that would provide broadband service to unserved areas of Cook County, including the communities of Lutsen, Schroeder, Tofte, East Cook and West Cook.  According to the application, the remainder of the proposed service area is unincorporated areas of Cook County.  The proposed service area includes 3,152 homes and 236 businesses.  The application also states that the proposed service area includes 57 community anchor institutions.  Cook County estimates 65% penetration of the market within three (3) years of receiving funding.  The application states that Cook County will partner with Boreal Access, an ISP organized as a cooperative that has been in business in the Cook County area for 15 years.
  • Northeast Service Coop.  This is a middle-mile project that would make dark fiber, wavelength services available to private sector providers in rural areas of northeast Minnesota.  The Northeast Service Cooperative members are state and local government agencies, schools, and health care institutions.  $32 million in grant funding is requested.  Over $11 million in loan funding is requested.  The application states that it will "improve access to critical education & health care services to 20,000 households which lack broadband services."

The NTIA has already contacted state agencies with instructions on how states are to provide feedback to the NTIA with respect to broadband applications that would serve areas of each state.  Comments from the states are due to the NTIA by October 14, 2009.  Interested parties are free to contact and comment on applications.  In Minnesota, comments should be directed to Diane Wells with the Minnesota Department of Commerce.  Ms. Wells has indicated she would like to receive comments from interested parties no later than October 2, 2009.

Links:   Summary of Minnesota-based Project Applications

 
FACEBOOK SETTLES CLASS ACTION PRIVACY INFRINGEMENT SUIT FOR $9.5 MILLION
 
Facebook settled a class action lawsuit over its Beacon advertising program this month.  The settlement is awaiting the approval of a federal court in San Jose, California.  Facebook's Beacon program reported on Facebook users' purchases from Facebook-affiliated web sites on Facebook users' social networking feeds.  The case was triggered when the Beacon program reported a user's purchase of an engagement ring, spoiling the surprise for his girlfriend.  Facebook continues to insist it did not violate the law.
 
With the exception of the three lead plaintiffs in the case, who will receive $23,500, Facebook users will receive none of the class action settlement proceeds.  Plaintiff lawyers can apply for up to $3.17 million of the $9.5 million settlement for attorney fees.  $250,000 will go to covering the costs of communicating with the class members.  The remainder will be used to establish a new privacy foundation to fund programs designed to educate users, regulators, and enterprises regarding critical issues related to the protection of identity and personal information online through the user control, and to protect users from on-line threats.  The lawsuit also caused Facebook to change its mode of customer engagement in the program from an opt-out to an opt-in system.  Facebook is also nearly complete in its efforts to terminate its Beacon advertising program.