The 70/80/90 GHz Bands are allocated on a co-primary basis for Federal and non-Federal use, for terrestrial, satellite, radio astronomy and radiolocation uses. For nearly twenty years, there has been a non-exclusive “light” licensing and registration scheme in the 70/80/90 GHz Bands for high-capacity, ground-based point-to-point links that can be used for any non-broadcast purpose. In a June 2020 Notice of Proposed Rulemaking in WT Docket No. 20133, the Commission launched consideration of changes to the 70/80/90 GHz antenna standards and the link registration processes which proponents believed would increase the utility of the bands. But the record also affirmed that other stakeholders envisioned additional uses of the bands, which they claimed would be compatible with the ground-based point-to-point links such as using the 70/80/90 GHz Bands for point-to-point links to endpoints in motion to facilitate broadband service to ships and aircraft or for high-capacity links between points on the ground using stratospheric platforms.

Now, a year later, the Bureau is particularly “interested in the feasibility of permitting HAPS or other stratospheric-based platform services in these bands” and whether these services could be introduced compatibly with other services in the bands. Among other subjects, the Bureau asks how stratospheric platforms would be used in the bands (including information system operating parameters), what services the platforms can support (e.g., commercial, private, or governmental uses), and whether HAPS or other stratospheric platforms are commercially viable in light of several previous stratospheric platform advocates have indicated they are no longer actively pursuing their plans. The Bureau also asks whether, if it were to authorize stratospheric communications platforms to use 70/80/90 GHz Bands, the FCC should impose certain technical limitations or restrictions on the deployment of such services to protect incumbent operations, such as altitude restrictions, power limits, transmitter design considerations, directional constraints, additional emission limits, coordination, or other requirements. Much like a rulemaking notice, the Public Notice also inquires what licensing and service rules should apply to stratospheric-based communications services and whether they should be limited to services facilitated by nominally fixed stratospheric platforms, one of the defining characteristics of HAPS as described in international and FCC regulations.

The Public Notice also seeks comment on any international implications related to HAPS or other stratospheric-based platform services that might be authorized in the 70/80/90 GHz Bands. The Bureau noted that, at the 2019 World Radiocommunication Conference (“WRC”) of the International Telecommunications Union, additional spectrum bands were identified for HAPS globally at 31.0-31.3 and 38.0-39.5 GHz and in Region 2, the Americas, at 21.4-22.0 and 24.25-27.5 GHz. The Commission has not taken action to date to implement domestically these new international allocations, which supplement much more narrow allocations for HAPS at earlier WRCs in the 2, 6, 27/31, and 47/48 GHz bands.

Continuing the Public Notice’s theme of new means of potential connectivity for internet broadband access, the Bureau’s Public Notice also requests additional information regarding the potential use of the 70/80/90 GHz Bands to provide broadband Internet access to customers on airplanes and aboard ships. One of the subjects in the 70/80/90 GHz rulemaking proceeding initiated last year was consideration of a proposal by Aeronet Global Communications, Inc. to use these Bands for “Scheduled Dynamic Datalinks” (“SDDLs”) to aircraft and ships.

Question Presented

The Supreme Court granted review of the question: “Whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential generator”?”

Six Circuits have previously answered the question. The Second, Sixth and Ninth held that a predictive dialer or system that dials from a stored list can qualify as an ATDS under the TCPA. The Third, Seventh, and Eleventh require that technology must have the capacity to generate random or sequential telephone numbers to qualify as an ATDS. The Seventh Circuit decision, Gadelhak v. AT&T Services, Inc., was penned by then-Judge Barrett, who participated in today’s argument. In addition, the D.C. Circuit’s 2018 remand in ACA International v. FCC questioned whether a broad reading of ATDS was lawful.

This case arises out of the Ninth Circuit’s broad approach to the definition of an automatic telephone dialing system under the TCPA.

Procedural History

The controversy comes before the Supreme Court on the basis of text messages that plaintiff Duguid allegedly received from Facebook in 2005. Duguid alleged that Facebook had violated the TCPA by maintaining a database of numbers on its computer and transmitting text message alerts to selected numbers from its database using an automated protocol. Facebook filed a motion to dismiss, arguing that Duguid had failed to plead the use of an ATDS. The district court held that the ATDS allegations were insufficient because they “strongly suggested direct targeting rather than random or sequential dialing” and dismissed the case. Soon after, the Ninth Circuit issued its decision in Marks v. Crunch San Diego, holding that an ATDS definition includes devices with the capacity to store numbers and to dial numbers automatically. Duguid appealed the prior dismissal of his claims and, applying Marks, the Ninth Circuit reversed. Facebook asked the Supreme Court to review the Ninth Circuit’s decision.

Briefing

Duguid, Facebook, and the United States have fully briefed the issue. Duguid argues for a broad definition of ATDS based on the statutory text and two canons of construction, the distributive-phrasing canon and last-antecedent canon, that he alleges show the adverbial phrase “using a random or sequential number generator” modifies the verb “to produce” but not the verb “to store.” Facebook, on the other hand, posits that the statutory language “using a random or sequential number generator” is an adverbial phrase that modifies both the verbs “store” and “produce.” Under that approach, the statutory text limits the definition of an ATDS to technology that uses a random- or sequential-number-generator. The United States filed a brief agreeing with Facebook that the plain text of the TCPA limits the definition of an ATDS to random- or sequential-number-generators. The government’s grammatical analysis focuses on the comma that precedes the adverbial phrase, pointing to past Supreme Court decisions and canons of statutory interpretation that advise such a comma is evidence that the phrase is meant to modify all antecedents (in this case, both the verbs “store” and “produce”).

Oral Argument

Argument in the case went over the scheduled hour by about 20 minutes. Facebook and the United States split the first 30 minutes and Duguid took the remaining time, excluding Facebook’s brief rebuttal. While oral argument does not always foretell the Court’s decision, certain trends developed.

• Grammatical Construction: A majority of Justices seemed to agree that Facebook and the United States had a stronger grammatical reading of the statute, but struggled with both the awkwardness of the construction, and the surplusage problem that their interpretation creates.
  • Justice Alito, for example, asked both Facebook and the United States whether it made sense to talk about random or sequential number generators as a device that can “store” numbers, wondering if their interpretation rendered the verb “store” superfluous. In response, the United States suggested that Congress was likely taking a “belt-and-suspenders” approach to drafting.
  • The Chief Justice, noting that most speakers do not resort to statutory canons of interpretation to understand language, suggested that the “sense” of the provision was more important than its syntax.
  • Justice Kavanaugh repeatedly asked about the different scope of the prohibition on artificial or prerecorded voice calls and “live” calls using an ATDS, as a way to understand the ATDS language.
  • Justice Gorsuch asked Facebook and the United States to address an alternate interpretation, offered by then-Judge Barrett in her decision in Gadelhak, that the clause “using a random or sequential number generator” could modify the phrase “telephone numbers to be called” instead of the verbs “store” and/or “produce.” Both parties asserted this interpretation would lead to their preferred outcome.
• Broader Questions on TCPA Scope: The Justices also pressed the parties on questions unrelated to the grammatical construction the statute.
  • Justice Thomas asked why “text messages” were covered by the TCPA at all, given that the statute’s language only regulates calls and later called the statute an “ill fit” for current technology. Justice Thomas’s question is indicative of a broader concern, shared expressly by Justices Sotomayor, Alito and Kavanaugh, that the TCPA may be ill-suited to regulate technology that looks very different from the technology available in 1991 when the TCPA was passed.
  • Justices Sotomayor, Barrett, Breyer, and Gorsuch each questioned whether the Ninth Circuit’s broad definition of an ATDS would expose all smartphone users to potential liability.
  • Justice Barrett was concerned specifically with the call-forwarding function and seemingly “automated” functions that modern cellphones are equipped with.
  • Duguid seemed unable to provide the Justices with a satisfactory answer on several of the non-grammatical issues and gave conflicting answers concerning the role for, and level of, human interaction necessary to remove technology from the definition of an ATDS.

The Court is expected to issue its ruling by Spring 2021. To learn more about the background of the case, the Circuit Courts’ varying definitions of an ATDS, and the potential implications for the Court’s ruling, consider listening to Kelley Drye litigator and Partner Paul Rosenthal’s preview podcast of Duguid or Kelley Drye’s monthly TCPA Tracker.

The case involves two Notices of Apparent Liability issued to companies now under common ownership, Horizon Telecom, Inc. and Reduced Rate Long Distance, LLC. In Horizon, the Commission proposed a fine of $5,084,000 for slamming. In Reduced Rate, the Commission proposed a fine of $8,000 for failing to respond to two informal consumer complaints. Both NALs were issued in 2008. Yesterday, the Enforcement Bureau released a consent decree settling the two cases.

What is so unusual about the settlement?

• For starters, the settlement amount is only $53,000. This is a significant reduction from the over $5 million in fines proposed against the two companies. (Though not quite this significant.) The Order notes that the payment "is reduced from the proposed NAL amounts based upon their demonstrated inability to pay."
• Second, Horizon, which had sold its customer base to Reduced Rate in 2007, agreed never to provide telecommunications services again. Not since the Fletcher Companies in 1997 have I seen a telecommunications carrier barred from the market.
• Third, Reduced Rate's compliance plan requires outside counsel review of its materials. The consent decree states that Reduced Rate "shall submit [its Policy Manual, sales scripts, TPV scripts and other marketing materials] to legal counsel of its own designation for review and editing ..." The order further requires that such counsel "shall have experience with federal telecommunications and consumer protection laws, including the law relating to fraudulent, deceptive, unconscionable, and unfair acts or practices." To our knowledge, this is the first time the FCC has ever required a regulated entity to obtain counsel.
• Finally, although not unprecedented, the consent decree requires Horizon and Reduced Rate to self-report non-compliance with the consent decree within 30 days. Such self-reporting obligations have appeared in a few consent decrees in the past year or so (though not in the Verizon and Verizon Wireless consent decrees last month). It's not quite a trend, but it is something worth monitoring in the future. (That's what we're here for).

The latest consent decree involves Tricom USA, Inc., a carrier that provided long distance international telecommunications primarily to resellers and other carriers. Tricom held a domestic 214, an international 214 and submarine cable landing licenses in order to provide these services. As explained in the consent decree, Tricom filed for Chapter 11 bankruptcy in 2008, leading to a reorganization of the carrier. The carrier properly filed for approval to transfer its authorizations during the bankruptcy and following its expected transition from bankruptcy.

However, upon emergence from bankruptcy, its largest shareholder received substantially more shares than initially anticipated, resulting in the shareholder holding a majority stake in the carrier, rather than a minority stake. Further, this shareholder than transferred ownership in Tricom to a subsidiary of the shareholder, without seeking the FCC's approval to do so. None of the violations appeared to be intentional, and all involved pro forma transfers of control of Tricom.

The Enforcement Bureau settled these proposed violations for a total payment of $20,000. The adopting order and consent decree are provided in the attached links.

2011 has been highlighted by an active FCC using Section 201(b) of the Act to engage in consumer-focused enforcement. Although the FCC's authority to use 201(b) in this way is in doubt, the lesson for carriers is clear, especially in the prepaid market. Carriers should clearly and conspicuously disclose all material terms and conditions of their services. Failure to do so risks claims of deceptive marketing or cramming.

The latest Notice of Apparent Liability was issued against Simple Network, Inc. The NAL largely tracks the previous four NALs. Simple Network's disclosure is slightly different than the disclosure in the other four cases, but the FCC reaches the same conclusion that the disclosure is not prominent enough (para. 9) and is too vague (para. 10). The NAL also dismisses Simple Network's listing of a toll-free number to obtain rate information, stating that this information is not available at the point of sale.

In the end, the FCC appears most skeptical of any assertion of a large number of minutes available only on a single call. The five carriers identified so far have all explained how those minutes may be obtained by consumers, but the NALs conclude that the explanations are not sufficient. Prepaid card providers should compare their disclosures with the five disclosures found insufficient so far.

The Compass Global proceeding dates back to 2006, when the FCC released a Notice of Apparent Liability proposing a fine of $466,000. Post NAL, Compass Global hired FCC counsel and presented, in the Bureau's words "significantly more detail about the Company's operations, other unique circumstances and its efforts to comply with the Commission's payphone compensation rules ..."

The Consent Decree settles the NAL for $20,000 (which is paid over six months). This was based in part on "certified financial information" submitted by the company a few months ago to document its inability to pay a large forfeiture.

In addition to the settlement amount, Compass Global agreed to a compliance plan in which, among other things, it must report to the Commission instances of non-compliance with the payphone compensation rules. Further, Compass Global agreed that it is a "completing carrier" for payphone compensation purposes.

The Commission, rather than the Bureau, must vote on all proposed fines above $100,000, so one may presume that each item involves a significant fine. Significant fines also are likely because several of the subjects of the draft enforcement orders have histories of prior FCC enforcement actions. One company -- The Hot Lead LLC -- received a fine of $2.5 million in 2008 for junk faxes. Pending against it are four proposed fines, of $739,500, $695,000, $47,000 and $51,500. Another company -- Sunstar Travel and Tours -- received a fine of $169,500 in 2008 and has a proposed fine of $136,000 pending now.

In addition, one potential action appears to be against an alleged "fax broadcaster." If issued, it would be the first proposed forfeiture issued under the Commission's "high degree of involvement" standard for fax broadcaster liability.

Caveat: Circulation of an item does not necessarily indicate impending action by the FCC. Four apparent "junk fax" orders began circulating in June 2009. 14 months later, those orders remain under consideration.

UPDATE 9/3/10: The FCC is beginning to release the orders. On Thursday, it released a Notice of Apparent Liability against Clean Credit, Inc. in the amount of $528,000. The Commission imposed the statutory maximum penalty of $16,000 per violation because

"Clean Credit has exhibited a flagrant disregard for the TCPA and the Commission’s rules and orders, with a lengthy history of violations, and an ongoing pattern of violations extending to as recently as a few months ago."

If the Commission similarly applies the $16,000 maximum forfeiture to the remaining investigations, multi-million dollar forfeitures are on the way.