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The FCC has announced that full payment of all applicable Regulatory Fees for Fiscal Year 2012 (FY 2012) must be received no later than 11:59 PM, ET, on September 13, 2012. As of today, the Commission’s automated filing and payment system, the Fee Filer System, is now available for filing and payment of FY 2012 regulatory fees.

As we reported last month, the FCC released a Report and Order containing final determinations as to how much each FCC licensee will have to pay in Annual Regulatory Fees for FY 2012. The FCC collects Annual Regulatory Fees to offset the cost of its non-application processing functions, such as conducting rulemaking proceedings.

These annual regulatory fees are owed for most FCC authorizations held as of October 1, 2011 by any licensee or permittee which is not otherwise exempt from such fees. As has been the case since 2009, the FCC requires that licensees use the Commission’s online Fee Filer System to submit their regulatory fees. In order to do so, parties must have a valid FCC Registration Number (FRN) and password. Payment can be made with a credit card, online payment from a bank account, check (after receiving an electronic voucher via Fee Filer), or wire transfer. More information regarding submitting a payment can be found here at the FCC’s Regulatory Fees website. Note that, effective June 30, 2012, the U.S. Treasury is no longer accepting credit card payments greater than $49,999.99.

For more information on annual regulatory fees, including assistance in preparing and filing them with the FCC, please contact any of the lawyers in the Communications Practice Section.

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The FCC has released a Report and Order which includes its final determinations as to how much each FCC licensee will have to pay in Annual Regulatory Fees for fiscal year 2012 (FY 2012). The FCC collects Annual Regulatory Fees to offset the cost of its non-application processing functions, such as conducting rulemaking proceedings.

In May of this year, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) regarding its FY 2012 payment process and the proposed fee amounts for each type of FCC license. In large part, the FCC adopted its proposals without material changes. With respect to the non-fee related proposals, the FCC imposed a new requirement that refund, waiver, fee reduction and/or payment deferment requests must be submitted online rather than via hardcopy. The FCC also adopted its proposal to use 2010 U.S. Census data in calculating regulatory fees. With respect to fees, Commercial UHF Television Station fees increased across the board, except for the fee associated with stations in Markets 11-25. In contrast, Commercial VHF Television Station fees decreased across the board, except for those stations in Markets 11-25. The fees for most categories of radio stations increased modestly. A chart reflecting the fees for the various types of licenses affecting broadcast stations is provided here.

The FCC will release a Public Notice announcing the window for payment of the regulatory fees. As has been the case for the past few years, the FCC no longer mails a hardcopy of regulatory fee assessments to broadcast stations. Instead, stations must make an online filing using the FCC’s Fee Filer system reporting the types and fee amounts they are obligated to pay. After submitting that information, stations may pay their fees electronically or by separately submitting payment to the FCC’s Lockbox.

Finally, as Paul Cicelski of our office noted earlier this year, the FCC is re-examining its regulatory fee program and has initiated the first of two separate NPRM proceedings seeking comment on issues related to how the FCC should allocate its regulatory costs among different segments of the communications industry. The FCC expects to release the second NPRM “in the near future” and implement any changes from those rulemakings in time for FY 2013.

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As I reported last week, the FCC’s new rules requiring television stations to replace the public files they maintain at their studios with electronic files to be hosted online by the FCC are currently set to become effective on August 2, 2012. Since that report, a lot of events have occurred, and the focus of this proceeding has officially shifted from the FCC to the U.S. Court of Appeals for the D.C. Circuit.

To no one’s surprise, the FCC earlier today issued an Order denying the National Association of Broadcaster’s (NAB) Petition for Stay of the FCC’s new online public inspection file rules. In its Order, the FCC states it is denying the NAB’s request because the NAB was unable to satisfy any of the four factors factors supporting grant of a stay. According to the FCC, the NAB failed to show (1) that the new rules would cause irreparable injury; (2) that the NAB is likely to prevail on the merits in its appeal; (3) that other interested parties will not be harmed if a stay is granted; and (4) that a stay would serve the public interest. Essentially, the FCC regurgitated its prior findings in deciding to move full speed ahead with the new rules. However, TV broadcasters have been seeking relief from the new rules, which will, without question, increase compliance burdens on TV stations while needlessly duplicating records already required to be maintained online by the Federal Election Commission.

As a practical matter however, today’s action by the FCC is more of a procedural hurdle that had to be cleared by broadcasters on their way to court rather than a true substantive analysis of the merits of the court appeal. As I reported last month, the NAB has already filed a Petition for Review asking the U.S. Court of Appeals for the D.C. Circuit to vacate the FCC’s action “on the grounds that it is arbitrary, capricious, in excess of the Commission’s statutory authority, inconsistent with the First Amendment, and otherwise not in accordance with law.” Also, earlier this week, in anticipation of today’s denial by the FCC, the NAB filed a separate Emergency Motion with the court asking the court to hold the new rules in abeyance. The NAB is asking the court to stay the August 2 effective date of the rules until the court has had an opportunity to consider the NAB’s Petition for Review.

According to the NAB’s request for a stay, the FCC has “engaged in arbitrary and capricious decisionmaking by disregarding the competitive harm that is likely to result from the Order and departing from the provisions of the Bipartisan Campaign Reform Act (BCRA.)” The NAB also states that its “members will suffer irreparable harm absent a stay because the Order compels television stations to post the prices for specific advertisements to a public website immediately after the sales occur.” The NAB’s request also noted that the new rules “will place NAB’s members at a distinct disadvantage to their non-broadcast competitors, who will not be required to post rate information on the Internet.”

While all of this is going on, the FCC has announced that it will be conducting a public demonstration of its proposed online public inspection file database next Tuesday, July 17, 2012, at 10:00 a.m., only two weeks or so prior to the date the new rules are scheduled to go into effect. Those of you interested in participating online can do so by logging in to www.fcc.gov/live. I will be posting a follow-up piece summarizing next week’s demonstration.

As the levels of activity on multiple fronts indicate, this proceeding is far from over. To be sure, obtaining a court stay is not an easy task. That said, this is the rare case where (despite the FCC’s contrary ruling), the irreparable harm to broadcasters is apparent, and the case on the merits is strong. While the court ponders the stay request, TV broadcasters need to be preparing themselves for the the process of uploading their public inspection files by the August 2 deadline. Whether or not a last-minute stay is granted, the next two weeks will be a white-knuckle ride for TV broadcasters.

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Earlier today, the FCC announced in the Federal Register that the Office of Management and Budget (OMB) has approved the FCC’s new rules requiring television stations to replace the public files that they maintain at their studios with electronic files that will be hosted online by the FCC. As a result of today’s announcement, the online file rules become effective on August 2, 2012. Included among the documents that must be made available online are stations’ ad sales records for political ads–a requirement widely speculated to be a response to the Supreme Court’s decision in the Citizens United case.

As I reported recently, what this means is that all full-power and Class A television stations will be required to upload any newly created public file documents to a not-yet-disclosed database managed by the FCC starting August 2. Stations will have until January 3, 2013, to post their current public file documents online, with the exception of letters and emails from the public which are not required to be uploaded.

With respect to political file documents, affiliates of ABC, CBS, NBC or Fox located in the top-50 television markets will have to begin uploading all newly created political file documents to the FCC’s database on August 2, 2012. The political file requirement will be phased in so that all other television stations must comply with the political file uploading requirement by July 1, 2014. Until July 1, 2014, stations not in the top-50 markets and all stations not affiliated with the top-four networks, regardless of the size of the market they serve, are exempt from the requirement. The FCC has stated that it plans to issue a Public Notice no later than July 1, 2013 seeking comments on the impact that the posting requirement has had on television stations to that point and to evaluate the effectiveness of the process. Items placed in a station’s political file prior to August 2 will not have to be posted online.

Whether any of these dates will hold remains to be seen.

First, the National Association of Broadcasters (NAB) has already filed a Petition for Review of the rules in the U.S. Court of Appeals for the District of Columbia Circuit, even though the deadline to do so is not until July 10. The NAB, along with 46 State Broadcasters Associations and others, had opposed the rules when the FCC proposed them, stating that they were riddled with omissions, greatly underestimated the burden on television stations, and were otherwise duplicative of reporting required by the Federal Election Commission (FEC). However, the FCC and the OMB rejected these claims, seemingly turning a blind eye to the voluminous record in the proceeding indicating that the proposed rules will increase burdens on television stations while merely duplicating records already required to be filed with the FEC. As a result, the NAB’s court challenge argues that the FCC’s action in adopting the rules “infringes on . . . First Amendment free-speech rights, exceeds statutory authority, and is arbitrary and capricious.” In addition, the NAB filed a motion for stay with the FCC earlier today asking the Commission to delay implementation of the rules until the court has had an opportunity to review the NAB’s Petition for Review.

Second, and of more practical concern, the FCC will now have to scramble to ready its online filing database and educate the public in its use before the August 2 effective date rolls around. The FCC has not yet announced when the database will be available for stations to “test” the system in advance of the rules going into effect as it claimed it would do when it adopted the new rules. The Commission did announce today that it will soon schedule user testing and educational webinars for the online public file to ensure that the uploading of materials by broadcasters can be done “smoothly and efficiently”.

Many will remember the chaos that occurred in 2009 and 2010 as a result of the FCC’s decision to adopt a new electronic Ownership Report filing requirement that increased both the amount of data to be collected and the number of reports to be submitted, but promised to mitigate the increased burden by making the data easy to copy into multiple filings. Repeatedly, the FCC’s system ground to a halt under the heavy load, precluding filers from working with the data they had painstakingly entered. As a result, the filing deadline had to be repeatedly extended until the bugs were worked out. Glitches such as this are inevitable with an untested system, which makes one wonder how the FCC believes it can make it all work before the August 2 deadline. It would be unfortunate if the combination of the Citizens United ruling and the impending November 6 election drove the FCC to once again implement a filing database that is not ready for prime time, forcing broadcasters to serve as beta testers.

Needless to say, given the NAB’s Petition at the court, the other likely court and FCC challenges to the rules, and the hurdles the FCC faces in implementing the online database, the odds are not high that stations will be fully uploaded by the August 2, 2012 deadline. Unfortunately, though, television stations can’t afford to wager on the speed with which the FCC will move in this case. Stations will therefore need to start moving now to ensure they are ready to post their files by August 2, 2012, and should remain alert to any FCC announcements informing them exactly how the new filing system will work.

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The FCC recently issued two separate Notices of Apparent Liability for Forfeiture (NALs), found here and here, for a combined sum of $40,000 against the licensee of a Class D AM radio station for failing to make available a complete public inspection file, and submitting what the FCC concluded was incorrect factual information concerning the station’s public inspection file. According to the FCC, the station submitted the incorrect information without having a reasonable basis for believing that the information it provided to the Commission was accurate. What is most significant about this case is that this latest in fines is in addition to a $25,000 fine the FCC issued less than a year ago and included the same violation, bringing the licensee’s collective contribution to the U.S. Treasury to $65,000 in the last 12 months.

By way of background, during a routine FCC inspection of an AM radio station in Texas back in December 2010, agents from the FCC’s Enforcement Bureau’s Houston Office found that the station failed to maintain a main studio with a meaningful full-time management and staff presence, determined that the station’s public inspection file was missing a current copy of the station’s authorization, its service contour map, the station’s most recent ownership report filing, the Public and Broadcasting manual, and all issues-programs lists, and refused to make the public inspection file available. As a result, in June of last year, the Bureau issued an NAL in the amount of $25,000 for violating the FCC’s main studio rule and public inspection file rules, and also required the licensee to “submit a statement signed under penalty of perjury by an officer or director of the licensee that . . . [the Station’s] public inspection file is complete.” In response to the FCC’s directive, last August the licensee submitted a certification stating that “[i]n coordination with [an independent consultant], all missing materials cited have been placed in the Station’s Public Inspection File, and the undersigned confirms that it is complete as of the date of this response.”

Agents from the Enforcement Bureau’s Houston Office returned to inspect the station’s public inspection file last October and it turned out that once again the file did not contain any issues-programs lists. The agents also determined that none of the station employees present had knowledge of the station having ever kept issues-programs lists in the public inspection file.

In response to a Letter of Inquiry from the Enforcement Bureau regarding the missing lists, the licensee told the FCC that that the issues-programs folder was empty due to an “oversight” and that the licensee believed that the public file contained daily program logs of the programming aired by the party brokering time on the station. The licensee also stated in its response that it had hired an outside consultant to review the public file, who apparently indicated to the licensee that the public file “was complete.”

Based on that follow-up visit, the Bureau released its first of two NALs issued on June 14, 2012, and cited the AM station for a failure to exercise “even minimal diligence prior to the submission” of its August certification stating that it was in full compliance with the FCC’s Public Inspection File Rules. In addressing the licensee’s violations, the Bureau noted that in 2003 the FCC expanded the scope of violations of Section 1.17 which states that no person should provide, in any written statement of fact, “material factual information that is incorrect or omit material information that is necessary to prevent any material factual statement that is made from being incorrect or misleading without a reasonable basis for believing that any such material factual statement is correct and not misleading.”

As a result, information provided to the FCC – even if not intended to purposefully mislead the FCC – can result in fines if the licensee does not have “a reasonable basis for believing” that the information submitted is accurate. Licensees therefore need to be aware that an intent to deceive the Commission is not a prerequisite to receiving a fine; inaccurate statements or omissions that are the result of negligence can be costly as well.

As if that were not enough, the Bureau issued a second NAL on the same day in which it assessed a further fine against the licensee in the amount of $15,000 for failing to make available a “complete public inspection file.” In determining the amount of this forfeiture, the Bureau noted that although the base forfeiture amount is $10,000 for public file rule violations, given the previous inspection by the agents from the Bureau’s Houston Office, the licensee had a history of prior offenses warranting an upward adjustment in the forfeiture amount. The Bureau therefore concluded that because the licensee had violated the public inspection file rule twice within a one-year period – including after being informed that it had violated the Commission’s rule – “its actions demonstrate[ed] a deliberate disregard for the Commission’s rules and a pattern of non-compliance,” warranting a $5,000 upward adjustment in the forfeiture amount.

This case is noteworthy because it demonstrates that parties dealing with the Commission must be mindful that, prior to submitting any application, report, or other filing to the FCC, it is important to ensure that the information being provided is accurate and complete in all respects. It also is significant for the high dollar amount of the fines the FCC issued to the licensee of a Class D AM station in a period of less than 12 months based on fairly common public file and main studio rule violations.

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The Office of Management and Budget (OMB) has once again rubber-stamped and approved an FCC information collection request in apparent defiance of its statutory obligation to take a hard look at the burdens imposed under the Paperwork Reduction Act (PRA). As I reported previously, the FCC adopted burdensome rules requiring television stations to replace their existing locally-maintained public inspection files with digital files to be placed online on an FCC-hosted website, including stations’ detailed political records. What is a bit of a surprise, and frankly disappointing, is that the OMB took less than two weeks to approve the FCC’s request even though the proposed rules appear to clearly violate the standards of the PRA, and lengthy comments were filed by multiple parties informing the OMB of that fact.

As I’ve stated, the new regulations will without question increase burdens on TV stations (including thousands of pages of copying, significant costs, and countless hours of employee time), while needlessly duplicating records already required to be maintained online by the Federal Election Commission. If such rules are not something the OMB should withhold approval of, or at least take a long hard look at, you have to wonder what level of burden is required to trigger a denial under the PRA. Very few FCC regulations that I can think of historically have imposed more paperwork burdens on stations than the online public/political file regulations.

In any case, in light of the OMB’s approval, all Top 4 network affiliated stations in the top 50 markets will have to start placing political file material online 30 days after the FCC publishes a notice of the OMB approval in the Federal Register. I will provide an update when that publication occurs. However, there still may be some twists and turns coming, as it is more than likely that broadcasters will ask the courts to stay the effective date of the rules. If such a request is granted, the rules will not go into effect as quickly as the FCC is hoping.

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As I discussed last month, the FCC has adopted rules requiring television stations to replace their existing locally-maintained public inspection files with digital files to be placed online on an FCC-hosted website, including stations’ detailed political records. The majority of television stations will not be required to begin posting their political file documents online until July 1, 2014, but stations in the top-50 markets that are affiliated with ABC, NBC, CBS or Fox will be required to comply once the new regulations go into effect, assuming that the rules survive challenges made by TV broadcasters.

Broadcasters have launched a three-pronged attack against the FCC’s proposed new regulations with a series of recent filings with the U.S. Court of Appeals for the D.C. Circuit, the Office of Management and Budget (OMB) and the FCC. The core thrust of the broadcasters’ challenges are focused on the requirement that TV stations disclose online very sensitive rate information about political advertising. Broadcasters have assailed the proposed rules for dramatically increasing regulatory burdens on TV stations while at the same time failing to require similar online disclosures by cable TV systems or other competitors to broadcast television.

The first shot fired after the FCC adopted the new regulations was by the National Association of Broadcasters (NAB) in a Petition for Review filed with the U.S. Court of Appeals for the DC Circuit. In its Petition, the NAB is asking the Court to vacate the FCC’s action “on the grounds that it is arbitrary, capricious, in excess of the Commission’s statutory authority, inconsistent with the First Amendment, and otherwise not in accordance with law.” An NAB spokesman summed it up by charging the FCC with “forcing broadcasters to be the only medium to disclose on the Internet our political rates” and jeopardizing “the competitive standing of stations.”

A number of broadcast groups opened up a second front against the FCC’s new rules earlier this week, with filings asking the OMB to take a hard look at the FCC’s proposed regulations under the Paperwork Reduction Act of 1995 (PRA), and to invalidate the rules due to the FCC’s failure to comply with the PRA. On behalf of 46 State Broadcasters Associations, Dick Zaragoza and I filed comments in the proceeding arguing that the FCC violated the PRA by, among other things, failing to analyze the large burdens the proposed new regulations will have on television stations in general, and on small television station businesses in particular. We also advanced the argument of the NAB and others that the new rules are unnecessarily and impermissibly duplicative of the records already required to be maintained online by the Federal Election Commission under the Bipartisan Campaign Reform Act of 1992.

In the third salvo, a coalition of broadcast groups calling themselves the “Television Station Group” is fighting the adoption of the rules at the FCC. This group filed a Petition for Reconsideration with the FCC asking the Commission to modify the proposed rules due to concerns with the requirement that stations reveal online precisely how much they charge for political advertising. The law requires that broadcasters charge their lowest unit rate for political ads during a pre-election window, and the Television Station Group told the FCC that if those rates are widely and easily accessible on an FCC-hosted website (and not just to candidates), commercial advertisers may make requests for that same low rate. The unintended effect could be to force broadcasters to homogenize their rates so that every ad costs the same, eviscerating the current cost advantage to candidates of being charged only the “lowest unit rate”. In short, the Television Station Group argues that the disclosure of price information is anti-competitive and disrupts the commercial advertising marketplace because “stations’ political ad rates, by law, must be based on commercial advertising rates.”

Although the new rules are under fire on a number of fronts, it remains to be seen if broadcasters will be able to successfully block the FCC’s efforts. Before the FCC’s regulations can go into effect, at a minimum, they will have to be approved by OMB through the PRA process which, in this case, will not likely be the usual perfunctory rubber stamp the FCC often receives from OMB. Also, Court of Appeals challenges to the rules are not due until July 30, 2012, and, at some point, parties are likely to ask both the FCC and the courts to hold the effective dates of the rules in abeyance until the broadcasters’ multiple challenges can be heard. In other words, the battle over the FCC’s proposed online public/political file rules is far from over.

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If all goes well, next week I’ll fulfill one of my secret ambitions: to discuss how retransmission consent is affecting the business of television distribution. I’ve participated in many panel discussions on retransmission consent policy (because I work in Washington, and policy is what we talk about here).

On Tuesday I’ll be in New York at the SNL Kagan TV and Radio Finance Summit where I’ll finally have a chance to talk about the business, financial and investment aspects of retransmission consent (because that’s what they talk about in New York). To me, those are the far more intriguing topics, because if you don’t totally understand the market, you can’t credibly defend your policy positions.

SNL has assembled an all-star panel, including senior execs from Fisher Communications, SJL Broadcast Management Corporation, Communications Corporation of America, Moodys, and the resident FCC Media Bureau Chief, Bill Lake. SNL’s Robin Flynn (who always comes armed with thoughtful and well-presented data) will moderate. So Robin, here are some of the questions I’d like to hear debated by my fellow panelists, and I may have an opinion of my own here and there.

  • Why are retransmission fees still so low relative to viewing and why aren’t they rising faster? What should the government do to help bring sports programming back to broadcast television?
  • According to SNL research, some groups get much higher retransmission rates than others. Does this reflect real differences or reporting anomalies? Will this differential continue? How will it affect the market?
  • What are the biggest negotiation and deal mistakes groups make?
  • Is there any way to protect against the unexpected, like Aereo and Ad Hopper?
  • Is Aereo really a “retrans killer”? What happens to different market segments if it is? Could some broadcasters be better off if Aereo prevailed?
  • Has retransmission consent fundamentally changed the network-affiliate model, or simply adjusted the dollar flow?
  • Is cord-cutting equally bad for all programmers?
  • Apart from retransmission consent, is there a growth case for broadcast groups?
  • Do rising retrans fees really make the pie bigger (and drive up consumer costs), or do they just move the slices around? Which networks will benefit most long term?
  • And most important: What happens to the price of a Happy Meal when corn futures triple (and what does this tell us about retransmission consent?)
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The FCC has issued its latest annual Notice of Proposed Rulemaking containing regulatory fee proposals for Fiscal Year 2012. Those who wish to file comments on the FCC’s proposed fees must do so by May 31, 2012, with reply comments due by June 7, 2012.

The FCC’s NPRM includes an interesting twist. Citing the “rapid transformation” of the communications industry, the FCC indicates that it plans to re-examine its regulatory fee program which has remained largely the same since the program was first introduced in 1994. According to the NPRM, the FCC will be undertaking two separate “Reform Proceedings” in the near future to address the Commission’s regulatory fee program. In the first phase, the FCC will consider the allocation percentages of core bureaus involved in regulatory fee activity and how it calculates those percentages. In the second phase, the FCC states that it will review other outstanding substantive and procedural issues. According to the FCC, “given the breadth and complexity of the issues involved, the issuance of two separate Notices of Proposed Rulemaking will permit more orderly and consistent analysis of the issues and facilitate their timely resolution.”

We will be publishing a full Advisory on the FY 2012 Regulatory Fees once they are officially adopted (likely this summer) and will keep you posted regarding the Phase I and Phase II Reform Proceedings. You may also immediately access the FCC’s FY 2012 proposed fee tables in order to estimate the payments (barring changes) that you will owe in September.

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To follow up on my post from last week regarding the FCC’s open meeting on implementing its proposals to require online posting of TV station public inspection files, including the political file, the FCC today voted to require television broadcasters to post their entire public inspection files online. FCC Commissioner McDowell dissented regarding the requirement that TV stations’ political files be included online.

According to statements made in the FCC’s meeting today, all TV stations will have six months to move their public inspection files online. The FCC has agreed to host TV public inspection files on its own website. With respect to the political file, online posting will be a “phased in” process. Stations affiliated with the top-four national networks in the top-50 Nielsen markets will be required to begin placing their political files online, with all other TV stations to follow on July 1, 2014. The FCC also indicated that it plans to issue a Public Notice in a year to evaluate the effectiveness of the process.

In adopting its Order, the FCC rejected a compromise proposal advanced last Friday by the National Association of Broadcasters, the ABC, CBS, NBC, Fox, and Univision networks, State Broadcasters Associations, as well as various television station groups. The compromise proposal would have permitted TV stations to provide summary information online, including the total amount of an advertising buy and the total amount of money a candidate has spent at that station on ads during a particular election window. The compromise proposal would have kept commercially-sensitive per unit rate information out of the online public file, while still including this information in the hard copy of the political file for candidates to inspect regarding lowest unit rate and other political advertising requirements.

Much more on these issues to follow, including further specifics on the details of the FCC’s Order in this proceeding.