June 1, 2012

Presidential Panel Urges Shared Use of Federal Spectrum

A panel of advisors to President Obama approved a draft report last Friday that

recommends immediate identification of 1,000 MHz of federal government spectrum to

be shared with commercial wireless carriers and other private sector entities. Entitled

Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth,

the report was compiled by the President’s Council of Advisors on Science and

Technology (PCAST), whose members include Google Chairman Eric Schmidt and

Microsoft chief research and strategy officer Craig Mundie. The report also follows up

on a 2010 White House memorandum that calls on federal agencies to clear at least 500

MHz of spectrum that can be repurposed for mobile broadband and other advanced

wireless services during the next decade. In comments to reporters, Mark Gorenberg, a

Silicon Valley venture capitalist and PCAST member, outlined the recommendations,

which include the establishment of a new Federal Spectrum Access System under which

government agencies would electronically rent spectrum to private sector users as

needed. Such spectrum sharing, explained Gorenberg, could be accomplished through an

extension of the geolocation database registration system that is currently under

deployment in the broadcast television “white spaces.” Federal incumbents would retain

primary access to affected spectrum, and non-federal users would be granted secondary

access. While predicting that effective sharing of federal frequencies could boost

spectrum capacity by “a thousand time or more,” Gorenberg noted that PCAST members

had further endorsed the creation of “a new set of metrics to measure the effectiveness”

of spectrum sharing as well as the development of minimum technical standards to ensure

that transmitters and receivers are able to co-exist. To encourage sharing, the draft report

also recommends the development of “spectrum currency” that would provide additional

funding to agencies that agree to reduce their spectrum footprints. Pending final edits,

the PCAST report is expected to be delivered to President Obama by mid-June.

Observing that “three very important trends [FCC Chairman Julius Genachowski] has

emphasized are ‘white spaces’ databases, spectrum sharing and the move to small cells,”

an FCC spokesman applauded the draft PCAST report in which “all these concepts

appear to be integral.”

House Lawmakers Unite Against International Web Governance Model

Lawmakers of both political parties and witnesses from the government and private

sectors found common ground during a House Communications Subcommittee hearing

yesterday on Internet governance, as they voiced agreement on the dangers of top-down,

government control of the web, as proposed by the International Telecommunications

Union (ITU). Internet governance is expected to emerge as a key topic of debate at the

upcoming ITU World Conference on International Telecommunications (WCIT) in

Dubai. Ambassador Phillip Verveer, the U.S. Deputy Assistant Secretary of State, told

Presidential Panel Urges

Shared Use of Federal

Spectrum read more

House Lawmakers Unite

Against International Web

Governance Model

read more

Broadcast Networks, DISH

Network Trade Lawsuits

over Ad-Skipping DVR

read more

Sprint Receives $1 Billion

Credit Facility, Sets

Termination Date for Nextel

iDEN Service read more

BEREC Issues Report

Findings on EU Network

Traffic Management

read more

France Telecom Completes

Tender Offer for Egyptian Mobile Stake read more

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 2

lawmakers that WCIT attendees are unlikely to move at this time on one proposal of particular concern, namely, the establishment of a

new, worldwide central regulatory framework for the Internet. Nevertheless, panel members agreed with Verveer, FCC Commissioner

Robert McDowell, and Internet pioneer Vint Cerf that the threat of centralized web governance to the current multi-stakeholder

approach remains high, given the support of states such as Russia, China, India and Brazil, for a centralized international model. Chief

among the dangers of centralized governance, observed Cerf, is the restricted flow of information that has the potential to cripple

innovation and hurt American business. Cerf also took issue with an ITU proposal to permit governments to collect fees from Netflix,

YouTube and other web content providers for the termination of international traffic. Responding to questions posed by subcommittee

chairman Greg Walden (R-OR), McDowell warned that the imposition of termination fees on web transmissions could go beyond

traditional telecom regulation as such a policy would potentially impact the content of web transmissions that regimes such as China

would attempt to control. Voicing alarm, Rep. Mary Bono Mack (R-CA)—the sponsor of a House resolution that affirms support for

the current multi-stakeholder approach—asserted that the adoption of a centralized governance model “could turn the next Arab spring

into a Russian winter.” As Rep. Anna Eshoo (D-CA) agreed that such a proposal would promote censorship and “uproot innovation

and transparency,” Walden urged the U.S. delegation to the WCIT to “continue the United States’ commitment to the Internet’s

collaborative governance structure and to reject international efforts to bring the Internet under government control.”

Broadcast Networks, DISH Network Trade Lawsuits over Ad-Skipping DVR

DISH Network’s introduction of a new digital video recorder (DVR) that allows users automatically to skip prime time TV

commercials has sparked opposing lawsuits. Broadcast networks are claiming that DISH violated its retransmission agreements, while

DISH declares that its ad-skipping technology complies with such agreements and with copyright laws. Filed last Thursday, the

lawsuits come on the heels of the May 10 debut of DISH’s “Auto Hop” DVR, which automatically records the primetime lineups of the

ABC, CBS, NBC and Fox television networks and makes commercial-free versions of those broadcasts available to subscribers the

next day. In lawsuits filed with the U.S. District Court in Los Angeles, CBS, NBC and Fox accused DISH of copyright infringement

and described Auto Hop as an “unlawful” technology that, in the words of CBS, “takes existing network content and modifies it in a

manner that is unauthorized” under DISH’s retransmission agreements with the networks. CBS—which, like the other networks, is

seeking unspecified damages—also advised the court that Auto Hop will deprive broadcasters “of a vital means of payment for their

works” as advertisers “will not pay, or will pay less to have their advertisements placed within and around . . . television

programming.” Characterizing Auto Hop as a “bootleg broadcast video-on-demand service,” Fox warned that the technology “will

ultimately destroy the advertising-supported ecosystem.” Meanwhile, in its countersuit, DISH asked the U.S. District Court in New

York to rule that Auto Hop “does not infringe any copyrights that could be claimed by the major networks.” DISH, which also

included ABC in its countersuit, also referred to the “billions” of dollars in retransmission fees that multichannel video distributors—

and, by extension, their subscribers—must pay to receive broadcast programming that would otherwise be provided over-the-air

without charge. Declaring that “viewers have been skipping commercials since the advent of the remote control,” a spokesman for

DISH argued that “consumers should be able to fairly choose for themselves what they do and do not want to watch.”

Sprint Receives $1 Billion Credit Facility, Sets Termination Date for Nextel iDEN Service

This week, Sprint Nextel passed two milestones in its quest to launch fourth-generation LTE network services with the signing of a

$1 billion credit facility to finance LTE network deployment and with the confirmation of its plan to shut down the legacy Nextel iDEN

network effective on June 30, 2013. Negotiated with Deutsche Bank and other lenders, the credit arrangement will enable Sprint to

purchase network equipment from Ericsson that is needed for completion of Sprint’s $7 billion “Network Vision” project, through

which the company aims to deploy nationwide LTE network services starting this summer. Meanwhile, Sprint’s second-generation

iDEN network has served as the backbone of Nextel’s narrowband “push-to-talk” service that had once been used widely by

construction workers, delivery men and other tradesmen nationwide. Since the 2005 merger of Sprint and Nextel, the iDEN network—

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 3

which served 5.4 million subscribers as of March—has been steadily losing customers. Decommissioning of the iDEN network will

enable Sprint to reuse iDEN frequencies in the 800 MHz band in support of the company’s future LTE network offerings. (In an order

issued last week, the FCC authorized Sprint to proceed with that plan.) Customers who remain on the iDEN network will ultimately be

transitioned to Sprint’s new “Direct Connect” push-to-talk service that is based on the company’s existing third-generation CDMA

network technology.

BEREC Issues Report Findings on EU Network Traffic Management

On Tuesday, the Body of European Regulators for Electronic Communications (BEREC) released its report on the results of an

investigation into network traffic management and other practices that aim to “restrict the open Internet” in the European Union (EU).

At the same time, BEREC launched a public consultative process on three related draft documents that pertain to quality of service,

differentiation practices, and IP interconnection. Conducted as part of a joint effort with the European Commission (EC), the BEREC

investigation found that, while a majority of European ISPs offer services without restrictions on specific applications, “specific

practices, such as blocking or throttling of peer-to-peer (P2P) traffic or VoIP, may create concerns for end-users.” Such practices,

noted BEREC, are more common on mobile wireless networks than on fixed networks. At least 20 percent of mobile broadband users

were found to have experienced “some form of restriction on their ability to access VoIP service,” while 41 out of 115 wireless network

operators were found to have placed varying levels of restrictions on P2P traffic. Fixed service operators, meanwhile, were found to

have restricted P2P traffic on 49 out of 266 assessed networks. In its consultative document addressing quality of service, BEREC

requested comment on “criteria proposed for the assessment of . . . degradation of Internet access service as a whole, and, on the other

hand, issues regarding individual applications used over the Internet.” Comments on the consultative documents are due by July 31.

Despite admitting that Internet access services “work well most of the time” for most Europeans, EC Digital Agenda Commissioner

Neelie Kroes proclaimed that the BEREC report findings “show the need for more regulatory certainty and that there are enough

problems to warrant strong and targeted action.”

France Telecom Completes Tender Offer for Egyptian Mobile Stake

France Telecom (FT) solidified its control of Egyptian wireless carrier Mobinil on Monday with the completion of a €1.5 billion

(US$1.86 billion) tender offer that raises FT’s Mobinil stake from 71% to 93.9%. Founded by Egyptian businessman Naguib Sawiris,

Mobinil competes against Vodafone Egypt for control of Egypt’s turbulent, yet fast growing wireless market, in which total mobile

subscriptions surged by 25% over the past year to more than 91 million lines as of last March. Sources indicate that Egypt accounts for

nearly half of FT’s wireless customers in Africa and the Middle East. These markets have become increasingly important sources of

revenue for FT, which faces stiff competition at home with the entry of a new, low-cost wireless operator. FT acquired the additional

Mobinil shares from local venture partner Orascom, a vehicle controlled by the Sawiris. Although Orascom will be left with a 5%

stake, the Sawiris will continue to retain a 28.75% voting interest to alleviate foreign ownership concerns. While the remaining 1% of

Mobinil will remain in free float, FT has committed to selling up to a 15% stake to domestic Egyptian shareholders at a future date. In

a press statement at the launch of FT’s tender offer last month, FT CEO Stephane Richard lauded the offer as a vote of FT’s confidence

in the strength of Egypt’s economy in spite of recent political upheaval.

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For information about any of these matters, please contact Patrick S. Campbell (e-mail: pcampbell@paulweiss.com) in the Paul, Weiss

Washington office. To request e-mail delivery of this newsletter, please send your name and e-mail address to

telecom@paulweiss.com.

(No. 2012-22)