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Telecom Business Alert -- Vol. VII Issue 32

Date: Aug 16, 2010

FCC Wraps Up Auction 87; Readies for auction of 218-219 MHz Spectrum

On August 6, 2010, the FCC completed Auction 87, which included 9,603 licenses for spectrum in the lower and upper paging bands. The auction raised a total of nearly $5.4 million with 59 winning bidders purchasing a total of 4,714 licenses. With this auction concluded, the Commission turns its attention to Auction 89, which is scheduled to begin on December 7, 2010. Auction 89 will include 1,420 licenses in the 218-219 MHz Service. These licenses, originally known as the Interactive Video and Data Service ("IVDS"), each consist of 500 kHz of unpaired spectrum covering a total of 727 Cellular Market Areas ("CMAs"). Spectrum in the IVDS band may be particularly attractive to current AMTS licensees, including entities that have acquired AMTS spectrum from previous auction winners. Auction 89 will also offer 448 Phase II 220 MHz Service (220-222 MHz band) licenses, including 444 Economic Area ("EA") licenses and 4 Economic Area Grouping ("EAG") licenses, covering a total of 154 separate EAs and EAGs. The Commission has not released the filing dates for submission of applications to participate in Auction 89. For more information or to participate, please contact Greg Kunkle (kunkle@khlaw.com; 202.434.4178).

FCC Assignment and Transfer Rules Important to Remember in Active M&A Environment

Rigzone Magazine recently reported that merger and acquisition activity in the U.S. Oil & Gas sector reached its highest level in nearly two years during the second quarter of 2010. The sector saw a total of 142 announced deals totaling nearly $37 billion, a 169 percent increase over the 2009 second quarter total of $13.7 billion. Major transactions involving power generation facilities have been announced this month, as well. In light of the increased merger and acquisition activity, companies are reminded that Section 310 (d) of the Communications Act requires entities involved in a corporate transaction to secure the FCC's prior consent to assign or transfer an FCC license as part of the deal. Within the past several months, private wireless licensees have paid substantial fines as a result of failing to secure the FCC's prior consent to assign or transfer radio licenses as part of a corporate acquisition. For more information about the FCC's assignment and transfer procedures, please contact Wes Wright (wright@khlaw.com; 202.434.4296).

Fiscal Year 2010 Regulatory Fees Due August 31, 2010

Last week, the FCC announced that regulatory fees for the fiscal year 2010 are due by 11:59 p.m. Eastern on August 31, 2010. This deadline is earlier than previous years. Licensees of certain facilities, such as Satellite Earth Stations, are required to make annual regulatory fee payments. For many licensed facilities, licensees pay regulatory fees as part of an application fee charged at the time of submission of an application for new, renewed or modified authority. The Commission recently revised its schedule of regulatory fees. For questions regarding regulatory fees, please contact Rich Hudspeth (hudspeth@khlaw.com; 202.434.4244)

Trends in Data Security Enforcement

Recent actions by the Federal Trade Commission (FTC) and various state laws highlight the need for companies that collect personal information, such as Social Security Numbers, driver's license or ID numbers, and credit/debit card numbers, to adopt and implement comprehensive written data security programs. Most recently, Rite Aid Corporation agreed to pay $1 million to the FTC, establish a comprehensive data security program, and undergo audits every two years for the next 20 years in settlement of FTC charges that it failed to use appropriate procedures to protect personal information. Rite Aid pharmacies discarded trash containing patient prescriptions and employment applications in open dumpsters. The FTC found that Rite Aid made a deceptive and unfair claim under Section 5 of the FTC Act when it informed customers that it took steps to protect their personal information. Earlier this year, Dave & Buster's settled FTC charges that it failed to take reasonable steps to secure credit and debit card information on its computer network, which left the information vulnerable to hackers and resulted in several hundred thousand dollars in fraudulent charges. For more information, contact Tracy Marshall (Marshall@khlaw.com; 202-434-4234).

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