Verizon is working on directly connecting Netflix content servers to Verizon’s network “so that we both can keep the interests of our mutual customers paramount,” a Verizon executive said Monday in a blog post (http://vz.to/1o1qoXl). Verizon and Netflix found a way to avoid congestion problems created by Level 3, said David Young, Verizon vice president-regulatory affairs, in the post. Rather than buy the capacity they need, Level 3 “insists that Verizon should add capacity to the existing peering link for additional downstream traffic even though the traffic is already wildly out of balance,” he said in response to Level 3’s blog post criticizing Verizon on how it handles interconnection (CD July 21 p11). Verizon and Netflix were at odds over which company is responsible for congested networks (CD June 18 p7).

Netflix will continue to advocate “strong net neutrality,” including interconnection, and that’s “about preventing large ISPs from holding our joint customers hostage with poor performance to extract payments from us, other Internet content firms, and Internet transit suppliers such as Level 3 and Cogent,” CEO Reed Hastings and Chief Financial Officer David Wells said Monday in the company’s Q2 letter to shareholders. “Our policy goals are for the FCC to not sanctify paid prioritization,” and for the Justice Department and the FCC to block the merger of Comcast/Time Warner Cable, “or at the very least, to require as condition to approving the merger that the combined entity be prevented from charging for interconnection,” the letter said. In 4K, Netflix is now streaming “flagship content” in Ultra HD to subscribers with 4K smart TVs, “putting Netflix at the leading edge of high-quality AV delivery,” it also said. The company globally in Q2 topped 50 million subscribers for the first time, a 33 percent increase from Q2 a year ago.

The FCC and NTIA jointly released coordination procedures for the two AWS-3 bands: 1695-1710 and 1755-1780 MHz. Commissioner Ajit Pai sharply criticized Chairman Tom Wheeler for allowing the Wireless Bureau to approve the document on delegated authority rather than through a vote of commissioners. The document provides guidance to AWS-3 licensees and affected federal incumbents on coordination for shared use of the two bands. “The rules are a milestone in providing commercial access to new spectrum bands through a spectrum-sharing arrangement with incumbent federal users,” said a Friday public notice (http://bit.ly/WnCwYt). “As part of that arrangement, the Commission’s AWS-3 rules require successful coordination with Federal incumbents prior to operation in Protection Zones.” Pai said in a statement (http://bit.ly/1kDMk5M) that a draft order circulated to commissioners purported to change some of the AWS-3 geographic coordination zones adopted by the FCC in March, but with a “catch.” The proposal “did not say what the relevant new zones would look like,” Pai said. He said he asked how the document changes the protection zones. “I had thought that these were quite reasonable inquiries,” he said. “So I was surprised when my requests for this basic information were denied. Instead, I was told that after the Commission adopted the item, I would be briefed on the new zones.” The item was ultimately pulled from circulation and approved instead at the bureau level, he said. “This is no way to run a railroad.” A senior official responded to Pai on behalf of the chairman, saying the Wireless Bureau acted only because of timing considerations. Wheeler circulated the order July 2, with the hope commissioners would vote by the end of the day Tuesday, the official said. “Chairman Wheeler offered his fellow commissioners the opportunity to vote on the notice,” the senior official said. “But, because some commissioners did not vote on the notice by the deadline, and in the interest of swift work on behalf of the American public, the bureau released the notice.”

The FCC will ensure that consumers can rely on 911, “even as the technologies and platforms we use to communicate evolve,” FCC Chairman Tom Wheeler said Friday in a blog post. Wheeler cited an April 911 outage centered in Washington state, during which more than 4,500 911 calls did not get through during one six-hour period. The FCC launched an investigation in May (http://bit.ly/1n1PvID). “Initial reports suggest that this outage appears to be a case where the transition to new networks may have been managed poorly and providers in the 911 ecosystem are not operating in a manner that is transparent to system users, regulators and each other,” Wheeler said in the post (http://fcc.us/1moFZLh). “Let me be plain -- no company will be allowed to hang up on 911.”

CTIA, the Telecommunications Industry Association and Microsoft urged the FCC to continue using a “flexible” regulatory framework on issues of the 21st Century Communications and Video Accessibility Act (CVAA). Comments were posted Wednesday. The filing in docket 10-213 (http://bit.ly/1wvVqHj) is to assist the Consumer and Governmental Affairs Bureau in preparing its biennial report to Congress on the CVAA. FCC rules allow innovation “by avoiding overly prescriptive regulations and setting reasonable compliance deadlines that provide industry time to research break-through solutions,” said Microsoft (http://bit.ly/1zJw1OB). CTIA and TIA said members have worked to make their products more accessible, urging the agency to avoid prescriptive regulations. “Regulatory uncertainty is inversely correlated to investment and innovation,” said TIA (http://bit.ly/1zJxRyZ). Along with flexible rules, the FCC can help the wireless industry improve accessibility by “making more spectrum available for wireless services,” said CTIA (http://bit.ly/1tS7y9l). The commission should especially maintain flexibility on CVAA recordkeeping requirements, TIA said. The commission should consider that products intended to be accessible for either blind or hearing-impaired consumers often remain inaccessible for consumers with both sight and hearing impairments, said the American Association of the Deaf-Blind (http://1.usa.gov/1oYwqal). Devices that replace text with audio or audio with captions don’t work for its constituents, the consumer group said. It said that makes it hard for them to participate in the FCC rulemaking process, a problem it said the commission should address.

NARUC’s board unanimously approved a resolution encouraging the FCC to craft its new net neutrality rules using Communications Act Section 706 as its main legal justification. The Wednesday resolution, cleared by NARUC’s Telecom Committee Tuesday, also lists Titles I, II and III as backup jurisdictional bases (CD July 16 p7). The board’s only revision to the resolution was to remove specific references in the title to Title II and Section 706, said Vermont Public Service Board member John Burke, the resolution’s original sponsor.

AT&T commended the FCC’s “innovative proposals” for spectrum sharing in the 3.5 GHz band, but warned the agency against putting too much faith in a Spectrum Access System (SAS) to facilitate sharing. The FCC is finalizing rules for the use of the 3.5 GHz band as spectrum sharing laboratory (CD July 16 p4). Comments were posted Monday and Tuesday in docket 12-354, but were unavailable part of Tuesday because of Electronic Comment Filing System problems at the FCC as it was inundated with net neutrality comments (CD July 16 p1). “Given that the SAS structure is the first of its kind, the model will presumably need to undergo extensive testing and refinement prior to deployment, a process that could be time-intensive given the documented technical challenges,” AT&T said (http://bit.ly/1r3XruL). The carrier warned it’s impractical to rely on the SAS to make “dynamic -- as opposed to static” spectrum assignments for companies that pay to use the spectrum through a Priority Access License (PAL). T-Mobile said the FCC should use SAS, but only for General Authorized Access (GAA) users, who unlike PAL licensees would not pay for licenses through competitive bidding (http://bit.ly/1oYfxN4). T-Mobile also urged the FCC to set aside at least 40 percent of the spectrum for priority access users and utilize more traditional licensing mechanisms “using areas larger than census tracts, at fixed frequencies, and for terms greater than one year.” Google stressed the importance of reducing the size of the proposed exclusion zones to protect federal users of the spectrum in parts of the U.S. “As currently structured, these zones would deny six out of every ten Americans access to the 3.5 GHz band,” Google said (http://bit.ly/1narEbl). Because the band will be used primarily by small cells, the FCC can cut the size of the zones without potentially causing problems for incumbents, said the company. Google also urged the FCC to base Priority Access licenses on “interference protection requirements” rather than the census tracts proposed by the agency. “In the context of small cell deployments, census tract boundaries are not designed to set boundaries for small cell deployments and are not suited for that application; their use for this purpose would waste valuable spectrum resources,” Google said. First and foremost, the FCC should guarantee that use of the spectrum doesn’t pose problems for cable companies, which depend on the 3.7-4.2 GHz band for the delivery of video, NCTA said. NCTA also urged the FCC to reduce the size of the exclusion zones established to protect federal users. “Because these exclusion zones assume that commercial operations would take the form of traditional macrocell deployments rather than small cell networks, the Commission should work quickly to determine appropriately sized exclusion zones for this band instead of codifying severe operating restrictions,” NCTA said (http://bit.ly/1l3iCqQ).

The Copyright Office wants more comment, by Aug. 14 at http://1.usa.gov/1skSnUq, on its study of digital-age making-available and communication-to-the-public rights, in light of last month’s Supreme Court ruling against Aereo (CD June 26 p1). Noting Aereo came after the office held a May 5 roundtable on its study that includes examining applying U.S. Code Title 17, the Copyright Office said “a critical aspect of the Court’s decision was its interpretation of Title 17’s ‘Transmit Clause.'” That clause allows public performance rights for copyright holders, said the office in a notice in Tuesday’s Federal Register (http://1.usa.gov/1sZPwOp). “To what extent does the Supreme Court’s construction of the right of public performance in Aereo affect the scope” of U.S. implementation of making-available and communication rights, asked the office. “How should courts consider the requirement of volitional conduct when assessing direct liability in the context of interactive transmissions of content over the Internet, especially in the wake of Aereo?” The company may not get much help from the FCC as it seeks to refashion itself after the high-court loss, an analyst predicted. (See separate report below in this issue.)

The FCC urged the Supreme Court to overturn a decision by the 11th U.S. Circuit Court of Appeals in favor of the city and against T-Mobile in a case headed for review -- T-Mobile South v. Roswell, Ga. The case looks at whether under the Telecom Act local governments must provide detailed written explanations when they deny carriers’ applications to build new cell towers in their jurisdictions. “The 1996 Act imposes both substantive and procedural limitations on the authority of state and local governments to regulate the placement, construction, and modification of personal wireless service facilities,” the FCC noted. The city did not offer in a timely manner a written statement of the reasons for its denial T-Mobile’s permit application, the FCC said. “Although respondent sent petitioner a letter stating that the City Council had denied petitioner’s application, that letter contained no reasons for the decision, and the meeting minutes referenced in the letter were not available to petitioner at substantially the same time.” The FCC said either “detailed minutes” or a transcript “created and approved” by the city would have been sufficient as justification for denial of the permit provided either had been made available “at substantially the same time as the decision denying” the tower application. The case makes clear that while the Telecom Act “does not require a zoning authority to provide a statement of reasons in the decision denying a request for permission to construct a cell tower, a local zoning board would be well-advised to provide such a statement,” the FCC said. The commission posted the filing (http://bit.ly/1sjvVuR) after it was filed in Supreme Court docket 13-975.

The FCC is creating a Universal Service Fund Strike Force in the Enforcement Bureau, charged with combating waste, fraud and abuse in agency funding programs, said Chairman Tom Wheeler in a news release (http://fcc.us/1qACHZl) Monday. The strike force will be led by Loyaan Egal, who joins the FCC after being a senior assistant U.S. attorney in the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia. The strike force will expand commission efforts, including those of the FCC Office of Inspector General, “to protect the integrity of the Universal Service Fund and ensure that the American people’s money is wisely spent,” Wheeler said. The Strike Force will investigate violations of the Communications Act, commission rules and other laws involving USF programs and contributions, said the FCC.