Correction: Noncommercial broadcasters pay a flat fee of $500 annually to stream sound recordings to no more than 218 average listeners (see 1507220078).

FCC Commissioner Mike O’Rielly voted on a draft order to approve AT&T's planned buy of DirecTV with conditions, a statement indicated Thursday. "After reading the Order as prepared by Commission staff, reviewing the voluminous record in the proceeding, and listening to interested parties, I voted the item this afternoon," he said. "To be clear, this process shouldn’t have taken this long, and we shouldn’t have been so cavalier with the Commission’s merger review ‘shot clock,’ but at least we have arrived at this final stage." The FCC's 180-day nonbinding shot clock remains stopped on Day 170. O’Rielly didn't say how he voted, but industry analysts said this week they expected the order to be approved unanimously or without major opposition in coming days (see 1507220076). FCC Chairman Tom Wheeler on Tuesday said he had circulated a draft order to approve the transaction that would impose various conditions on the postdeal AT&T. Among them are conditions to vastly increase its fiber-based broadband deployment and "build on" the network neutrality order by preventing the company's fixed broadband data caps from discriminating against online video rivals and requiring it to file interconnection agreements and network performance reports, he said. Some critics said the draft order, based on what was known, wasn't demanding enough of AT&T, which could "game" the conditions, but Wheeler also said, "Importantly, we will require an independent officer to help ensure compliance with these and other proposed conditions." An FCC official told us Thursday that the latter compliance condition shouldn't be underestimated. "The independent compliance monitor will be looking over AT&T's shoulder to make sure they comply -- including by reporting back to us to help ensure compliance -- and that's extremely significant, given the resources necessary to enforce merger conditions," the official said. While Comcast and NBCUniversal in 2011 accepted FCC and Justice Department conditions requiring the combined company to comply with network neutrality rules for seven years if they are thrown out in court, no such condition was imposed on AT&T/DirecTV, said an informed source.

AT&T isn't concerned about FCC conditions on its buy of DirecTV articulated by FCC Chairman Tom Wheeler Tuesday (see 1507220076), AT&T Chief Financial Officer John Stephens said Thursday during a call with analysts on Q2 earnings. “We feel very confident that we can make an adequate return on any investment we make as part of this deal,” he said. “Our threshold for investment and determining what’s best for our shareholders has not changed.” AT&T still expects to achieve $2.5 billion in cost synergies from the deal, he said. AT&T plans to webcast an analyst day shortly after the deal closes “to discuss our strategy in much more detail,” Stephens said. AT&T added 2.1 million net wireless subscribers in the quarter, including 410,000 postpaid and 331,000 prepaid subscribers and 1 million connected cars. Postpaid churn was 1.01 percent, a record low for the carrier. On the wireline side, U-verse consumer revenue of $4.1 billion was up 19 percent year over year. AT&T reported adjusted earnings per share of 69 cents in Q2, up from 62 cents a year ago. Consolidated revenue was $33.0 billion, up 1.4 percent versus the year-earlier period. “Our wireless strategy” of moving customers away from subsidized handsets “is working,” Stephens said. “This is a pivotal time for us,” CEO Randall Stephenson said in a news release. “We look forward to closing DIRECTV and building on this momentum by delivering a new TV everywhere experience integrated with mobile and high-speed Internet service.”

CTIA filed a petition for reconsideration asking the FCC to revise rules for the 3.5 GHz shared spectrum band. “A handful of policies adopted in the 3.5 GHz Order … threaten to undermine the investment and innovation necessary for the new 3.5 GHz Band to succeed,” CTIA said. The wireless association asked the FCC to increase the license terms for priority access licenses (PALs) to at least five years “and adopt an expectation of license renewal so that the risk of stranded investment does not deter interest in the band.” The FCC approved three-year license terms as part of the rules for the band. CTIA also asked the agency to revise a decision to auction one less PAL than the total number of PALs applied for in a given Census tract “so as to avoid systematically phasing out PALs with each subsequent auction.” The commission also should increase out-of-band emission limits “that otherwise will force licensees operating 20 MHz LTE channels to engage in power backoff” and increase power limits “to allow for meaningful indoor and outdoor coverage,” CTIA said. The commission approved its order creating the new Citizens Broadband Radio Service in the 3550-3700 MHz band at its April meeting (see 1504170055). Parts of the rules took effect Thursday.

Dish Network officials have been told the FCC will deny its proposed use of bidding credits to buy AWS-3 spectrum indirectly through designated entities Northstar Wireless and SNR Wireless, Dish said in a filing Wednesday with the SEC. Dish reported on a meeting with the FCC, also Wednesday. A draft order by the FCC Wireless Bureau has found that Dish “has a controlling interest in Northstar Wireless and SNR Wireless, therefore DISH’s revenues should be attributed to them, which in turn makes Northstar Wireless and SNR Wireless ineligible to receive the 25 percent bidding credits,” Dish said. Northstar Wireless used $1.9 billion and SNR $1.4 billion in bidding credits in the auction, Dish said. The FCC has also determined that Northstar and SNR are eligible to hold the licenses and questions of bidding irregularities shouldn't be referred to the Enforcement Bureau or Department of Justice, Dish said. FCC Chairman Tom Wheeler indicated last week that he had recommended a course for addressing the Dish bids in the AWS-3 auction (see 1507160054). The filing Wednesday is the first concrete information available on Wheeler’s draft proposal.

The 6th U.S. Circuit Court of Appeals set a briefing schedule for North Carolina and Tennessee's case against the FCC in dockets 15-3291 and -3555, said a briefing letter Monday. The petitioner's brief appendix must be filed by Sept. 1, respondent's brief appendix is due Oct. 5 and the petitioner's reply brief must be filed 17 days after the respondent's brief. If a party wants an oral argument, it must include a statement in the brief, the letter said.

The activation of FM chips already built into smartphones would enhance broadcasters' ability "to distribute lifesaving, emergency alert notifications before, during and after natural and man-made emergencies,” the Multicultural Media, Telecom and Internet Council (MMTC) told FCC Chairman Tom Wheeler in an open letter Tuesday. During Hurricane Katrina, the FM chip “would have added a layer of security for consumers, first responders and other stakeholders interested in the timely distribution of emergency response data,” MMTC said. During that emergency, terrestrial radio “was the only viable method of mass communications, and the activation of FM chips would have potentially extended this service to wireless consumers who are more likely to be ‘smartphone dependent,’ minority, multilingual and, in some cases, geographically isolated,” it said. “With your support and endorsement we could make radio a reality in all smartphones,” it told Wheeler. “You can help by encouraging all cellular carriers to turn on the FM Chips in their phones. The goal is to provide all Americans with peace-of-mind during emergencies so they will be kept abreast of lifesaving alerts if ever needed.” In House testimony in March, Wheeler expressed doubts whether the FCC “should be forcing wireless carriers to activate these chips or whether they ought to be leaving that to consumer choice” (see 1503200031). Those remarks drew a sharp response from NAB, which said broadcasters weren't seeking a government mandate on activating FM chips in smartphones, but were merely seeking the FCC's help “in using its influence in enabling a technology that can save lives in emergency situations.”

A court motions panel dismissed an FCC request to hold in abeyance Neustar's challenge to the agency's order conditionally choosing Telcordia as the next local number portability administrator (LNPA). But the order Tuesday by Judges Judith Rogers and Robert Wilkins of the U.S. Court of Appeals for the D.C. Circuit referred the commission's request to dismiss the Neustar challenge to a panel that will review the case on its merits (Neustar v. FCC, docket 15-1080). An FCC motion had asked the court to dismiss the Neustar challenge, or in the alternative hold it in abeyance pending final commission action in the LNPA proceeding. The order Neustar is challenging "is not final Commission action; rather, it is an interim step in a process that, after additional Commission action, may result in the selection of a new LNPA," the FCC said. Because the order isn't final, the court lacks jurisdiction to review it, the FCC argued. Neustar opposed the motion and argued the FCC had designated Telcordia as the next LNPA: "As the culmination of a four-year selection process, that selection decision is final, not tentative." In their order Tuesday, the judges directed the court's clerk "to enter an appropriate briefing schedule" without elaborating. Neustar had asked the D.C. Circuit to expedite briefing, but the commission opposed the request.

The FCC put together a task force, including representatives of all five commissioner offices, to push forward on process reform, said Chairman Tom Wheeler's special counsel Diane Cornell Tuesday in a blog post. “The task force will consider ways to improve the effectiveness of the Commission’s internal processes from the Commissioners’ perspective, taking into account views expressed by internal and external stakeholders about the FCC’s internal processes and protocols,” Cornell said. The group will “seek public input from those who regularly interact with the FCC” and also look at the practices of similar agencies, she said. The task force will take on several hot-button issues, including the “use of delegated authority, and practices for providing notice of matters being handled on delegated authority,” Cornell said. Commissioners Ajit Pai and Mike O’Rielly have complained that FCC staff make too many decisions on delegated authority (see 1403180024). Other topics being reviewed include the FCC consent agenda, “approaches for providing increased transparency of FCC procedures and protocols” and “practices to track, disclose and encourage prompt Commissioner votes on items on circulation,” Cornell said.

At least three more parties asked a federal court for permission to file amicus briefs in the litigation over the FCC net neutrality and broadband reclassification order. This week, the Center for Boundless Innovation (CBIT), International Center for Law and Economics (ICLE) and Phoenix Center filed motions (here, here and here) with the U.S. Court of Appeals for the D.C. Circuit to file briefs supporting petitioners challenging the FCC order, which are Alamo Broadband, the American Cable Association, AT&T, CenturyLink, CTIA, Daniel Berninger, Full Service Network, NCTA, USTelecom and the Wireless Internet Service Providers Association. All but FSN is challenging the FCC order as overly regulatory. CBIT said it would argue that broadband ISPs are part of the "press" that's protected by the First Amendment from common carrier regulation imposed by the FCC through its reclassification of broadband Internet access services under Title II of the Communications Act. The ICLE would argue the order exceeded FCC delegated authority, and even if it didn't it acted arbitrarily and capriciously "by failing to consider relevant economic literature, evidence, and the costs" of its rules. The Phoenix Center would address a "narrow legal issue deliberately sidestepped" by the FCC in lumping "edge providers" with retail customers of "Broadband Service Providers," which the center said "appears to be a strategic choice designed to obscure the regulatory implications of reclassification on the end-user termination service provided by BSPs to edge providers." If the FCC had properly followed D.C. Circuit precedent in the 2014 Verizon v. FCC case, it should have defined what a "just and reasonable" rate was for terminating end-user traffic, which would have potentially conflicted with the agency's net neutrality rule prohibiting paid prioritization and effectively mandating a zero price, the Phoenix Center said. Other parties recently moved to file amicus briefs (see 1507150012 and 1507140035).