Resolves Investigation into Outage Report Violations, Will Pay $3.4 Million Fine 

On March 18, 2015, the FCC’s Enforcement Bureau entered into a Consent Decree with MCI Communications Services, Inc. d/b/a Verizon Business Services (“Verizon”) resolving its investigation into whether Verizon complied with the FCC’s network outage reporting rules.  The investigation stemmed from an April 2014 incident when consumers in nine California counties were unable to make 911 calls for six hours.  As part of the Consent Decree, Verizon will pay a $3.4 million fine and implement a “fair-reaching” compliance plan. 

Background.  Under FCC regulations, communications providers (wireline, wireless, satellite, cable, and Interconnected VoIP) must report certain disruptions to their networks to the FCC, including within four hours of discovering an outage of at least 30 minutes in duration that potentially affects a 911 special facility.

Pursuant to a contract with the State of California Office of Emergency Communications, Verizon is the 911 service provider for some callers as part of a trial in an area of Northern California.  The trial, which began in 2012, is designed to test a new way of routing wireless 911 calls to the appropriate Public Safety Answering Points (“PSAPs”) using the latitude/longitude location of the caller.  Verizon subcontracts performance of certain functions of the trial to Intrado, a third-party provider of 911 and emergency communications infrastructure, systems and services to telecommunications service providers and public safety agencies in the United States.

Investigation and Consent Decree.  On April 9-10, 2014, Intrado experienced a malfunction in one of its call processing centers that affected delivery of 62 wireless 911 calls to 13 PSAPs associated with the trial.  Intrado allegedly did not inform Verizon of the outage until after it was resolved.  After Verizon was informed about the impact of the outage on the trial, it notified the State of California Office of Emergency Communications.  Verizon acknowledged that it is responsible for complying with applicable FCC rules concerning outage reporting regardless of any alleged failures by its subcontractors. 

In addition to the $3.4 million fine, the Consent Decree requires that Verizon develop and implement a compliance plan, including new operating procedures, a detailed compliance manual, a compliance training program, and a commitment to report any material noncompliance with the FCC’s 911 service reliability and outage notification rules (and with the terms of the Consent Decree) within 15 days after discovering any noncompliance.  Verizon must follow these new procedures for three years.

This action serves as a strong reminder to covered telecommunications and VoIP providers that they need to have effective compliance plans and operating procedures in place for tracking and reporting applicable network outages.

For more information about outage reporting obligations, or for assistance in setting up compliance guidelines, please contact Scott Friedman or Jake Baldwin at (312) 372-3930 or sfriedman@cinnamonmueller.com or jbaldwin@cinnamonmueller.com.

ISP Refuses to Turn Over Financial Records in Copyright Infringement Lawsuit

Last November, two music publishers sued Cox Communications for copyright infringement, arguing that Cox, as an Internet Service Provider (“ISP”), failed to disconnect subscribers who allegedly had downloaded music illegally.  The publishers, which control the publishing rights to songs by Katy Perry, The Beatles and others, claimed that Cox had given up its safe harbor protections under the Digital Millennium Copyright Act (“DMCA”) by failing to act on repeated infringement notices that the publisher’s agent had sent. 

More recently, the publishers submitted a motion requesting that Cox reveal financial records that may support a claim that Cox profited by ignoring copyright infringement by its subscribers.

The DMCA is an important federal law that can shield ISPs from liability for infringing activity by subscribers.  In order to be eligible under the DMCA’s “safe harbors,” ISPs must adopt, publish, and follow a repeat infringer policy that provides for termination of account holders who repeatedly infringe copyrighted works.  Further, an ISP cannot turn a blind eye to actual knowledge of repeat infringement by account holders.

The plaintiffs contend that Cox is no longer eligible under the DMCA’s safe harbor protections because of Cox’s failure to follow its own repeat infringer policy.  In the lawsuit, the plaintiffs alleged that they, through their agent, Rightscorp, Inc., sent thousands of notices of infringement to Cox.  Even though Cox’s published repeat infringer policy calls for suspension or cancellation of user accounts of repeat infringers, according to the plaintiffs, Cox did not suspend or terminate those accounts despite its knowledge of the infringing activity.  By not following its repeat infringer policy, the plaintiffs claim that Cox contributes to, enables, and profits from copyright infringement of the music owned by the plaintiffs. 

The case is currently pending before the United States District Court for the Eastern District of Virginia.  The Court has not yet decided whether Cox will have to turn over its financial records.

This case and the motion requesting Cox’s financial information serve as reminders to ISPs of the importance of maintaining and complying with a repeat infringer policy. 

If you have questions regarding DMCA compliance or drafting and maintaining a repeat infringer policy please contact Heidi Schmid or Madeleine Goldfarb at (312) 372-3930 or hschmid@cinnamonmueller.com or mgoldfarb@cinnamonmueller.com.