The Front Lines - January 20, 2006

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http://www.thefrontlines-hlg.com/ The FRONT LINES
Sponsored by The Helein Law Group, P.C. http://www.thlglaw.com/

Advancing The Cause of Competition in the Telecommunications Industry

REMINDER : FCC REGULATORY REPORTING DEADLINES

FCC FORM 499-Q - QUARTERLY TELECOMMUNICATIONS REPORTING WORKSHEET

Deadline:    February 1, 2006

Providers of interstate and international telecommunications services
("Universal Service Fund contributors") are reminded that their FCC
Form 499-Q is due no later than Wednesday, February 1, 2006.

The FCC requires all non-de minimis USF contributors to file Form
499-Q to report actual billed revenue and projected revenues.  In the
Form 499-Q due February 1st, contributors must report actual billed
revenue for the 4th Quarter of 2006 and projected billed & collected
revenue for the 2nd Quarter of 2006.

The Universal Service Administrative Company mails forms and
instructions to contributors who have reported in the past.  If you
have not reported in the past, but are required to do so, forms and
instructions are available on the FCC's website -- http://www.fcc.gov
or you may contact our firm and we'll e-mail them to you.  Contact:
mail@thlglaw.com or 703-714-1300.

De Minimis carriers and service providers (i.e., those with $10,000 or
less in annual USF contributions) are not required to file Form
499-Qs, but are reminded that an annual Form 499-A is required each
year in April.

FCC FORM 499-A - ANNUAL TELECOMMUNICATIONS REPORTING WORKSHEET

Deadline:    April 1, 2006

Companies providing domestic U.S. interstate services must register to
do so with the FCC.  Registration is accomplished by filing FCC Form
499-A (Telecommunications Reporting Worksheet).  Among other things,
the form requires a company to list an agent for service of process in
the District of Columbia and calls for a listing of states where the
company either provides or anticipates providing intrastate service in
the future.

On April 1st of each year, interstate service providers whose
Universal Service Fund contribution obligation exceeds the de minimis
threshold are required to file FCC Form 499-A and report
telecommunications and certain non-telecommunications revenues to the
FCC.

Even companies providing predominantly international services must
file FCC Form 499-A if they derive revenue from domestic U.S.
interstate services.

The FCC Form 499-A is critically important. One reason is that it
links a company into the FCC's USF contribution system, identifying a
company as a payor under the program. Another reason is that
registering companies are added to the FCC's online, searchable
database of registered companies.  Under the FCC's rules,
facilities-based carriers are only allowed to contract with resellers
on the FCC registration list. Thus, failing to register will not only
subject a company to potential FCC enforcement action, but could
prevent it from being able to enter agreements with underlying
facilities-based carriers.

If you have any questions or concerns regarding compliance with the
FCC Form 499 and related requirements you should contact your existing
regulatory attorney.  You may also contact our firm for a
consultation: (703) 714-1313, e-mail: jsm@thlglaw.com

For more information regarding Form 499-A, the following link directs
you to a recent article on the subject by Helein Law Group partner,
Jonathan S.  Marashlian.

http://www.prepaid-press.com/news_detail.php?t=paper&id=1124

FCC FORM 477 - LOCAL TELEPHONE COMPETITION AND BROADBAND REPORTING

Deadline:     March 1, 2006

The FCC Form 477 for the filing due on or before March 1, 2006 is now
available electronically on the Commission's website.  Filers may obtain the
form, and the accompanying detailed reporting instructions, at
http://www.fcc.gov/formpage.html#477

All facilities-based providers of wired or wireless broadband
connections to end user locations, all local exchange carriers, and
all non-reseller commercial mobile radio service (CMRS) providers
offering mobile telephony are required to file Form 477 twice each
year.  In the filing that is due on or before March 1, 2006, filers
will report information about broadband connections and local
telephone service as of December 31, 2005.

For the purposes of Form 477, a broadband connection is one that
enables the end user to receive information from and/or send
information to the Internet at information transfer rates exceeding
200 kilobits per second.  The facilities-based provider of a broadband
connection is the entity that owns the portion of the wired broadband
connection that terminates at the end user location, that
provisions/equips over licensed or unlicensed spectrum the broadband
wireless channel that terminates at the end user location, or that
obtains an unbundled network element, special access line, or other
leased facility to the end user location and provisions/equips it as
broadband.
 
EDITOR'S NOTE:  LEGAL TRENDS IS A NEW FEATURE OF THE FRONT LINES.  ARTICLES
IN THIS SECTION WILL ADDRESS OTHER AREAS OF THE LAW AFFECTING
TELECOMMUNICATIONS AND TECHNOLOGY COMPANIES SUCH AS EMPLOYMENT, TRADE
SECRETS, DEFAMATION, NON-COMPETITION AND SIMILAR ISSUES.

CYBERSPACE AVAILABILITY CAUSES LOSS OF TRADE SECRETS

A New York biomedical research support company learned that
information in unlocked file cabinets and non-password-protected
computer files, were not trade secrets under New York Law.  (ENV
Servs. Inc. v. Alesia, N.Y. Sup.  Ct., No. 11777-04, 11/28/05).

"Trade secret protection will not be accorded to customer lists where
the names and addresses of the customers are readily ascertainable or
where client information is scattered throughout the office in
unlocked files. Information from publicly available sources is not
entitled to trade secret protection."

ENV's claims failed because its customer list was available on its
corporate Web site and could be ascertained from trade publications.
Customer contact information, pricing, and servicing information were
also available on the company's internal home page.

As a result of this decision, five former employees of ENV were held not
liable for violating a non-competition agreement.

ISP EXPOSURE TO LAWSUITS FOR INTERNET LIBEL ("CYBERSMEARING")

Some ISPs are being confronted with a new and increasing legal issue --
Internet libel or "cybersmearing."  

For example, Credit Suisse First Boston and Informix recently filed
lawsuits against Yahoo and anonymous posters to their message boards
on Yahoo because the posters were posting defamatory statements,
sharing confidential information and spreading misinformation.  In the
lawsuits, demand is made that Yahoo disclose the names of the
anonymous posters.  Last year, Raytheon sued 21 John Does who posted
on defamatory statements about it on Yahoo!

A Miami-based company, MasTec Inc., was confronted with false
statements about it circulating on Internet investor forums and
bulletin boards and sued to obtain a subpoena against a former
employee.

A growing number of companies are starting to monitor the cyberhighways
for defamatory material and when any are found, filing suit.  These
companies scour the Internet for defamatory comments because of the
damage they can do in a number of important areas.  It is estimated
that there are now 200 lawsuits on "Internet libel" or "cybersmearing"
and the number is increasing.

ISPs that operate investor and other corporate bulletin boards are
largely immune from liability because the Communications Decency Act
of 1996 designates then as common carriers.  But it should be
remembered that this Act does not immunize original content produced
by ISPs.

While some state courts have generally recognized a right to speak
anonymously on the Internet, the U.S. Supreme Court has yet to address
the issue except for acknowledging a right to anonymity in cases
concerning the distribution of political pamphlets.  But lower courts
are requiring companies to make a preliminary showing that the
anonymous speaker injured them economically (such as a fall in stock
price or a deal lost) before forcing the ISPs to identify the speaker.

Companies are advised to consult with an attorney familiar with this
area of law and establish a formal set of procedures, to move quickly
after an Internet libel attack and to limit the damage to a company's
reputation.

To further demonstrate the potential for new legal hurdles, a suit was
recently filed against AOL in Ohio claiming that the plaintiff was
being humiliated online in an Internet chat room.  The suit claims AOL
failed to do anything about chat room participants who allegedly
caused him emotional distress.  Gillespie v. America Online,
No. 05CIV1255 (Medina Co., Ohio, Ct.  C.P.).

COMMUNICATIONS TAXES: News & Notes

At The Helein Law Group we are frequently asked to provide advice
regarding state and federal taxation of telecommunications and
enhanced communications services.  The firm's Telecommunications &
Technology Regulatory Practice includes a separate focus that offers
expert advice on federal and state excise taxes on communications
products and services, as well as on state sales, use and gross
receipt (excise taxes), and other "tax-like" regulatory fees that are
or can be applied to a variety of communications and information
technology services and products.

As a new service to its clients and readers of The Front Lines, we
will begin publishing summaries of tax decisions relevant to the
communications industry on a more frequent basis.  We are taking these
steps to highlight the dizzying array of taxes, changes in tax laws &
regulations, and the importance these changes have in the context of
the telecommunications & enhanced services industries.

If you seek legal advice on issues pertaining to taxes or "tax-like"
fees, please contact our firm at 703-714-1300 or via e-mail:
mailto:mail@thlglaw.com

New York

Purchase of plastic cards used to provide prepaid calling services
declared "resale"; not subject to separate sales tax.

A telephone service provider's purchase of plastic telephone calling
cards that provided information on its prepaid calling service were
excluded from sales tax as purchases for resale.

The plastic telephone calling cards offered information concerning the
provider's prepaid telephone calling service to customers. The cards
contained such information as the transfer of the authorization code
verifying payment for the telephone service, and instructions and
codes for accessing the service.

The company was audited for sales and use tax and subject to additional
tax due on its purchase of the plastic prepaid telephone calling
cards, including the printing, bundling, storage and packaging of the
cards.

The company argued that the plastic telephone cards were tangible
personal property and were in fact transferred to their customers. The
cards served as an integral part of the sale for the taxable
telecommunication service, without which, customers could not access
the information to utilize the service. The Tax Division argued that
the company was not in the business of selling plastic cards. The
provider reminded the tax division that the cards were simply an
incidental part of the company's primary business of supplying prepaid
telephone service.

The Division of Tax Appeals held that the resolution of the issue in
this case revolved around whether the plastic cards were an incidental
or ancillary part, as opposed to an essential or critical element of
the taxpayer's business of providing a prepaid telephone calling
service.

The tax division held that the plastic cards contained the information
essential to enable the consumer to access and utilize the prepaid
telephone service. It was ultimately decided that the company's
purchase of plastic telephone cards were purchases for resale and not
subject to tax.

(US Telecom, Inc., New York Division of Tax Appeals, Administrative Law
Judge Unit, DTA No. 820160, 12/01/05)

             =============================

The Front Lines is a free publication of The Helein Law Group, P.C.,
providing clients and interested parties with valuable information,
news, and updates regarding regulatory and legal developments
primarily impacting companies engaged in the competitive
telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it
establish a lawyer-client relationship with the reader. If you have
questions about a particular article, general concerns, or wish to
seek legal counsel regarding a specific regulatory or legal matter
affecting your company, please contact our firm at 703-714-1313 or
visit our website:

 http://www.thlglaw.com /

The Helein Law Group, P.C.
8180 Greensboro Drive, Suite 700
McLean, Virginia 22102


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