FCC financial statements received generally good marks from an independent auditor’s report in the commission’s FY 2015 Agency Financial Report (AFR) released Thursday. Kearney & Co. found the statements “present fairly, in all material respects” the FCC’s financial position as of Sept. 30 in accordance with generally accepted accounting principles. The accounting firm did find “one repeat material weakness, originally reported in FY 2014, in internal control” regarding Universal Service Administrative Co. budgetary accounting, “one repeat significant deficiency” going back 10 years related to IT controls, and “one repeat instance of noncompliance with laws and regulations related to the requirements of the Debt Collection Improvement Act,” said FCC Inspector General David Hunt in an introductory memorandum. “The independent auditor’s opinion addresses more than $10.1 billion in revenues, more than $460 million in FCC operating expenses and more than $9.2 billion in outlays for the Universal Service Fund and Telecommunications Relay Service Fund,” said FCC Chairman Tom Wheeler in an AFR message. “Despite the positive audit opinion, the independent auditor’s report shows that work remains at the FCC to continue to improve the agency’s operations.” The $10.1 billion revenue includes: some $8.77 billion from USF, $847 million from the TRS Fund, $340 million from appropriations (regulatory fees), $106 million from auction-related appropriations, $6 million from North American Numbering Plan revenue, and $7 million from “other” sources, according to an “FCC management” overview. Wheeler highlighted FCC work on spectrum, net neutrality, transactions, Lifeline and E-rate USF support, robocalls, empowering people with disabilities, process reform, and field and IT modernization. He voiced confidence the FCC is on “sound legal footing” in net neutrality litigation and he noted the agency raised more than $40 billion in AWS-3 auction revenue. He said field activities “presented real challenges and opportunities for improvement,” given technological change since the last Enforcement Bureau field structure review and given a reduction in FCC resources. “The Commission adopted a field modernization plan that will allow our field operations to do more with less,” he said. “The resulting plan reflects the review team’s thorough, data-driven analysis and concentrates field resources where they are needed most -- areas with the greatest spectrum density. … Once implemented, this plan will save millions of dollars annually.” Wheeler also said the FCC's IT team "is on track to modernize our infrastructure, information and communications technologies," replacing costly-to-maintain legacy systems and "leveraging cloud service offerings to the fullest extent possible."

The FCC is “trying to be helpful” to broadcasters seeking deferred taxes on their takings from the reverse auction or from channel sharing agreements, FCC Chairman Tom Wheeler told us during a news conference Thursday. Several broadcasters have approached the FCC over the issue recently (see 1511130041). Wheeler said efforts to have incentive auction proceeds taxed favorably began with a letter from the commission to the IRS early in the auction process. Wheeler was asked Thursday if he was open to delaying the incentive auction, and he replied that the auction is 131 days away -- referencing the planned March 29 start date. Commissioners Ajit Pai and Mike O’Rielly said the FCC should be willing to delay the auction if required for the process or the auction software to run smoothly. “The ultimate timing is up to the chairman,” Pai said.

The FCC approved a draft item on accessibility for user interfaces Wednesday and deleted it from the commission’s meeting agenda Thursday. No commissioners dissented from the item, an FCC official told us. The text of the order, which is expected to concern gestures and voice-controlled closed captions and accessibility information requirements for pay-TV carriers (see 1511160058), is expected to be issued this week, FCC officials told us. Some experts had expected the final item to incorporate a compromise between industry and advocates.

The FCC is focused on encouraging more broadband competition, said Gigi Sohn, counselor to Chairman Tom Wheeler. In a speech Tuesday at a European Competitive Telecommunications Association event in Brussels, Sohn said competition is the most effective way to achieve the agency’s goals of promoting communications innovation and investment while upholding public interest values as technology changes networks. She said the benefits of competition are well known in the long distance, wireless, consumer device and information services markets. “However, in the broadband market, more work needs to be done for consumers and industry alike to realize the full range of benefits that competition can provide,” she said. Sohn highlighted FCC decisions on the IP technology transition, municipal broadband, net neutrality, USF support and broadband speeds, and its concerns that helped thwart Comcast's takeover of Time Warner Cable. She also outlined the commission’s efforts to stage a “historic incentive auction,” carry out further USF reforms to help rural and low-income consumers, and ensure “reasonable” rates, terms and conditions for special-access services in the business data market. Sohn said she recognized that the FCC values of competition, universal access, consumer protection and public safety were basically shared by the EU in its digital single-market strategy. "While our commercial markets differ and may, at times, require different policy solutions, these common values unite us," she said. Sohn said mobile networks now reach about 95 percent of the world's population, with about half having access to mobile Internet service. She noted the international Global Connect effort of governments and private parties to connect another 1.5 billion people by 2020. There are about 15 billion Internet-connected devices, she said, along with projections that number could grow to about 50 billion in five years. "McKinsey estimates that the emerging Internet of Things could generate up to $11 trillion in economic value over the next decade," said Sohn.

The FCC is developing a cognitive accessibility pledge for carriers, service providers and government stakeholders, Chairman Tom Wheeler said at the Association of University Centers on Disabilities. In October, the FCC held a summit on communications issues for people with cognitive disabilities, at which Wheeler also spoke (see 1510280037). “The Summit identified two pressing challenges: first, the lack of equipment and services that meet the unique and varied needs of people with cognitive disabilities; and, second, the lack of awareness across government and the private sector about accessibility rights and enforcement mechanisms,” Wheeler said Tuesday, according to prepared remarks. “Drawing from these lessons learned, we have charted out next steps.” The FCC will start with a more comprehensive “needs assessment to determine the types of accessibility features needed,” he said. Next, he said the agency will start “targeted outreach efforts in early 2016 not only to educate individuals with cognitive disabilities about their rights to communications products and services, but also to engage individuals who can help.” Wheeler said the commission has received numerous complaints about the unique problems faced by people with cognitive disabilities. “One individual may not be able to use email, because he has difficulty remembering a unique password,” he said. “Another may face challenges in using new telephone equipment or understanding service plans or pricing. Some are unable to navigate the confusing menus of service providers’ web sites. Others complain of service personnel who are insensitive, refuse to address their concerns, and who even make fun of their disabilities.”

FCC rules on the methodology to be used during the incentive auction to predict interservice interference between broadcasting and wireless services and on a cap on the aggregate amount of new interference a TV station may receive from other TV stations in the repacking process take effect Dec. 17, said a notice in Tuesday's Federal Register. Parts of the rules still being reviewed by the Office of Management and Budget don't take effect until the review is complete, the FCC said. Rules approved by the FCC in August allowing wireless mics to use new bands and share spectrum in the TV band (see 1508060050) also take effect Dec. 17, except for parts still being reviewed by OMB, said a second notice in the FR.

The Justice Department asked the U.S. Court of Appeals for the D.C. Circuit to stay a ruling by U.S. District Judge Richard Leon, who last week ordered the NSA to stop collecting the call records of attorney J.J. Little and his law firm (see 1511090049). "Given that the government’s bulk collection of telephony metadata under Section 215 will terminate in less than two weeks, thereby mooting plaintiffs’ claims for injunctive relief and the injunction entered by the district court, this court should stay the district court’s injunction pending appeal, the Monday DOJ filing said. Little and his law firm were two of the five plaintiffs in Klayman v. Obama that are seeking to end the government's spying program, saying it's unconstitutional. The government will shift to a new program on Nov. 29 but wants to continue the current telephony metadata collection until then.

The FCC and the FTC released a memorandum of understanding on their respective roles in protecting consumers in the communications sector. Both agencies posted the MOU on their websites Monday. “The memorandum is designed to formalize the existing cooperation between the agencies, outlining how the FTC and FCC will coordinate consumer protection efforts,” the FTC said in a statement. The agencies said they have had a similar MOU in place on telemarketing enforcement issues since 2003. “The FCC and the FTC will continue to work together to protect consumers from acts and practices that are deceptive, unfair, unjust and/or unreasonable,” the MOU said. They agreed to regular meetings to review current marketplace practices and their observations on the “evolution of communications markets.” The agencies committed to “coordination on agency initiatives where one agency’s action will have a significant effect on the other agency’s authority or programs” and “consultation on investigations or actions that implicate the jurisdiction of the other agency.”

USTelecom filed a legal challenge to the FCC IP technology transition decisions adopted in August that were intended to safeguard competition and consumers as telcos switch from copper-based traditional services to IP-based services over fiber networks (see 1508060044). USTelecom filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit (USTelecom v. FCC, No. 15-1414) against FCC orders that grew out of a 2014 FCC NPRM, declaratory ruling and subsequent USTelecom petition for reconsideration. "In the Order and Order on Reconsideration, the Commission not only denied USTelecom's petition for reconsideration of the Declaratory Ruling, but also took a number of final actions in the rulemaking it initiated in the Notice, including: adopting new rules governing the retirement of copper facilities; declaring that a carrier must seek Commission approval under § 214(a) if a change in its service will cause a wholesale customer of that carrier to discontinue, reduce, or impair its own retail service offerings; and adopting a new rule under which it will condition its approval of § 214(a) applications for certain services on the applicant's provision of a reasonably comparable, wholesale Internet Protocol service, on reasonably comparable rates, terms, and conditions," USTelecom said. Incompas General Counsel Angie Kronenberg emailed us Monday: “First, the Bells tried lobbyists. Now they will try the lawyers, but they cannot fight the future. Competition is the answer, and it’s driving new networks.” Public Knowledge Senior Vice President Harold Feld emailed us: "This is not unexpected. USTA and its members have made their opposition to the FCC's order fairly clear. We believe the FCC acted entirely within the scope of its authority and in a manner reasonably calculated to protect and advance the pro-consumer and pro-competition goals of the Act -- and that the court will ultimately affirm the Commission." FCC spokesmen had no immediate comment.

Larry Klayman, chairman of Freedom Watch, requested oral argument from the U.S. Court of Appeals for the D.C. Circuit after the court granted an administrative stay to the U.S. government of last week's ruling by U.S. District Judge Richard Leon. He had ordered the NSA to stop collecting the call records of attorney J.J. Little and his law firm (see 1511090049). They were two of the five plaintiffs in Klayman v. Obama. "Appellants cannot -- and should not be able to -- rely on the failed argument that it may be burdensome to avoid obeying the Constitution," wrote Klayman in his appeal.