Emerging Technologies Washington Update

August 13, 2020

Pardon Our Dust

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This week: EU-US privacy shield struck down, but talks continue; White House and Defense Department announce mid-band spectrum auction for 5G; Ninth Circuit decision largely upholds FCC decisions to promote 5G deployment; President Trump signs Executive Order targeting Chinese apps.

EU-US Privacy Shield Struck Down, But Talks Continue

In mid-July, the European Union’s (EU) Court of Justice ruled that the EU-US Privacy Shield framework is no longer a valid instrument for transferring personal data from the European Union to the United States due to concern with regard to the United States’ national security surveillance programs and the right to seek judicial review and remedy. The opinion highlights the tension between the General Data Protection Regulation (GDPR) and the different standards of access to judicial review under U.S. law where personal data has been obtained for national security purposes from an EU citizen as opposed to a citizen of the United States. 

The U.S. Department of Commerce and the European Commission issued a joint statement on August 10 indicating, however, that they have initiated discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework that would comply with the Court’s judgement.  Both sides recognized the critical importance of data protection and the significance of cross-border data transfers to their economies and have agreed to work to address the concerns raised by the EU Court of Justice.

White House and Defense Department Announce Mid-band Spectrum Auction for 5G

On Monday, the Trump Administration and the Department of Defense (DOD) announced a long anticipated plan to free up 100-megahertz of wireless spectrum in the 3.45-3.55GHz band, currently being used by the military, for use in commercial 5G network deployment. The White House said the plan to auction mid-band spectrum underscores President Trump’s commitment to strengthening United States leadership in 5G communications. DOD’s statement stressed the importance of finding the right balance between supporting the needs of private industry and protecting national security.

In terms of projected timeline and next steps, the Administration indicated it plans to release technical details regarding spectrum stakeholder use by the end of this summer. The Federal Communications Commission (FCC) would then draft proposed rules and seek public comment for the spectrum auction, currently targeted for December 2021. Under this timetable, commercial entities would be able to start using the spectrum as soon as the summer of 2022. 

FCC Chairman Ajit Pai praised the President and DOD’s actions and acknowledged the important role his agency played in creating the framework to promote 5G service in the band. He stated, “This is a key milestone in securing United States leadership in 5G,” adding “The FCC looks forward to moving quickly to adopt service rules for the 3.45 GHz band and then hold an auction to bring this prime mid-band spectrum to market.”

Ninth Circuit Decision Largely Upholds FCC Decisions to Promote 5G Deployment

On August 12, the U.S. Court of Appeals for the Ninth Circuit upheld much of the Federal Communications Commission’s (FCC) 2018 order, which seeks to promote the deployment of 5G service through streamlining of various infrastructure deployment regulations, establishing a safe harbor of presumptively reasonable fees, and clarifying the timing for permitting decisions by State and local governments (collectively “Small Cell and Moratoria Orders”). The Ninth Circuit panel held that, given the deference owed to the agency under in interpreting and enforcing the Telecommunications Act, the Small Cell and Moratoria Orders were, with the exception of the decision on local aesthetics regulations, a permissible exercise of its authority under the congressional directive in the Act.

Specifically, the Court held that the FCC’s test for determining the reasonableness of State and local fees was within its statutory power as was the determination that application fees of less than $500 and recurring fees of less than $270 per year are presumptively lawful under its test. The Ninth Circuit also supported the FCC shot-clock decision, which reduced the time for State and local governments to reach a decision from 150 days to 60 days to decide applications for installation on existing infrastructure, and 90 days for all other applications.

The Ninth Circuit, however, did overturn the FCC’s decision concerning aesthetics regulations adopted by local governments.  The panel noted that the Commission’s order dealing with aesthetics “are among the most problematic.”  The panel concluded that unlike the statutory structure established by Congress, the FCC’s standard for determining whether a local aesthetic regulation is permissible “does not permit even reasonable regulatory distinctions among functionally equivalent, but physically different services.”  The result being that the FCC’s requirements would “contravene” the statutory principle by placing a limitation on local zoning authority that departs from the explicit directive of Congress.

FCC Chairman Pai said of the Ninth Circuit’s decision that it “is a massive victory for U.S. leadership in 5G, our nation’s economy, and American consumers.”  Commissioner Carr echoed that sentiment stating “I’m glad that with today’s decision, the litigation is settled, and we can continue our pursuit of next-gen opportunities for all Americans.” 

President Trump Signs Executive Order Targeting Chinese Apps

After months of threats, on August 6 President Trump issued an Executive Order prohibiting any person or entity under the jurisdiction of the United States from conducting transactions with ByteDance, the parent company of Chinese social media platform TikTok. The order will come into effect on September 20 and follows warnings that the President would move to ban the social media platform if not sold to an American company. Microsoft is currently in discussions to purchase the app; however, the Trump Administration has only given Microsoft until September 15 to close a deal, or the app will be banned from the United States on national security grounds. President Trump issued a similar order targeting WeChat, a Chinese messaging app that is much less popular in the United States, on the same day.

Concerns surrounding TikTok are not new. Many privacy stakeholders have suggested that user data owned by the company may be compromised, as current Chinese law provides Chinese regulators with near universal access to user data stored in the country. In prefacing the orders, Trump highlighted that many federal entities, including the Department of Homeland Security and United States Armed Forces, have already prohibited downloading TikTok on government phones. Similarly, the Senate, by a unanimous vote, passed a bill last week banning TikTok on all government-issued devices. The House passed a similar measure as an amendment to its National Defense Authorization Act (NDAA) last month. TikTok is expected to file a lawsuit against the Administration soon.