Federal Communications Commission (FCC)

DBS industry will leave behind most of U.S. TV stations when new spot beam satellites are launched, according to study by Equal Airwaves Right Now (EARN), organization supported by 20 broadcast companies and consumer groups. At least 2/3 of U.S. market (1,100 TV stations) won’t receive local TV signals, said EARN study, The Left Behind Project. In news conference at National Press Club Tues., group cited new study as demonstrating why FCC should license competing services such as Northpoint. EARN Exec. Dir. Peter Pitts said “satellite giants” made decisions on must-carry “based on pure profit and politics” with no consideration of “public interest.” He said policy on local TV carriage was “wrong.”

Commerce Secy. Donald Evans told FCC Chmn. Powell that with “additional time” NTIA should work with Commission to develop “a new plan for the selection of 3G spectrum.” Evans wrote: “The aim will be to build upon the good work already done and to develop and execute the new plan as quickly as possible.” Evans said he was asking that the work be done in coordination with other Executive Branch agencies, including National Security Council, National Economic Council (NEC), Office of Management & Budget, Defense Dept. Evans said in letter that he was urging participants to consider ways to “achieve flexibility” on statutory auction dates if flexibility was needed to implement plan. Letter appeared to be response to Powell letter last month outlining Commission’s plans to delay spectrum allocation decision for 3G that had been due this month under timeline set in White House executive memorandum last fall (CD June 28 p4).

Newest FCC Comr. Martin is focused on statutory-based authority of Commission and need for “more stable regulatory environment,” he said. In interview with Communications Daily Fri. in his still sparsely-furnished office, with boxes of files not yet arrived from Austin, he said: “That’s kind of an overarching philosophy, that the government has limited but important roles. The Commission specifically is an implementer of congressional policy, first and foremost.” Martin repeatedly emphasized role that competition played in protecting consumer interests and said “the government has a vital role in making sure that playing fields are level and fair.” He also stressed importance of strong enforcement arm in maintaining level playing field.

Decision by 4th U.S. Appeals Court, Richmond, Va., that federal law bans localities from imposing open access mandates on cable operators is likely to halt efforts by cities and counties to enact such requirements, according to both open access proponents and opponents. With its unanimous ruling late Wed. that cable modem lines were “telecommunications facilities” that couldn’t be regulated locally, 4th Circuit panel joined 9th U.S. Appeals Court, San Francisco, and U.S. Dist. Court, Miami, in striking down local open access ordinances as violations of either Constitution or federal law. Although 3 courts differed on grounds for rejection and on regulatory classification of Internet access over cable lines, they all agreed that cities and counties couldn’t impose restrictions on cable modem service. “The local authorities are becoming preempted out of this,” said Andrew McBride, partner at Wiley, Rein & Fielding, who represented Verizon in joint case with Henrico County against AT&T and MediaOne. “They [the courts] keep reaffirming the federal authority over this.”

Pa. Office of Consumer Advocate (OCA) urged FCC not to approve Verizon’s bid for long distance entry in state until company corrected “number of problems” in opening its facilities to local competition. In comments filed late Wed., OCA said it agreed that CLEC access had improved and consumers would benefit from Verizon’s competing in long distance market. However, 3 things must be improved first, OCA said: (1) Verizon must offer CLECs “all of the loop qualification information to which Verizon has access and develop a metric as to the accuracy of this information.” (2) Telco must produce white page listings for CLECs with “same level of accuracy that it offers to its retail customers and develop a metric to measure such accuracy.” (3) Verizon must “commit to not seeking to overturn the Pa. PUC’s fundamental regulatory authority to implement and maintain self- effectuating metric remedies.” OCA said Verizon had taken legal action against metrics mechanism in past so FCC should get commitment that it wouldn’t do it this time. OCA is state govt. organization that represents consumer interests before PUC, federal agencies, courts. Not surprisingly, competitors urged FCC to turn down Verizon’s Sec. 271 petition for Pa. WorldCom said Verizon had “progressed a long way” in Pa. but “instead of resolving the handful of issues that remain and presenting the Commission with a clean application, Verizon seeks Sec. 271 authorization based on future promises and rhetoric.” Assn. of Communications Enterprises (ASCENT) said FCC should deny petition because Verizon: (1) “Unlawfully restricts… resale of xDSL- based advanced services to consumers who receive their voice service from Verizon.” (2) “Has yet to develop and implement a reliable billing system.” (3) Doesn’t provide nondiscriminatory network access “in critical competitive areas,” such as provision of “hot cut loops.” Sprint complained that Verizon had stymied Sprint’s access in number of ways. Sprint said Verizon: (1) “Refuses to allow Sprint to interconnect at a single point of interconnection per LATA as clearly required by Commission’s rules.” (2) Doesn’t let CLECs order interoffice transport facilities at same time they apply for colocation, instead delaying CLEC rollout by waiting until 2 weeks before colocation is complete. (3) Refuses to apply reciprocal compensation to local calls over existing access trunk facilities and instead “has attempted to bill Sprint access charges for these calls.” AT&T said Pa. PUC should be commended for helping create conditions conducive to competition but “this progress cannot obscure the fact that [2 PA PUC commissioners] voted to oppose” Verizon application “because of Verizon’s failures” to comply with 14- point competitive checklist.

Local competition might have developed more quickly without Telecom Act, former FCC official said Wed. at Washington symposium sponsored by think tank Phoenix Center. Telecom Act stymied experimentation by state regulators and put brakes on competition that already was developing under state tutelage, said Robert Atkinson, ex-FCC Common Carrier Bureau deputy chief. Atkinson, who was senior vp of pre-Telecom Act competitor Teleport Communications before joining Commission, said competition was developing long before Telecom Act through enforcement of AT&T divestiture agreement, known as Modified Final Judgment (MFJ). Issues such as colocation and reciprocal compensation had been solved, although “not perfectly,” when Act came on scene and froze market “because everything became a federal case,” said Atkinson, now exec. dir. of Columbia U.’s Institute for Tele-Information. States were much more able to experiment in competitive models in limited geographic areas, he said. Bells traded enforcement through Sec. 8(c) of MFJ for Act’s Sec. 271, resulting in “a 14- point logjam,” he said. Furthermore, Atkinson said, Telecom Act “over-encouraged investors,” leading to financial failures. Situation might be improved if FCC were willing to delegate some authority to state regulators to oversee local competition models, he said. More legislation generally won’t help, although Congress could help situation by giving FCC more enforcement power, not just through fines but through “the ultimate sanction, structural remedies, the potential atomic bomb,” he said. Most of all, Congress should resist micromanaging FCC: “Legislators are terrible at micromanagement.” Atkinson and Robert Berger, pres. of competitive CityNet and former WinStar official, also criticized Act as disincentive to facilities-based competition. Placing too low price on unbundled network elements (UNEs) saps value of those companies that have spent money to install their own lines, Atkinson said. Best price is one that enables competitors to “break even,” he said. “You shouldn’t be able to make money using a competitor’s facilities,” Atkinson said. Berger said Telecom Act gave false sense of “instant gratification” that encouraged investment based on time frames that were entirely too short.

Despite protests from public interest groups, Comcast’s unsolicited $58 billion offer for AT&T Broadband stands good chance of earning federal regulatory approval if it gets that far, according to public policy analysts. They said Justice Dept. (DoJ) and FCC were likely to allow proposed deal to go through largely unscathed, especially if AT&T shed its 25.5% stake in Time Warner Entertainment (TWE) as Comcast pledged. They also predicted that FCC’s expected new horizontal cable ownership cap shouldn’t be problem for proposed combination of nation’s largest and 3rd largest MSOs, assuming Comcast won AT&T’s consent. Nor did they see either govt. agency imposing such conditions as open access and interactive TV nondiscrimination on deal, even though those obligations were placed upon AOL’s recent takeover of Time Warner (TW) and AT&T and Comcast co-own Excite@Home, nation’s largest cable ISP.

In decisive victory for satellite TV industry, U.S. Appeals Court, D.C., Fri. ruled in favor of FCC regulations that allow renters to install DBS dishes and other types of TV antennas despite property owner opposition. Panel of 3 judges roundly rejected petitions by building owners, building managers, homeowner groups and real estate trade associations that challenged federal rules as unconstitutional and exceeding Commission’s authority. Judges also rejected petitioners’ claims that agency “acted capriciously and arbitrarily” in extending its original rules on over-the-air reception devices (OTARD) to renters in 1998 action. Although FCC’s statutory authority is, “of course, subject to limitations,” court ruled, “an OTARD rule that safeguards all viewers’ access to these services clearly falls within this limitation” in light of “Congress’s explicit (and exclusive) grant of jurisdiction to the Commission over direct-to-home satellite services and its broad responsibility to make communications services available to all individuals.”

Fellow CLECs expressed opposition while ILECs offered wary support for Mpower Communications’ proposal to establish alternative to ‘pick & choose’ provision for competitive interconnection (CD May 29 p5). Mpower plan would allow ILECs and CLECs to voluntarily enter “flexible contracts” that wouldn’t be subject to pick & choose requirement. Pick & choose lets CLECs opt into individual sections of contracts that ILECs sign with other CLECs. So-called “FLEX contracts” would be available to other CLECs but only on all-or-nothing basis. Mpower’s theory was that flexible contracts without pick & choose requirements would speed competition because ILECs would be more amenable to them.

Providing first glimpse of his public policy priorities, new FCC Comr. Copps teamed up with Comr. Tristani to lash out at Enforcement Bureau’s handling of 2 indecency complaints against radio stations. In separate statements issued Mon., Copps and Tristani criticized Enforcement Bureau for not aggressively investigating listener complaints filed against Chicago station WKQX(FM) and Burlington, N.C. station WDCG(FM). Copps and Tristani, 2 Democrats on Commission, called on Bureau to take more steps in enforcing broadcast indecency regulations, instead of dismissing many complaints because station didn’t provide record of what was broadcast. “Lack of information about what was said and when it was broadcast should not be allowed to derail our enforcement of the laws,” Copps said. “If something is said on the public airwaves, a strong argument can be made that it should be part of the public record.” Copps raised similar concerns in interview with Communications Daily last month (CD June 14 p1).