Although no one we reached would speak for record, ABC TV affiliates are upset and “very concerned,” as one put it, by implications for future of TV network following comments by Disney CEO Michael Eisner at Golden Sachs conference in N.Y. last week. Eisner told analysts operations of TV network -- day part by day part -- would be combined with Disney’s cable channels to create “national duopolies.” In future, he said, Disney will focus on 2 “core brands” -- Disney theme parks and cable sports network ESPN. “Where does that leave us?” group executive with several ABC affiliates asked. Eisner also indicated repurposing of programs on cable would increase substantially after expiration of new 2-year agreement with stations on football (CD Oct 3 p10), which limits repurposing to 25% of ABC programming. Here are some reactions to Eisner’s statements: “That’s 180 degrees from what [ABC TV Network Pres.] Alex Wallau and [Disney Pres.] Bob Iger have been telling affiliates.” “The TV network is absolutely critical to the welfare of Disney itself.” “Nobody really knows what he meant.” One suggested statement was just effort to boost stock price. Also of much concern, affiliates said, was Eisner’s comment he would be “thrilled” if deal could be made between CNN and ABC News. Disney official told us Eisner’s remarks had been “misinterpreted.” Meanwhile, even though ABC officials wouldn’t confirm figures, we're told more than required 2/3 of non-ABC-owned affiliates had endorsed new football deal before deadline today (Fri.). One major group -- Young Bcstg. -- is back in football fold after sitting out deal that expired July 31 (CD July 11 p6), while Sinclair Bcstg., which agreed to original deal, won’t participate in new one, we're told.
Country of origin cases
FCC on Thurs. unanimously approved new technology that will for first time allow radio broadcasters to transmit same program in both analog and digital modes, as well as other services, -- all within their existing spectrum. In decision, FCC approved iBiquity Digital’s in-band, on-channel (IBOC) technology for digital broadcasts in AM and FM bands. IBiquity executives hailed development as removing last important hurdle to commercial introduction of first IBOC receivers at Jan. CES in Las Vegas and were ecstatic at lavish praise heaped upon system by individual commissioners.
Saying it lacked oversight, General Accounting Office (GAO) dismissed protests filed by Sprint and Global Crossing over hotly disputed, $450 million defense network contract awarded to WorldCom. Defense Information Systems Agency (DISA) awarded IP network contract to WorldCom before carrier filed for bankruptcy. Sprint and Global Crossing protested after WorldCom disclosed in June it had overstated earnings by $3.8 billion in 2001 and 2002. Carriers argued that DISA’s contract decision was based on faulty financial information from WorldCom, which meant Defense Research & Engineering Network (DREN) contract award should be void.
FCC approved $2 million consent decree with AT&T Wireless to resolve possible violation of Enhanced 911 Phase 2 rules in largest E911-related fine to date. Consent decree set timeline for carrier to deploy network-based location technology within its GSM network. Agreement doesn’t require Enhanced Observed Time Difference of Arrival (E-OTD) technology and carrier said Wed. it was setting its sights on another caller-location system. E-OTD has come under fire from public safety groups and others recently as beset with problems that were slowing E911 rollouts. AT&T Wireless spokeswoman said carrier planned to use same kind of time difference on arrival (TDOA) location technology in its GSM network as it used for its TDMA infrastructure. AT&T said it would continue to test E-OTD in some markets, but consent decree doesn’t stipulate particular network-based location technology, freeing carrier to use other systems to meet deployment deadlines.
CANNES -- Panelists at MIPNET here urged patience in dealing with digital and interactive TV. Although many digital channels, especially in N. America, have yet to realize their expected potential, programmers believe they eventually will have significant financial and creative impact on industry.
FCC fined SBC $6 million for violating condition that agency imposed when it approved Oct. 1999 merger of SBC and Ameritech. FCC Chmn. Powell said fine was highest in Commission’s history and penalized SBC “for serious violations of our local competition rules.” When it approved merger, Commission had required SBC to offer shared transport unbundled network elements (UNEs) in former Ameritech states on terms “at least as favorable as those offered to telecommunications carriers in Texas” at time. Shared transport essentially is connect between central offices. FCC issued notice Jan. 18 saying it appeared SBC had violated that requirement in each of 5 former Ameritech states “by restricting the use of shared transport by carriers providing intraLATA toll service.” Notice proposed $6 million fine and gave SBC opportunity to respond.
CTIA urged FCC Tues. to follow through on proposal that laid out options for NextWave re-auction winners to opt out of all or some of their pending license obligations. Commission in recent public notice described alternatives, with comments due Fri. In comments, CTIA reiterated dire economic straits that it said encompassed wireless sector. “By allowing Auction 35 winning bidders maximum flexibility to decide whether to request voluntary dismissal of pending applications, allowing a full refund of applicable deposits and granting a full release from contingent liabilities that encumber billions of dollars of wireless assets, the Commission can inject new liquidity into the wireless telecommunications industry that will foster capital development, job creation and better services,” CTIA said. “The NextWave licenses have been nothing but a tar baby for the FCC and the wireless industry,” CTIA Pres. Tom Wheeler said. “While the Supreme Court decides the NextWave appeal, it is essential the Commission move forward and expeditiously release the multi-billion-dollar overhang it has saddled the wireless industry with.” CTIA said NextWave re-auction winners now had contingent liability of $16 billion that would have to be paid in 10 days if FCC ultimately prevailed in litigation and could uphold re-auction results. CTIA said FCC should: (1) Let winning bidders cancel their pending auction applications in full or in part. (2) Allow any bidders that opted out of applications to be allowed to take part in future auctions for same spectrum “should the ultimate resolution of the NextWave proceedings permit such a re-auction.” Because FCC couldn’t follow through on its part of auction “contract” when it couldn’t deliver licenses because of litigation, re-auction winners shouldn’t be punished for opting out of original bids, CTIA said.
House voted Mon. to codify last-min. deal on Webcast royalties. Assuming Senate follows suit (Senate Judiciary Committee Chmn. Leahy [D-Vt.] said he thought it was possible even with Congress near adjournment), small Webcasters would have much smaller royalty bill due Oct. 20, day Librarian of Congress’s rate was to go into effect. Revenue caps for participation in discounted rate would not apply to most radio stations also webcasting music. House Judiciary Courts, Internet & Intellectual Property ranking Democrat Berman (Cal.) gave House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) credit for agreement, citing chairman’s threat last week to delay for 6 months implementation of royalty rate that prompted resolution. Berman had opposed Sensenbrenner’s introduction of that original bill (HR-5469), but on floor Mon. said “I was wrong… the chairman had a method to his hamhandedness.” Agreement applies back to Oct. 28, 1998 and forward to Dec. 31, 2004, and would apply either minimum payment or percentage of gross revenues or expenses. To qualify, Webcaster must have less than $1 million revenue between Nov. 1, 1998, and June 30, 2002, less than $500,000 revenue in 2003 and less than $1.25 million in 2004. Several parties are appealing the Librarian’s decision in U.S. Appeals Court, D.C., and as Webcasting agreement affects only small portion of the parties involved, it’s not given that agreement will stop appeals. One of parties appealing, NAB, had not responded by our deadline. RIAA spokesman wasn’t sure whether that group would drop its legal case.
Cable was largely unencumbered by adverse legislative initiatives in states this year, with contentious issues such as open access and cable modem classification moving to federal level. Furthermore, state cable associations we talked with didn’t anticipate any cable-specific issue in next year’s sessions, but were bracing for taxation measures that could affect all businesses as states faced budget shortfalls. Also, with cable diversifying into telephony and Internet service, industry was taking increasing interest in telecom and privacy issues in legislatures, they said. “I don’t think there is any big issue in particular that is coming up repeatedly like back in the days of open access,” said one official. And unlike in recent past, there’s been lessening of interest in industry’s sponsoring legislation to restrict entry of municipalities into telecom business.
FCC rationale for determining that all space in conduits or ducts of electric utilities is usable, including those set aside for maintenance and emergencies, was questioned in U.S. Appeals Court, D.C., Fri. Court was hearing oral argument in review sought by Southern Company Services (SCS) of FCC final order on rates, terms and conditions of access for attachments by cable operators and telecom carriers to utility poles, ducts, conduits, rights-of-way. Judge Merrick Garland said utilities’ complaint was FCC regarded all space in conduit as usable even that was set aside for maintenance and emergencies. He asked why Commission should consider space that couldn’t be used for attachments as usable. Saying agency had computed rates based on percentage of total space occupied by cable or telecom companies, FCC lawyer Gregory Christopher said that unlike pole attachments, statute (Pole Attachment Act) didn’t make distinction between usable and unusable as far as ducts or conduits were concerned. “It is their [utilities'] administrative decision to keep it empty,” he said referring to space for maintenance and emergencies. Although space was being used for maintenance, it still was usable to accommodate attachments, he said. Responding to question from bench, Christopher said if utilities could show that use of space for maintenance would preclude its use for attachments, then they could seek waiver. But as general rule, all space within duct is usable and it’s irrelevant whether it’s used or not used, he said. FCC did say in order that utilities were entitled to same protections and rights in case of overlashing (affixing new fiber to existing cable) as was case with host (original) attachment. Utilities had said FCC had failed to mandate advance notice and coordination of overlashing, thereby nullifying their statutory right to deny access to poles for reasons of insufficient capacity, safety, reliability, engineering. SCS counsel Russell Campbell said FCC had to define attaching entities consistently. Under statute, it applied only to utilities, cable and non-ILEC telecom companies, he said, and Commission’s inclusion of ILECs, govt. entities and electric utilities for apportioning of costs of unusable pole space couldn’t be sustained.