Australian Competition & Consumer Commission (ACCC) released discussion paper in anticipation of govt.’s release of its telecom legislative package. Paper looks at how ACCC can provide guidance for market participants on prices for access to public switched telephone network (PSTN) originating and terminating services, Unconditioned Local Loop services (ULLS), local carriage services (LCS). Industry comments on how prices should be determined are due Oct. 18. ACCC said comments were part of preparation for pending govt. initiatives that would require it to establish model terms and conditions, including prices, for access to PSTN, ULLS and LCS. Paper doesn’t set prices for those services. ACCC said it planned to develop indicative prices in early 2003 after issues on how such prices should be set were resolved. Commission said indicative prices “would only be used for the purposes of providing information and guidance to the market, and would not be binding in any arbitral processes that may arise.” ACCC Chmn. Allan Fels said he hoped publishing indicative prices would encourage developing more open and transparent telecom industry and let parties reach commercial agreement without need for arbitration: “The ACCC sees indicative prices as being a reference point which will assist parties to resolve any differences encountered when negotiating the terms and conditions of access and will also encourage parties to give undertakings to the ACCC.” He said while any indicative prices published weren’t binding upon parties or ACCC, if disputes were referred to ACCC, they should be resolved more quickly by having published guidelines. Currently, Commission determines PSTN and ULLS access prices on annual basis through use of economic cost modeling. It said undertakings including reasonable terms and conditions could complement establishing of indicative prices by providing long-term certainty and information on pricing of services to marketplace. ACCC said its preliminary approach to setting indicative prices for PSTN and ULLS services would involve using price for first regulatory period, then applying adjustment factor to calculate indicative prices for following 3 regulatory periods.
Country of origin cases
Tensions between Pegasus and EchoStar are escalating over allegations that DISH network retailers and/or employees were “using false statements” about proposed EchoStar takeover of DirecTV to “convert Pegasus subscribers,” Pegasus Asst. Gen. Counsel Mark Eyer said in Sept. 6 letter to EchoStar Senior Counsel Christopher Melton that was filed with FCC as part of EchoStar-DirecTV regulatory review. Pegasus, which made original allegations to FCC in Aug. 27 letter, said it had “found numerous examples” of illegal behavior by EchoStar retailers and representatives. EchoStar formally denied charges Sept. 12 in letter to Commission. EchoStar Dir.-Legal & Business Affairs David Goodfriend said: “EchoStar takes every such allegation very seriously, and investigates each one. Unfortunately, that investigative effort has been hampered by the fact that in many cases the allegations by Pegasus lack documentation.”
British Culture Secy. Tessa Jowell approved new BBC3 DTV channel, govt. announced. Approval includes dozen conditions, mainly detailing program quality, but Jowell said BBC3 “has now made the case for BBC3,” which is to target younger audience than original BBC. Earlier proposal for BBC3 was rejected year ago when Jowell said programming wouldn’t be distinctive enough.
RadioShack petitioned FCC to reconsider order that granted radar industry partial relief on marketing deadline for radar detectors that didn’t comply with new rules to prevent VSAT interference (CD Sept 5 p11). Commission provided radar industry 30 more days to market devices that meet Part 15 limits on emissions in 11.7-12.2 GHz but turned down request for more time to make and sell compliant devices. FCC also had rejected separate RadioShack request to allow detectors that didn’t meet new emissions limits to be marketed for 6 months beyond original Sept. 27 deadline. “An extension of the marketing deadline through January of 2003 for RadioShack presents no additional harm to the satellite industry or to the public interest purpose of the Commission’s rule and will avoid needless harm to RadioShack,” company said in Sept. 10 petition. Earlier this month, FCC’s Office of Engineering & Technology turned down emergency waiver petition by RadioShack on marketing deadline. In latest filing, RadioShack said it had “special circumstances” as private-label retailer and faced timing problems linked to its 6-month distribution cycle and FCC’s tighter compliance timeline. Retailer outlined steps it took in anticipation of new rules to mitigate satellite interference. But it reiterated arguments that without additional time, it would have to deplete its inventory at loss to meet new rules. “RadioShack will likely be forced to increase these sales and is considering all other options for depleting any remaining inventory remaining near the end of October because it is significantly more cost-effective to deplete inventory in the marketplace than it is to retrieve and destroy inventory,” filing said. “In total, RadioShack anticipates losses of several million dollars.”
National Radio Systems Committee (NRSC), meeting at NAB Radio Show in Seattle, said it had formally opened process to set technical standard for in-band, on-channel (IBOC) DAB service in AM and FM bands as prelude to commercial launch of first IBOC receivers in early 2003. New working group has been formed within NRSC to draft voluntary standards on IBOC AM and FM transmissions. FCC has been studying NRSC- submitted IBOC test data as part of rulemaking on terrestrial digital radio and is expected to “issue an initial action” later this year, NRSC said. NRSC development came day before NAB Pres. Edward Fritts opened Radio Show with speech hailing IBOC DAB as “potentially the biggest change for radio since the introduction of FM broadcasting. At same time, Fritts took aim at satellite digital radio competitors Sirius and XM as having tried to “build their business by criticizing local radio.” Fritts said NAB “will continue to insist that XM and Sirius are held to the rules” under which their services were licensed by FCC, meaning that terrestrial repeaters were designed to fill in coverage gaps and “not to sneak in locally originated programming or advertising.”
SBC/Ameritech operation support system (OSS) tester KPMG Consulting advised Ohio and Wis. state commissions of another delay in completion of OSS testing, to Dec. 19 from Nov. 19. Advisory didn’t cite specific reason for latest delay. OSS tests in Ameritech region originally were to have been completed in May, but have been delayed several times since for variety of reasons. Ameritech in Mich. recently asked that KPMG test report for that state be filed now, with any missing pieces to be filled in using data from Ameritech’s own internal auditor, Ernst & Young, so it could move ahead with its Sec. 271 case.
As expected, Sen. Landrieu (D-La.) introduced legislation Tues. that would order FCC to grant licenses in 12.2-12.7 GHz range on basis of merit, not licenses (CD Sept 6 p11). Bill, Emergency Communications & Competition Act (ECCA) (S-2922), apparently is designed to aid Northpoint, which seeks to share spectrum with DBS service providers in that range of spectrum. In Senate floor speech, Landrieu said bill was essential to ensure rapid deployment of Multichannel Video Distribution & Data Service (MVDDS), which will provide competition for both cable and broadband services. It has several notable co-sponsors, including Senate Minority Leader Lott (R-Miss.), Senate Commerce Communications Subcommittee ranking Republican Burns (Mont.), Senate Judiciary Committee Chmn. Leahy (D-Vt.), Senate Small Business Committee Chmn. Kerry (D-Mass.). Other co-sponsors are Sens. Baucus (D-Mont.), Dodd (D-Conn.), Mikulski (D- Md.), Gregg (R-N.H.). Bill was sent to Senate Commerce Committee, of which Landrieu isn’t member. She said FCC decision to subject MVDDS providers, and not satellite companies, to auction process was “discriminatory tax on an innovative new technology.” She also said auction process was producing effects opposite of original intention. “In this case, industry incumbents can use the auction to block the introduction of new competition.” Under ECCA, applicants that can demonstrate through independent testing that technology won’t cause harmful interference to DBS operators would be granted licenses. Bill also would require services to build out systems within 5 years, not 10 now required by FCC. Parties that apply for licenses under that provision would have to assume specific public interest obligations, including full must-carry of local television stations, Landrieu said. Also, 4% of system capacity must be set aside for other purposes, such as telemedicine and distance learning. ECCA would require MVDDS licensees to air Emergency Alert System warnings, Landrieu said, which often aren’t seen by DBS viewers. Licensees would have to make transmission systems available to national security and emergency preparedness personnel in national emergency, she said. Landrieu said Consumers Union supported legislation since it would foster competition with cable, which she said had raised rates 45% since it was deregulated in 1996. “MVDDS can go head-to-head with incumbent cable systems everywhere, and I believe that this good old-fashioned competition will result in lower prices and better service for consumers -- even those who don’t choose to subscribe to MVDDS,” Landrieu said. Legislation also has been endorsed by National Grange, farm and rural public interest organization, she said. Burns said bill would give rural TV viewers in Mont. opportunity to get local TV stations, where DBS providers don’t offer local TV to residents.
Despite wide expectation that FCC is about to release item considering scenarios for allowing NextWave re-auction winners to exit their bid obligations, Senate bill that would provide such relief gained momentum Wed. Senate aide confirmed to us that FCC did tell Hill staffers this week that it was considering action to release winners of NextWave re-auction from FCC deposits. However, aide said senators were planning to “stay vigilant” in efforts to gain co- sponsors and push measure through Congress. Despite FCC representations, order hasn’t been released, aide told us: “I haven’t seen it.” Sen. Kerry (D-Mass.) still was gaining co-sponsors on bill he introduced (S-2869), adding 4 in addition to original co-sponsor Sen. Brownback (R-Kan.) since Senate returned -- Sens. Ensign (R-Nev.), Enzi (R-Wyo.), Leahy (D-Vt.), Lincoln (D-Ark.) Bill could have up to 10 co- sponsors by end of Wed., aide said, including Sens. Allen (R- Va.), Cleland (D-Ga.), Murray (D-Was.), Nelson (D-Fla.) Aide said if FCC issued notice of proposed rulemaking (NPRM) on issue, it probably wouldn’t deter Senators from continuing work on legislation due to amount of time it could take to complete rulemaking. House version of bill, HR-4738, introduced by Rep. Stearns (R-Fla.), gained 5 new co-sponsors since Sept. recess -- Reps. Cunningham (R-Cal.), Bryant (R- Tenn.), Stickland (D-O.), Davis (D-Cal.), Wilson (R-S.C.). Bill now has 40 co-sponsors. At our deadline, FCC hadn’t released proposal outlining options to allow NextWave re- auction winners to opt out of their Jan. 2001 bid obligations. Several sources said Commission was expected to issue proposal shortly that would cover scenarios for allowing bidders to opt out of bids and would seek comments. Verizon Wireless and other successful competitors in that re- auction have sought release from auction “overhang” in which they would be obligated to pay full amounts of bids should FCC ultimately prevail in U.S. Supreme Court. Commission is challenging U.S. Appeals Court, D.C., ruling that had disagreed with FCC’s decision to cancel NextWave’s PCS licenses for missed payment, leading agency to return disputed spectrum to NextWave. FCC has returned all but 15% of bidders’ down payments. It was unclear late Wed. whether item would take form of public notice or notice of proposed rulemaking, but either version was seen as likely to ask questions to fill out factual record before FCC. Item would come just weeks before Supreme Court is to hear oral argument in NextWave case Oct. 8. Several industry observers said that although FCC has been reluctant to do anything in short- term to release NextWave auction bidders from “overhang” issue, that economic downturn in telecom sector has stepped up pressure on FCC to take steps in area where carriers have complained that their credit ratings have suffered. “That’s a substantial sum of money being tied up,” one source said, citing nearly $16 billion in bids that NextWave re-auction drew.
Speculation continued to mount Tues. that FCC was about to release item that would allow NextWave re-auction winners to opt out of bidding obligations. Several sources said notice was being drafted at FCC that would release re-auction winners from $16 billion overhang from Jan. 2001 commitments, although as of early Tues. no item was on circulation on 8th floor. Move would come as interest had been growing on Capitol Hill in legislation sponsored in House Commerce Consumer Protection Subcommittee Chmn. Stearns (R-Fla.) that would allow bidders that chose to leave auction to receive full amount of down payments on licenses and not be held to original bids. Verizon Wireless also has been stepping up pressure in court, asking U.S. Court of Federal Claims Mon. to grant summary judgment on issues it was raising in litigation against govt. in NextWave case (CD Sept 10 p6). FCC has returned all but 15% of down payments made by bidders, meaning if Commission ultimately prevailed in appeal to U.S. Supreme Court and subsequent litigation, re-auction could be upheld. Several sources indicated FCC might be willing to release re-auction winners in advance of congressional action if it was confident that doing so wouldn’t undermine its Supreme Court case, for which oral argument will be heard Oct. 8.
FCC established public comment cycle on order reconsidering certain aspects of previous Notice of Proposed Rulemaking (NPRM) and order on cable rates. Original order and NPRM, released in June, proposed to update FCC’s cable TV rate regulations to reflect end of its jurisdiction over rates for cable programming services and to update its rules on rate regulation of basic service tier rates and related equipment by local franchising authorities. In Aug., FCC issued another order, this time reconsidering some of changes it was proposing. NPRM and order were published in Federal Register Sept. 5, so FCC said comments on item (MB 02-144) would be due Nov. 4, replies Dec. 4.