The European Parliament’s (EP’s) overwhelmingly support for a cap on international mobile roaming rates was as much about its own power and legitimacy in European consumers’ eyes as its desire to cut calling rates, lawmakers said Wed. The first-reading plenary vote -- which came after months of intense negotiations among the EP, the European Council of Ministers and the EC -- showed EU institutions can get things done, said Information Society & Media Comr. Viviane Reding.
Notable CROSS rulings
Negotiators are “approaching a break-through” on capping international mobile roaming rates but aren’t there yet, said Angelika Niebler, European Parliament (EP) Industry, Research & Energy Committee (ITRE) chmn. After 4 rounds of talks involving the EP, EC and Council, Niebler said Tues., lawmakers have done all they can to cut roaming prices for consumers and hope telecom ministers agree when they meet June 7. Austrian MEP Paul Rubig, who wrote the lead report on the EC proposals, said the compromise package includes: (1) Caps, for the first year of the 3-year regulation, of 49 eurocents a min. for roaming calls made and 24 eurocents for calls received, “a major concession to Council.” Year 2, rates drop to 46 and 22 eurocents, and at the end of that year to 43 and 19 eurocents. (2) A sunset clause, under which the regulation would end after 3 years - sooner, if after 18 months the EC decides it isn’t working. (3) Wholesale tariffs -- rates mobile operators charge one another to transmit calls on their networks -- applying within 2 months of the regulation’s effective date, of 30 eurocents a minute the first year, dropping to 28 and 26 the 2nd and 3rd years. (4) Clear pricing, with customers getting push text messages from operators detailing individualized per-minute tariffs as they cross EU borders, and a phone number where they can get information on other services. Once the rule takes effect, mobile operators will have a month to offer customers attractive deals. If buyers don’t respond, the automatic retail “Eurotariff” kicks in 2 months later; wholesale ceilings take effect 2 months after entry into force. But U.K. Christian Democrat MEP and ITRE member Giles Chichester said that despite what seems to be a long lead-in time, he'd be “astonished” if operators didn’t “take the hint” and adjust their rates quickly. The package is a compromise and it’s unclear whether the various EP political parties will buy it, said Maltese Socialist MEP Joseph Muscat. Only one parliamentary group, the Christian Democrats, has signalled acceptance, he said; others are reviewing. Muscat said he had hoped that negotiators would “go the extra mile” by making the Eurotariff automatic, without consumers having to opt into any plan. “I don’t take the support of my group for granted on this issue,” he said. The compromise sets wholesale price caps so low operators will be hard-pressed to compete below them, a GSM Assn. (GSMA) spokesman said. Companies worry about the proposed annual cap reductions, which seem arbitrary and not based on how actual costs may change, he said. GSMA still is analyzing the deal’s potential effect on operators, but it’s concerned about having to contact all customers about which tariff they prefer, the spokesman said. Providers favor an opt-in approach where the consumer decides whether to shift to a different rate, he said. The Council is expected to endorse the compromise package today (Wed.). ITRE votes on it May 21; the full parliament, May 24. If the Council accepts the package, telecom ministers will formally ratify it when they meet June 7, ITRE said.
A federal court in Mich. gave AT&T a partial victory in its dispute with the Mich. PSC over how to read federal rules on determining whether wire centers have wholesale competition sufficient to justify exempting them from mandatory cost-based DS-1/DS-3 network unbundling requirements. The main dispute was over counting loops. The PSC wanted only unbundled loops providing switched services counted; AT&T said all unbundled loops, including dedicated circuits, must be counted. Under the PSC loop-count, AT&T’s Dearborn/Fairborn wire center didn’t qualify for an unbundling exemption; it would if AT&T’s reading applied. AT&T also contested PSC use of 2004, not 2003, ARMIS data in its loop counts, and the PSC’s reading of “collocated provider.” The U.S. Dist. Court, Detroit, struck down the PSC approach to loop counts. The court (Case 06-12374) said the FCC order’s plain language included all loops, regardless of nature: “This court declines to transform the unambiguous phrase ‘all UNE loops’ to mean only some UNE loops.” The court noted 12 other state commissions accepted AT&T’s interpretation. On the ARMIS issue, AT&T had based its claim for exemption on 2003 ARMIS data but the PSC said the 2004 data, available in raw form but not edited or compiled into formal reports by the FCC, more accurately depicted competitive conditions. The court sided with the PSC. It said nothing in FCC rules specified any particular data year in wire center exemption determinations. The court said all ARMIS data were reported to the FCC, so the PSC was free to use the raw 2004 data if it thought those data painted a more accurate competition picture. The court also upheld the PSC finding that secondary co-locators cross-connected with a primary co-locator shouldn’t be counted as wholesale competitors in a wire center.
Public broadcasters view FCC proposals to Congress to regulate TV violence as aimed mainly at their commercial counterparts, but fear the impact will spill onto public TV programs, as occurred with indecency rulings. “If the FCC is empowered to regulate ‘violence’ there will be a chilling effect on public media producers, who will fear being fined by a powerful government agency second-guessing their artistic and editorial choice,” said Louis Wiley, exec. editor of Frontline, a documentary series WGBH Boston produces for PBS.
Tribune sought FCC cross-ownership rule waivers for its $8.2 billion sale (CD April 3 p3) so it can keep a half dozen TV and one AM station in cities where it publishes daily newspapers. The company presented the Commission with voluminous data showing cable networks, TV stations and websites in Chicago, Hartford, Miami, N.Y. and L.A. have higher ratings than Tribune stations. The broadcaster also said an overwhelming majority of residents in each of the markets buy cable or DBS service, to show it needs waivers because of tough competition. Getting the waivers is part of the deal to be taken private in a leveraged buyout by real- estate titan Sam Zell and an employee stock ownership plan.
The FCC shouldn’t renew N.Y.-area Fox TV station licenses because sister company News Corp. breaks newspaper/broadcast cross ownership (NBCO) rules by owning WWOR-TV N.Y.-Secaucus, N.J., and WNYW N.Y., said 2 media activist groups. Rainbow/Push Coalition and United Church of Christ (UCC) said renewing the licenses would violate Sect. 309 of the Telecom Act, since News Corp. also owns the N.Y. Post. The groups previously asked the FCC to rethink a 2- year ownership waiver the agency granted Fox in Oct., allowing the company to keep the paper and stations (CD Dec 5 p7). Voice for N.J. said WWOR-TV inadequately covers N.J. political, govt. and other news because it focuses on N.Y. and touts itself as “My 9 NY.” During Jan.-Sept., the station carried less than 3 hours of news on N.J., Voice for N.J. said, citing the broadcaster’s own data. WWOR-TV is the only full-power commercial VHF station in N.J., said the group. Given unique public interest obligations WWOR-TV faces, FCC Chmn. Martin told legislators earlier this year, the station must show it covers “issues of concern to people in the area.”
Rainbow/Push Coalition and UCC also cited cross- ownership rules in asking the FCC to deny a license renewal application by another N.Y. station, Tribune’s WPIX. Tribune breaks the rules by owning Newsday, the Advocate and Greenwich Time, 3 papers covering parts of the metropolitan area, the groups’ FCC filing said: “When Tribune acquired the newspapers in March 2000, it knew it was required to comply with the NBCO rule by the time its broadcast license came up for renewal. But instead of complying with the cross-ownership rule, Tribune is seeking a permanent waiver of the rule, or in the alternative, a temporary waiver until the Commission finishes the current quadrennial review. The Commission should reject both requests.”
News Corp. is unlikely to face significant regulatory hurdles if it gets an agreement to buy Dow Jones (CD May 2 p12), broadcast lawyers and a media activist agreed. At first glance, the FCC seems to have little ground to block such a deal, since broadcast/newspaper cross-ownership rules wouldn’t be triggered, said the attorneys and Media Access Project Pres. Andrew Schwartzman. Analysts cheered the bid, saying News Corp.’s cable and broadcast properties would benefit from joining with Dow’s extensive online operations. A deal is anything but certain, however, as Dow Jones’ controlling Bancroft family rejected the $5 billion effort late Tues.
Seven media ownership studies the FCC commissioned the past 6 months weren’t put out for competitive bid, according to our review of the contracts, other documents and conversations with agency and industry officials. The FCC agreed to pay Nielsen Media Research, CRA International and 7 professors a total of $332,500 for the reports. At least 3 of the studies’ contractors missed deadlines, according to the documents and researchers. Other reports will arrive later than expect due to delays getting data and lags at the FCC in signing agreements with the 3rd parties (CD April 30 p2).
Comcast will buy Cablevision’s stake in 2 regional sports networks (RSNs) for $570 million, it said. The deal will leave Comcast owning all of FSN New England and 60% of FSN Bay Area, the rest owned by a News Corp. affiliate. Cablevision owns parts of those networks, via its Rainbow Media unit, in markets where Comcast is the dominant cable operator. The deal makes sense for Comcast and should please investors, who don’t usually like to see Comcast investing in programming, wrote Sanford Bernstein analyst Craig Moffett. The move “gives them additional cross-promotional options, and could bolster their competitive position vis a vis satellite and the telcos if current Program Access rules… eventually sunset,” he said: “In-region Regional Sports Networks are all about bolstering the core cable business, not diversification away from it.” Comcast paid top dollar for the networks, wrote Wachovia analyst Jeff Wlodarczak, who valued Cablevision’s stakes at $200 million total before the deal was announced. Cablevision may use the proceeds to slash debt, Wlodarczak said; the company wouldn’t say. Cablevision’s nonoperating losses let it avoid taxes on the proceeds, meaning more of them can go directly to debt. That could mark “an incremental step toward yet another privatization bid,” Moffett said: “The Free Cash Flow generation prospects for Cablevision leave the company starkly undervalued by the public equity markets, making it a compelling target for privatization.”