FCC Comr. McDowell may be excluded from voting on the AT&T-BellSouth merger because his former employer, CLEC association CompTel, has a stake in the proceeding, he told reporters Tues. McDowell said the FCC gen. counsel will decide if he should be recused, but until then he’s operating as if he’s barred from voting. He’s not reading the docket, and interested parties aren’t visiting him to pitch their positions -- although at this point “I'm not sure they are coming to see anyone” because the issue isn’t very active right now, he said.
Notable CROSS rulings
The FCC began a broadcast ownership inquiry that may ease limits on the number of radio and TV stations a firm can own in a city and end a ban on broadcast-newspaper cross ownership. The further notice of proposed rulemaking asks respondents to provide a reason for setting caps. The FCC response to a 2004 appeals court remand asks if it should lift some limits. The inquiry, released late Mon., was voted on more than a month ago (CD June 22 p11). A wholesale lifting of limits is unlikely, but TV limits probably will be eased, said a broadcast lawyer.
The Vt. Public Service Board wasn’t wrong in requiring Global NAPS to pay access charges to Verizon for long distance calls and barring its use of “virtual NXX” service, the 2nd U.S. Appeals Court, N.Y.C., said July 5. The issues date to the board’s 2002 oversight of interconnection talks between the 2 telecom companies. Global NAPS disputed 2 details of the board’s ruling: (1) Local calling areas the board drew to decide whether a call is a long distance or local. Global NAPS wanted calling areas set by carriers, not the board. The issue was deemed important because jurisdiction of a call determines intercarrier compensation, the court said. If a call is long distance, access charges apply; if local, payment is by reciprocal compensation. (2) Global NAPS couldn’t offer virtual NXX service, which assigns phones number in one local calling area to customers located in a different calling area. The service resembles “foreign exchange” or FX service except Global NAPS wasn’t using its own facilities to send a call from one calling area to another, as it would via FX service, the court said. NXX stands for the 2nd set of 3 digits in a phone number. Sometimes called the central office code, it identifies the local switch associated with the phone number. Affirming a decision by a lower court, the appeals court said it didn’t think the board erred in deciding calling areas it designed should see use to direct intercarrier compensation. “Allowing the state-commission-determined local calling areas to govern intercarrier compensation also makes good practical sense,” Judge Richard Cudahy wrote: “If carriers were free to define local calling areas for the purposes of intercarrier compensation, the door would be open to overweening conduct by the CLECs… Local calling areas defined by CLECs would permit such areas to be so broad as to eliminate all intercarrier compensation for ILECs.” Cudahy, a judge on the 7th U.S. Appeals Court, Chicago, was sitting on the 3-judge panel by designation. Other panel members were Wilfred Feinberg and B.D. Parker. The court acknowledged the case includes another factor, “namely the ISP-bound nature of the traffic,” but “we can find no authority to clarify this issue and we are accordingly unable to conclude that the [FCC’s] 2001 Remand Order strips state boards of their jurisdiction over ISP-bound traffic.” On the other issue, the court didn’t agree with Global NAPS that the ban on virtual NXX violated federal law. The board decision didn’t obstruct entry or exceed state authority, the court said. “Contrary to Global’s contentions, [federal law doesn’t] confer blanket authority on carriers to provide any interstate service in any manner unfettered by state regulation.” Cudahy added: “Global wants to use virtual NXX to disguise the nature of its calls -- that is, to offer its customers local telephone numbers that cross Verizon’s exchanges instead of the traditional long-distance numbers attached to such calls… Where a company does not own the infrastructure and is not willing to pay for using another company’s infrastructure, we see no reason for judicial intervention. Congress opened up the local telephone markets to promote competition, not to provide opportunities for entrepreneurs unwilling to pay the cost of doing business.”
Though telemarketing calls from overseas seem to be rising, the FTC hasn’t seen a corresponding rise in violations of the Do Not Call (DNC) rule that take advantage of cross-border complications, an official told us Thurs. Internet-borne maladies like spam and spyware first presented a challenge for FTC enforcement, but the “increased adoption of VoIP… has made the world even smaller,” with cross- border telemarketing dirt cheap and locations easy to fake, Bureau of Consumer Protection Asst. Dir. Lisa Hone said: “We have some cross-border challenges but we do name defendants in foreign countries.” One business defendant made fraudulent claims in calls that appeared TO come from N.M. but originated in Costa Rica; the agency is in a proceeding to enforce a court judgment against it, Hone said. “Business-opportunity” telemarketing violations seems more numerous than DNC violations: “There’s very good compliance with Do Not Call,” she said. The SAFE WEB Act, passed by the Senate and awaiting a House sponsor, would give the FTC new cross-border powers to attack telemarketing fraud and DNC violations as well as spam and spyware purveyors, she said. But the agency hasn’t researched whether the DNC rule is specifically driving U.S. telemarketers offshore with the goal of operating beyond easy reach of regulators and courts, Hone said. On VoIP, Hone said the FTC would soon modify the notice on its DNC page to inform consumers that they must reregister for the DNC list if they switch their traditional phone number to a VoIP line. The number gets dropped briefly and the agency gets a notice in the transfer process, she said.
FCC Comrs. Adelstein and Copps heard about 100 citizens’ gripes on media consolidation at a hearing in Asheville, N.C. Copps worries about the dearth in 2004 of broadcast coverage of local political races, he said, citing a figure that 92% of newscasts didn’t mention local races. “We need to ask the hard questions and do the research on what’s happening in various media markets around the country - before we vote,” Copps said, according to prepared remarks. Adelstein described last week’s FCC broadcast ownership inquiry (CD June 22 p11) as “a wide-open notice that’s essentially a blank check to permit further media consolidation without any accountability to…communities,” said comments released by event organizer Free Press. Area broadcast executives highlighted benefits brought to that market by economies of scale. Clear Channel, which went on an acquisition binge when rules last were relaxed, serves residents by “combining our resources,” said Asheville Vp Ken Salyer. Allowing cross ownership of broadcast properties and newspapers, which industry officials expect FCC Chmn. Martin to support, will “open up a multitude of opportunities for additional news and information products,” said Virgil Smith, publisher of Gannett’s Asheville Citizen-Times. Neither a recording of the late Wed. event nor Adelstein’s full remarks were available. - JM
Dutch telecom company KPN said it’s suing the Dutch govt. for subjecting KPN to unequal regulation compared to rivals in the cable sector. Its recent launch of digital TV services makes KPN a direct competitor of Dutch cable operators, which also offer Internet and telephony. KPN said it’s subject to “a complex web of rules and regulations” cable companies don’t face. It said cable operators cross- subsidize new services such as telephony with proceeds from TV and selectively price-dump to keep KPN and others out of the market. Europe is the setting for a battle over growth amid cut-price competition from cable companies in fixed-line telephony and an increasing shift to wireless. KPN is complaining to Dutch competition authority NMa and communications regulator OPTA and seeking a preliminary injunction in court to end “this unequal treatment,” it said. The Dutch govt. still holds a share of about 8% in KPN.
The telecom investment community is more reserved in the current boomlet than in its predecessors, but there are sweet spots to hit, panelists said Tues. at the Wireless Communications Assn. conference. Investment opportunities are present in the content, spectrum leasing, and specific international markets, they said, though incumbents’ sheer size makes the venture capital community a bit leery of smaller operations generally. Smaller companies that show an ability to adopt a large customer base rapidly have an advantage even in the face of other shortcomings, the investment analysts said.
Broadcasters and activists, poised to battle on ownership rules, agree it will take a year and possibly 2 for anticipated FCC changes in media caps to take effect. Last week’s Commission vote to open a long-awaited rulemaking on cross ownership, TV and radio station limits and duopoly restrictions (CD June 22 p11) will take at least a year to complete, said 5 broadcast executives, lawyers and activists we surveyed. Ownership tweaks will likely be delayed another 6-12 months by court appeals that they said are all but certain.
FCC Chmn. Martin won approval for a media ownership cap review, but caught flak from FCC Democrats because the inquiry, while wide-ranging, insufficiently addresses local broadcast obligations. In a concession to Comrs. Adelstein and Copps (CD June 21 p2), the ownership docket will include a summary of filings from a 2003 localism notice of inquiry. Even so, the 2 partially dissented.
FCC Chmn. Martin may address local broadcast obligations to get a media ownership rulemaking he’s long championed (CD June 15 p13) approved by all fellow commissioners, said sources. Some last-min. 8th floor communications have focused on a 2003 notice of inquiry on localism that has since lain fallow, said a Commission source and lobbyists familiar with the item. Martin’s further notice of proposed rulemaking, set for a vote today (Wed.), seeks public comment on lifting cross ownership restrictions and loosening broadcast property caps without addressing localism.