The FCC should abandon its rules on the relations and payment obligations among long distance carriers, payphone service providers (PSP) and switch-based resellers (SBR) when coinless calls are placed from payphones, several parties said in comments. Telstar International and the International Prepaid Communications Assn. (IPCA) urged the Commission to return to a system for payphone compensation where SBRs compensated PSPs either directly or via a clearinghouse arrangement. They called the rules “unnecessary” and said they had “produced significant administrative burdens and costs” on long distance providers and SBRs and had “created opportunity for abuse by IXCs which hold SBRs hostage to unfair and unjust practices.” Sprint called the rules “unfair” and “unlawful” and said they should be replaced as they were “based on faulty assumptions” and functioned “very poorly. The Commission should rethink its overall approach to Section 276,” which requires fair per- call compensation for completed coinless payphone calls. Sprint urged the Commission to adopt a “caller-pays” rule: “It is the most rational, efficient and fair system to ensure that all completed calls are compensated to payphone owners.” Sprint said the Commission should require that all switch- based carriers track, report and pay for their own coinless calls. Global Crossing urged the Commission to adopt a compensation system that would base the compensation obligation either on a timing surrogate or on call attempts, with an “appropriately discounted per-attempt compensation rate.” It said the Commission needed to modify the rules by: (1) Making clear that underlying carriers weren’t the guarantors of the obligations of facilities-based resellers that utilized their wholesale services. (2) Adopting a uniform set of reporting requirements that would apply to both underlying carriers and facilities-based resellers. (3) Clarifying that the data collected and reported by carriers, which were obligated to track and pay compensation, was “to be accorded conclusive weight, absent evidence of fraud or other misconduct, in determining whether a carrier has complied with its compensation obligation.”
Notable CROSS rulings
With the FCC’s adoption of the new media ownership restrictions, prospects for congressional approval remain unclear. But if anything happens on the Senate floor, it won’t be until after July 4, said a spokesman for Senate Majority Leader Frist (R-Tenn.) The spokesman said Frist hadn’t developed a position on the issue and was too preoccupied with subscription drug and Medicare issues to focus on media ownership at this point.
After 15 months of Parliamentary negotiations, the Australian govt. decided to proceed with Senate debate on media ownership legislation this week. The bill, which would allow the Australian Bcstg. Authority (ABA) to issue cross- media exemptions in certain cases, seeks to remove the foreign ownership restrictions. Australian Minister for Communications, Information Technology & the Arts Sen. Richard Alston said the govt. had accepted 4 amendments to the bill, including: (1) An extension to all metropolitan markets of the restriction on owning more than 2 of 3 types of media covered by the cross-media rules in any one license area. (2) A requirement that the ABA impose a license condition on all commercial TV broadcasters in regional aggregated markets requiring the broadcast of at least a minimum amount of local news and information. (3) A requirement that a mandatory review of ownership and control provisions be conducted in 3 years. (4) Amendments to tighten the circumstances in which approval of a temporary ownership or control breach could be granted, including ensuring that approvals were granted for only the minimum necessary time.
The Senate Commerce Committee approved legislation that would roll back several of the media ownership rules loosened by the FCC earlier this month. The bill (S-1046), which began as a restoration of the 35% broadcast ownership cap, was amended several times to include reinstatement of the cross-ownership bans and forced divestiture in some radio markets. With 5 amendments being tacked on the bill, and several others going down in defeat, passage itself was almost an afterthought as Senate Commerce Committee Chmn. McCain (R-Ariz.) nearly forgot to call for a vote on the amended final bill. It passed on voice vote and no senators asked the roll to be called.
Marantha Bcstg. told the FCC it doesn’t oppose News Corp.’s application to acquire a 34% stake in Hughes, but the Commission should bar DirecTV from ever implementing a 2-dish system if the deal is approved. Marantha said News Corp. could use the 2-dish system to hurt competitors to its Fox stations. Meanwhile, the National Hispanic Media Coalition (NHMC) said News Corp.’s application should be dismissed, denied or designated for a hearing, and in the meantime, the freeze imposed on existing broadcast long-form assignment and transfer applications should also apply to this application. News Corp.’s application “directly implicates the new rules as they govern cross ownership of television stations and an MVPD,” the NHMC said.
Sen. Schumer (D-N.Y.) vowed Wed. to fight any efforts to delay the local number portability (LNP) deadline for wireless carriers, even if it meant opposing media ownership legislation he now supported. He said Sen. Stevens (R- Alaska) could use his 35% broadcast ownership bill as a vehicle to move a delay of the FCC’s Nov. 24 LNP deadline, and if he did, Schumer said he would reverse his support for the media ownership bill.
The markup of the FCC Reauthorization Act (S-1264) has been postponed one week as the Senate Commerce Committee prepares for a meeting Thurs. that will include efforts to roll back the Commission’s June 2 media ownership vote. A committee spokeswoman said the panel would mark up S-1264 June 26. She said Committee Chmn. McCain (R-Ariz.) wanted to delay the markup since the bill had been introduced only recently (CD June 16 p1) and senators needed more time to digest it. It would make sweeping changes in FCC procedures, including giving the agency more power to regulate media ownership and raising fines for rule violations.
The “immediate impact” of the FCC’s new media ownership rules was a 5% overall increase in the stock prices of media companies, said Victor Miller of Bear, Stearns at a Media Institute lunch Tues. Long term, he said, “we expect much more improvement” if the rules withstand court appeals. Blair Levin of Legg Mason predicted there would be 2 “waves” of acquisitions. The first, he said, will be the formation of duopolies and newspaper cross-ownerships in local markets as group owners seek to improve their competitive positions; the 2nd wave is about 2 years away and will involve major changes in the national ownership picture. Miller agreed with Rudy Baca of The Precursor Group that newspapers would be “the regulatory winners” through their ability to form new cross-ownerships with local TV stations. Asked whether radio consolidation was over, Baca said “certainly for one company” -- with Clear Channel (CC) in mind although he didn’t mention it. He said that under new rules, it would be difficult for another CC, which owns 1,200 radio stations, to develop. However, Levin said CC would have “opportunities to buy” more stations under the new rules. He also said TV networks were in the best position to form local TV triopolies because of their control of program content. In response, Miller named several large TV station group owners and asked: “Are those guys going to sell? I don’t think so.” Given the last word, Baca said “these [FCC] rules are really vulnerable” in promised court appeals. He said not to expect a lot of station trading unless and until the rules were upheld in court.
Univision and Hispanic Bcstg. Corp. (HBC) said the FCC shouldn’t “create a ’separate but equal’ class of broadcasters to be known as the Spanish language media market.” In a filing at the FCC, the companies said there was no factual basis for the FCC to “partition the broadcast audience.” They also asked the agency to finally decide on their merger application, saying the delay was causing harm. The companies said that, despite pleadings from their critics, Hispanic audiences relied heavily on English- language formatted stations. “Despite the stereotype of Hispanics that is promoted by those advocating a separate market, Hispanics listen to and watch a broad diversity of broadcast sources,” they said. In a separate filing, the companies said their primary opponent, Spanish Bcstg. System (SBS), had taken its “theater of the absurd” to Capitol Hill, getting several congressional leaders to oppose a merger of Univision and Clear Channel. Univision and HBC said Clear Channel was only a shareholder in HBC and its interest in fact would be diluted by a merger. SBS, meanwhile, in its own filing said advertisers believed English and Spanish media constituted separate markets. “The separate nature of the Hispanic broadcasting market means that the FCC may not rely exclusively on its cross-ownership and multiple ownership rules in making its public interest determination,” SBS said.
The FTC used reauthorization hearings in the House and Senate Wed. to push a sweeping proposal that, among other things, would end the 70-year exemption of telecom common carriers from FTC deceptive practices and unfair competition rules. The proposal prompted wariness from some House lawmakers, who worried about potential clashes between that agency and the FCC. Others questioned whether recommendations aimed at stepping up the FTC’s ability to fight cross-border fraud and spam via more extensive information-gathering and sharing powers raised privacy concerns.