Bipartisan group of House members is considering legislative remedy to hasten transition to digital TV conversion, House Commerce Committee Chmn. Tauzin (R-La.) said Mon. in keynote at NAB State Leadership Conference in Washington. He said committee was planning one more hearing to assess whether progress had been made in private sector negotiations among broadcasters, cable operators and consumer electronics manufacturers to develop best approach to broadly deliver DTV across America. If progress hasn’t been made on private sector solution on stalled issues such as cable carriage of DTV and provision of digital tuners by electronics manufacturers, “Democrats and Republicans will come to the table and offer legislation to speed up the proceedings,” Tauzin said.
Notable CROSS rulings
Before it entered bankruptcy earlier this year, Global Crossing had spent $10 million over last 3 years in campaign contributions and direct lobbying Congress, FCC and FTC, according to public disclosure records. In 6-month period in 1999, for example, Global Crossing paid former Asst. Attorney Gen. Anne Bingaman -- wife of Senate Energy Committee Chmn. Bingaman (D-N.M.) -- $2.52 million in successful lobbying campaign against U.S.-Japan cable proposed by AT&T, WorldCom and Sprint. When it began its Washington spending binge in 1999 it was focused on traditional telecom issues such as implementation of 1996 Telecom Act, although company’s interest in broadband led it into Internet-related topics as well.
It’s “tremendously urgent” that Commission appeal U.S. Appeals Court, D.C., decision Tues. that overturned FCC’s cable-TV station ownership rules and remanded national TV station ownership cap (CD Feb 20 p1), FCC Comr. Copps told reporters Thurs. at his monthly press breakfast. He said he was concerned that court ruling could add major administrative burden because it appeared to change way FCC conducted biennial reviews of regulations as required by Telecom Act. Comrs. Martin and Abernathy and Chmn. Powell have expressed similar concern (CD Feb 21 p1) but Copps is only one so far to call for appeal to U.S. Supreme Court. “If we have to go through this kind of rulemaking every 2 years, it will add an administrative burden that will be impossible for the Commission to discharge,” he said: “This is a decision that cries out for Supreme Court review.”
Court decision Tues. overturning FCC’s cable-TV station cross-ownership ban (CD Feb 20 p1) could have significant effect on how biennial review process is conducted, FCC Chmn. Powell said Wed. In somewhat unusual action, U.S. Appeals Court, D.C., acted not on any new FCC order but on agency’s decision to retain existing rule, in decision made during biennial review. Telecom Act requires FCC to review existing regulations every 2 years to determine whether they remain necessary.
Saying FCC had “no valid reason to think [national TV station ownership cap] is necessary to safeguard competition,” U.S. Appeals Court, D.C., remanded ownership cap to Commission, saying it needed further justification. In same decision, appeals court completely overturned ban on cable systems’ owning TV stations in same market, saying remand wasn’t justified because of “low” probability that FCC could justify that rule. In TV ownership cap case, court rejected networks’ suggestion that ban be overturned completely, saying rule wasn’t inherently unconstitutional and FCC might be able to justify it.
In latest skirmish over regulatory reform in rural areas, rural LECs (RLECs) urged FCC to give them flexible rules to better serve their costly areas, while competitors said agency should stick to its guns in eliminating protections for RLECs. Their comments, filed Feb. 14, were in response to 2nd part of agency’s reform effort. FCC last year acted on access and universal service portions of Multi- Association Group (MAG) plan proposed by RLECs (CD Oct 12 p1). Agency now is looking at several portions that were deferred, such as incentive regulation to encourage rural carriers to move from rate-of-return to price cap regulation.
Cingular Wireless and 3 rural carriers asked FCC to reconsider part of spectrum cap order that retained cellular cross-interest rule in rural service areas (RSAs) but eliminated it elsewhere. Decision came in Nov. FCC order repealing spectrum cap effective Jan. 1, 2003, and raising it to 55 MHz in all markets during transition period (CD Nov 9 p1). Before change, rule had limited ability of carrier to have ownership or other attributable interests in cellular licenses on different channel blocks in overlapping geographic area. FCC said it kept rule intact for rural markets because cellular incumbents generally continued to dominate market in those areas. In petition for reconsideration filed Feb. 13, Dobson Communications, Western Wireless and Rural Cellular asked FCC to eliminate immediately cellular-cross interest rule for RSAs. Alternately, they wanted Commission to sunset rule for rural areas at same time as spectrum cap itself is phased out. Distinction between urban and rural markets “does not rationally reflect the state of competition or the impact of the rule in specific geographic markets and is paternalistic and fundamentally arbitrary,” they wrote. If rule continues to be applied, it will create “adverse impacts,” petition said. Carriers said it would limit their ability to secure financing from carriers with 5% or more interest in other cellular licensee in given RSA to expand wireless service in such markets. Restriction would prohibit “economically efficient mergers,” they said. “The Commission’s promise to consider waivers of the rule is well intentioned but inadequate to resolve these concerns.” Petition said rule would prohibit investment and consolidation in regionalized markets by treating RSA parts of such markets differently from urban markets without factual basis. “Petitioners are in the difficult position of either limiting the pool of potential merger or financing partners to noncellular licensees or negotiating transactions that involve disaggregating overlapping cellular markets,” carriers said. In separate petition, Cingular said: “Given today’s trend towards national and regional calling areas and plans (in many cases coupled with either free or inexpensive long distance service), individual RSAs are simply not segregable from metropolitan statistical areas from a customer service standpoint,” Cingular said. Examining competition only on basis of individual RSA “skews the competitive analysis in a way that does not reflect the relevant geographic market,” petition said. Cingular said although local wireless service still could be purchased, it was rare that service was limited to single RSA due to proliferation of regional and national calling plans. MG
Hollywood’s major movie studios are pressing FCC for govt. intervention to help establish common technological standards for copyright protection on digital devices. Studios also defended their decision to work with broadcast industry on issue, telling FCC Chmn. Powell that such collaboration didn’t pose antitrust concerns. Executives of Disney, Fox, Viacom, Vivendi Universal, Sony Pictures, AOL Time Warner (AOL TW) and MPAA met earlier this month with FCC Cable Bureau Chief Kenneth Ferree, Rick Chessen, chmn. of FCC’s DTV task force, and members of Office of Plans & Policy and Office of Engineering & Technology. Studios fear that, without adequate protection, their movies, music and other content could be copied and distributed over and over again on Internet without reimbursing copyright holder.
U.S. Trade Representative Robert Zoellick said Wed. he was asking World Trade Organization (WTO) for dispute settlement panel on complaint that Mexico hadn’t opened its cross-border telecom market to competitors. Bush Administration has said in last year that Mexico has made some progress in areas such as ensuring that competitors obtain local interconnection from incumbent Telmex. But serious concerns on international interconnection issues have remained unresolved. Request marks first time USTR under Zoellick has made such request to WTO. In Nov. 2000, U.S. asked WTO to convene dispute settlement panel on complaints about Mexico, process that wasn’t pursued when some progress was made. But USTR said its latest WTO request was focused on unresolved issue of U.S. carriers’ paying inflated charges because “Mexico has still not begun to dismantle its anticompetitive cross-border telecommunications regime.” Panel request is expected to be brought up at March 8 meeting of WTO’s dispute settlement body.
Federal and state regulatory policies are impeding consolidation of rural telephone lines, growing movement led by mid-sized companies such as CenturyTel and Citizens Communications, panelists said at Legg Mason investment conference in N.Y. on rural telephony Thurs. From regulators to rural operators, speakers said consolidation is latest trend in rural phone business, stoked by divestiture of lines by Bells such as Verizon and Qwest. Verizon has divested hundreds of thousands of former GTE lines throughout country, many of them acquired by consolidators, while others such as Qwest continue long-time trend to eliminate unprofitable exchanges. In addition, consolidators buy up small telcos run by families that no longer want to be in business. Consolidators generally can make more money from rural lines than Bells can because they have more access to universal service funding and their smaller size enables them to act more flexibly, panelists said.