RECIPROCAL COMPENSATION APPEARS TO BE MOVING AT FCC AGAIN

FCC Comr. Furchtgott-Roth expressed optimism Tues. that Commission would get its reciprocal compensation item out “shortly,” although he said he was disappointed with results. “This item has just a dreadful history,” he told reporters at monthly breakfast, referring to order that now is on circulation. FCC order vacated and remanded by U.S. Court of Appeals, D.C., reflected “a mistrust in state government” and belief “that the federal government could do things better,” Furchtgott-Roth said. Citing “unsubstantiated” rationale for federal jurisdiction over certain kinds of traffic, he said that 2 years later item is “frankly much the same result from the Commission.”

D.C. Circuit vacated and remanded earlier Commission order that asserted jurisdiction over dial-up ISP traffic, finding LECs don’t necessarily have right to receive reciprocal compensation for such traffic. FCC order had declared ISP dial-up calls weren’t local because they didn’t terminate at ISP’s premises, but traveled on to the Internet servers that subscriber used. Remand told Commission to provide clearer explanation for its reasoning. “Don’t be deceived about the fundamental issue -- this is not about deregulation,” Furchtgott-Roth said, this is about federal agency looking for solution via “massive federal price regulation.” He said “it is a disappointing juncture in the history of the development of the 1996 Act.”

Circulation of reciprocal compensation item comes as Commission is preparing to take up at its agenda meeting Thurs. notice of proposed rulemaking on potential reforms in intercarrier compensation. That issue had been scheduled for Commission meeting in Jan., although related, narrower issue of reciprocal compensation wasn’t yet ready to go as companion item. Intercarrier compensation ultimately was dropped from Jan. meeting. Commission had been scheduled to address reciprocal compensation by end of last year.

Furchtgott-Roth said recently he mistrusted bill-and-keep payment scheme that Commission apparently had been eyeing as potential replacement for reciprocal compensation mechanisms. He has characterized that as price regulation and expressed skepticism over whether it would work. On Tues., he reiterated his concerns that agency needed to alter pick-and-choose rule that allows CLECs to take parts of contracts that ILECs have arranged with other competitors: “This has led to very few contracts’ being negotiated.”

On TV issues, Furchtgott-Roth said he was heartened that Commission wasn’t planning to seek reconsideration at U.S. Appeals Court, D.C., of last month’s decision striking down FCC’s limits on cable horizontal and vertical ownership because they placed too much burden on First Amendment rights of cable operators (CD March 5 p1). Commission, which had faced 45-day deadline for filing for reconsideration of decision at D.C. Circuit, quietly let that deadline pass Mon. Meanwhile, Consumers Union and Consumer Federation of America reportedly petitioned D.C. Circuit on Tues. for reconsideration of cable ownership decision. Concerning FCC action, Furchtgott-Roth said it was his “personal view” that that also was probably “strong signal” that agency wouldn’t appeal ruling to U.S. Supreme Court. “I would be surprised if they referred it to the Supreme Court,” he said. “I hope it’s a signal” of not wanting to take appeal to high court, he said.

In past, Furchtgott-Roth has said that FCC should conduct fresh rulemaking on overall ownership issue rather than pursue appeal. Spokeswoman for FCC Cable Bureau said agency hadn’t ruled out appeal to Supreme Court, but was focusing on responding to Appeals Court remand that Commission provide greater justification for its 30% horizontal ownership and 40% vertical ownership caps.

Furchtgott-Roth also expressed concerns about praise that FCC Chmn. Powell showered on NCTA, which said its MSO members would comply voluntarily with FCC’s suspended equal employment opportunity (EEO) rules (CD April 13 p5). NCTA commitment came after Appeals Court said EEO rules were unconstitutional. NCTA board approved resolution adopting “self-enforcing version of the FCC rules,” which broadcast groups successfully opposed in court.

Furchtgott-Roth said he was “very disturbed” when NCTA, which always had supported new EEO rules, said it would use FCC employment guidelines for women and minorities that had been at issue in D.C. Circuit ruling. While constitutional issues examined in decision centered on FCC’s promulgation of rule, Furchtgott-Roth said adoption of language that raised constitutional concerns wasn’t “to be lauded.” He put issue in context of other voluntary commitments previously adopted, particularly in some merger conditions for which companies were congratulated after fact. “Does that make it right to violate an individual’s equal protection rights?” he asked.

Comr. Ness later joined Powell in backing NCTA’s voluntary pledge on EEO rules. Noting that group’s board members “represent some of the most successful businesses in America today,” Ness praised MSOs for “reaching out to women and minorities in a spirit of inclusion.” She said that by doing so, “those companies demonstrate that diversity and profitability can go hand in hand.”

Separately, Furchtgott-Roth said he still was concerned about pace at which merger reviews were moving at Commission, citing pending VoiceStream-Deutsche Telekom and News Corp.-Chris-Craft transactions as examples. Earlier, he had criticized FCC for taking far too long to approve such mergers as AOL-Time Warner.