POWELL SEES OWNERSHIP RULING CHANGING BIENNIAL REVIEW PROCESS

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.

Powell said court’s decision could change burden of proof agency used in determining whether rules should be kept or eliminated in reviews. Until now, FCC has seen its burden as proving why it wants to eliminate particular regulation, he said. Court’s ruling could change that around and require FCC instead to prove why rules should be kept, he said. That’s because court questioned decision to keep regulation, rather than to drop it. That’s “really hard” requirement, he told reporters after speech at broadband conference sponsored by Georgetown U., FCBA and FCC: “It’s a tough thing to do.” He said he was “worried about our ability to do a review effectively every 2 years.” New burden basically makes it “harder to keep something than get rid of it,” Powell said. Asked whether agency would appeal, he said it hadn’t been decided yet.

FCC is facing difficult conundrum because Appeals Court expressed “growing impatience” with Commission on establishing rational broadcast and cable ownership rules but building adequate record on which agency can base sustainable decisions “takes time,” said Susan Eid, Powell’s mass media aide. She declined to nail down time frame for Commission to make such determinations. Eid said court’s decision striking down Commission’s 35% limit for broadcasters and its rule on cable-broadcast cross-ownership “almost puts the chairman in the position of saying, ‘I told you so.'” She said Powell 4 years ago had come to conclusion that current rules were too old and must be re-evaluated based on today’s marketplace. “He has consistently maintained that for the Commission to do its job and do it right, we need to establish a modern-day foundation,” Eid said. She said Commission hoped to shift some of debate to how rules would affect public by using data to “look through the eyes of the consumer.”

Paul Gallant, special adviser to Cable Bureau Chief Kenneth Ferree, said Commission’s newly formed media ownership working group intended to conduct broad survey of consumers to determine what kinds of media they used -- newspapers, broadcast, cable, Internet and others -- and how they used each of them. Specifically, group hopes to examine whether one form of media can act as substitute for another, Gallant said. He said court’s decision highlighted need for “common set of facts” to establish sustainable rules. Group will look at issues from several angles, including historical perspective, and will conduct in-depth examination of how waivers to some rules had affected local communities in terms of Commission’s goals of competition, diversity and localism. In addition to gathering comments and data, Gallant said group would undertake its own research to establish fundamental data. He said Commission hadn’t decided whether final work product would be made public. FCC Chief Economist David Sappington discussed Commission’s intention to use experimental economics as part of its study on ownership issues, saying data would be gathered in-house and experimental models would be run at lab at Pa. State U. Study will draw from FCC independent research, comments and data submitted by parties, academic literature and even sociology to determine consumer behavior. However, Sappington said staff members “can’t tell how useful and informative the results will be.” Eid stressed that experimental economic study was only “one data point” commissioners would use to inform their decisions.

Calling court’s ruling “a monumental decision,” Robert Ratcliffe, deputy chief of Mass Media Bureau, said he didn’t think anyone at FCC could or would re-examine ownership rules by starting with particular number in mind. “You start with the assumption of whether we think there is some limit that is necessary,” he said. “If you make that showing, then you get down to the question of what it ought to be.” Such approach probably would please companies such as AOL Time Warner, News Corp. and Viacom since each had interest in crossing FCC’s old and now-defunct caps.

In speech at broadband conference, Powell said he had been asked repeatedly about effect of last week’s ILEC broadband proposal on telecom industry, and said there was no immediate answer. FCC’s Notice of Proposed Rulemaking “asks questions, just that,” he said. It will enable Commission to “explore the impact” of reclassifying retail ILEC broadband services as information services, he said. But, he emphasized, it’s just proposal, enabling FCC to build record. Telecom Act gives competitors rights to use unbundled network elements (UNEs) for provision of telecom services and they will retain that right, Powell said. What’s unclear is whether there are similar obligations for providers of information services, he said.

Robert Pepper, chief of FCC Office of Plans & Policy, said move to broadband communications was creating “ripple effects” such as: (1) Consumers are cancelling 2nd lines once used for data transmission as they move to cable modems and DSL service. That’s having impact on ILEC profits and universal service funding, he said. (2) Nationwide wireless services are disrupting long distance market and requiring change in way universal service traditionally is collected. Asked by moderator Lauren Belvin of Qwest to suggest one policy that ought to be reexamined, Christopher Libertelli, Common Carrier Bureau legal counsel, said it was “time to clarify where unbundled switches are available,” issue that has “tormented” Commission and is teed up in triennial review of UNE policies. Kris Monteith, chief of Wireless Bureau’s Policy Div., nominated intercarrier compensation, issue also now under study.

On later panel on DTV transition, chmn. of Commission’s DTV task force, Rick Chessen, said he saw 4 obstacles to DTV transition: (1) Compelling digital content. (2) Cable compatibility. (3) Relatively high price of DTV sets. (4) Consumer awareness. “I think a lot of people have no clue that this transition is happening, have no clue what digital TV is,” he said. Unless there’s more DTV content out there, people aren’t going to “get out of their La-z-Boys and run down to Circuit City,” Chessen said. He encouraged NBC to follow lead of ABC and CBS in producing more DTV content. He also urged more cable companies to deploy set-top boxes that would allow consumers to get DTV through boxes. Chessen said Comcast and Time Warner Cable were doing that in limited areas. “I'm taking that as a really big hint,” said moderator Alexandra Wilson, vp-public policy, Cox. Chessen acknowledged broadcasters’ concerns about copyright and piracy problems but said he believed it’s possible for them to produce more DTV programming “without incurring massive piracy problems.” Barbara Kreisman, chief of Video Services Div. of Mass Media Bureau, expressed sympathy for TV stations seeking extensions of time for DTV transition, but said each company must make solid case showing what it was doing to move forward. “They [applications] are not going to be rubber-stamped,” she said. -- Edie Herman, Brigitte Greenberg

FCC 2002 Notebook…

FCC-led mass media panel with structure similar to Network Reliability & Interoperability Council (NRIC) will be formally unveiled in near future, with first meeting as early as May. Enforcement Bureau Deputy Chief Linda Blair said in homeland security segment of Georgetown U. Law Center’s FCC 2002 forum in Washington that new entity was “being put together” in conjunction with broadcast industry. FCC Chmn. Powell said (CD Oct 24 p1) following Sept. 11 terrorist attacks that such “NRIC-type” public-private sector entity could be useful in assessing and making recommendations to prepare nation’s broadcast system in event of disaster. On related topic, Blair said Commission had no intention of preempting local authority on zoning, issue raised in light of difficulties experienced by broadcasters dislocated by World Trade Center collapse and seeking alternate tower sites. Senior Deputy Common Carrier Bureau Chief Jeffrey Carlisle said in same panel discussion that federalization of ILEC central office security access standards wasn’t being considered, despite media attention to issue. He said ILECs could apply same set of “reasonable security requirements” on CLECs seeking network access as incumbents imposed on themselves. He said PUCs in Mass., N.J. and Tex. were considering creation of “physical infrastructure procedures,” but unless someone could argue successfully that existing security standards were insufficient to protect ILEC equipment, Commission wouldn’t take action, Carlisle said: “At the moment, it doesn’t look like a real issue for us.” He said there were 2 open dockets at Commission in which comments could be submitted on access security, but “nothing has been filed at the FCC on this issues… The issue isn’t formally in front of us.”