FCC NPRM WILL STUDY CLASSIFYING CABLE MODEM SERVICE

Assuming FCC will declare Thurs. how cable modem service should be classified, Commission also is poised to adopt Notice of Proposed Rulemaking (NPRM) examining who has jurisdiction to regulate service. Question is important because, if FCC classifies cable modem service as “information service,” as is widely expected, cable operators could be vulnerable to additional demands from local franchising authorities (LFAs) for new taxes, fees, etc., Cable Bureau Chief Kenneth Ferree, who soon will head up new Media Bureau, said in interview Mon. He said NPRM would take “granular” look at implications of particular classification, whether it be as “information service,” “telecom service,” “cable service” or some other animal. He declined to say which it would be, but gave some insight into NPRM that’s expected at FCC’s agenda meeting: “The second step is, well, what does that [classification] mean? What are the implications?” Specifically, NPRM will seek to determine who has jurisdiction and what role FCC and LFAs will have in overseeing cable modem service. Ferree said he would like to see issue resolved before end of 2002.

Ferree said there was no out-and-out effort by Cable and Common Carrier bureaus to make classification of cable modem service match that of DSL. Commission tentatively concluded last month that DSL was “information service” (CD Feb 15 p1). “There’s obviously coordination between the 2 bureaus. They see what we're doing. We saw what they were doing. But the goal was not, gee, how can we create something that would work for both?” he said.

Ferree said he wasn’t surprised by fact that about 650 TV stations had asked for waivers on meeting deadline to transition to DTV. In fact, he said he was “pleasantly surprised” that so many of those requests -- about 2/3 -- were based on factors other than financial hardship. “There were a lot of very good reasons given, at least in the ones that we've begun to review,” he said. For example, some cited problems in booking qualified personnel to put equipment on towers, while others said they were having problems with their tower sites. “That’s fine. That’s the kind of thing we can look at and say, ‘That’s a reasonable reason for a delay,’ and there’s a fix to it,” he said. Bureau already has granted about 200 waivers and probably will issue hundreds more, Ferree said.

Deborah Klein, who will be chief of staff in new bureau that combines old Cable and Mass Media bureaus, said FCC was recruiting executives from broadcast, cable and satellite companies, as well as representatives from industry groups, to serve on federal advisory committee to Commission’s Homeland Security Policy Council. “The idea is, post Sept. 11, to have some sort of plans in place and contingencies to deal with issues that come up,” she said. Noting that broadcast tower that carried most N.Y.C. stations was destroyed by attack on World Trade Center, Ferree said panel’s goal would be to ensure that public would continue to get news and information in another emergency. Klein said number of members of panel hadn’t been determined and declined to identify those being considered. FCC hopes to have committee in place within next couple of months and it will be chartered for 2 years, she said.

Bureau is receiving preliminary results of study using experimental economic model to determine how cable companies would behave under certain market conditions. Study was commissioned to help Bureau formulate rules on cable ownership and what limits would be appropriate (CD Nov 8 p3). Full results from Pa. State U., which is conducting study, should be in by end of March, Ferree said. At that point, Bureau economists will examine results to determine whether they can be relied upon in rulemaking process. “If so, we'll put that out for comment and let other folks tell us whether they like it or dislike it, what we did right, what we did wrong, other ways that it could be done better,” he said. Ferree said there always was possibility that results could be sent back for further study. However, he expressed hope that study itself could be put out for public comment in April. Bureau also is examining audience reach cap.

Ferree acknowledged pressure to determine media ownership limits but denied Bureau would be hampered in its examination of pending deals -- AT&T Broadband-Comcast and EchoStar-DirecTV -- by lack of rules in place. Courts have thrown out both cable and cable-TV station cross-ownership caps. Ferree said burden remained on companies to show that particular deal was “in the public interest.” If Commission later determined appropriate cap, and combined company was above it, that company might have to divest some assets, he said. Asked whether Commission would consider changing attribution rules -- which could have profound effect on how company ownership was determined -- Ferree called it “an interesting idea,” but said he was unsure whether agency would conduct separate rulemaking. “There have been internal discussions,” he acknowledged.