FCC Wed. moved step closer to making final decision on whether to approve proposed merger of AT&T Broadband and Comcast. Commission rejected separate motions filed by Media Access Project (MAP), on behalf of Consumer Federation of America (CFA) and other public interest groups, and Earthlink to gain access to agreement that would give AOL carriage on what would be merged pipe of AT&T Comcast. Comr. Copps dissented, saying he believed MAP and others should have been granted access to documents in question, even if they had to sign protective order.
NCTA suggested many revisions in FCC’s regulations for basic service tier (BST) and equipment. Nevertheless, it said in comments filed late Mon., “there is no evidence that the benefits of a dramatic shift in rate regulation methodology outweighs the significant costs that would be imposed on the FCC, LFAs [local franchise authorities] and operators.” Comments were due Mon. in rulemaking that would update FCC’s rules on regulation of basic rates and related equipment by LFAs. Replies are due Dec. 4. NCTA suggested FCC presume all cable operators faced effective competition, which would shift burden of proof on cable operators to prove they're in competitive market. Burden should be on LFAs to show there’s no competition, NCTA said. It said that as result of competition from DBS and others, number of systems not subject to effective competition and therefore, subject to basic rate regulations, would “be steadily diminishing.” FCC’s authority to regulate cable programming services tier (CPST) expired in 1999. Since then, there has been much confusion over how cable operators should calculate BST rates, NCTA said, so basic rate calculations for channels added or deleted during interim period should be grandfathered. It asked FCC to abandon practice of making operators reduce prices by greater amount when they remove channels from BST than they were permitted to boost price when services were added to BST. “The Commission instead should return to its earlier methodology and permit operators to increase and decrease their rates by the same amount when channels are added to or deleted from a tier,” NCTA said. Assn. said operators should continue to be able to factor in any increase or decrease in programming costs plus 7.5% markup for that channel. Basic per-channel adjustment factor should be based on number of channels in that tier, not CPST, NCTA said. It said cable companies should be allowed to adjust rates throughout year, not just at time of annual rate filing. As for digital broadcast TV rate adjustments, NCTA said rate rules should be based on channels, not bandwidth. “Cable’s ability to compress more than one digital channel into each 6 MHz is irrelevant to the value for customers receiving the service,” NCTA said. It said adopting different rate approach for digital than for analog would “artificially skew operators’ incentives against using basic tier capacity for digital services.” Commission also should clarify that when operators added digital signals to basic tier, they could increase rates for all basic subscribers, not just those taking digital broadcast signals, it said. “These signals still occupy capacity and operators still incur costs, regardless of how many customers choose” to get DTV sets or other equipment needed to view digital broadcast signals, NCTA said. Assn. said FCC didn’t go far enough in allowing operators to have uniform rate structures in regions or systems, saying individual LFAs shouldn’t have power to insist on franchise-specific filings. In cases where customers have been overcharged, operators should be allowed flexibility in refunds, NCTA said. Currently, operators can give one-time refund or credit. It told FCC that operators should be able to pay refunds in installments over reasonable period of time or use in-kind refunds. NCTA said FCC should deregulate equipment, such as converter boxes, used primarily to access nonbasic services and limit regulation to equipment destined for basic-only service. If FCC must regulate boxes used to access analog tiers, it said, then Commission should provide operators with option of pricing digital boxes without actual cost regulation. National Assn. of Telecom Officers & Advisors (NATOA) said in its comments that Commission’s current rate rules didn’t work. Rules are difficult and expensive to enforce, it said, and they don’t have effect of holding rates to reasonable levels for consumers. It recommended, among other things, that Commission: (1) Require that demonstration of effective competition show that all subscribers in area to be declared competitive actually had competitive alternatives, that programming offered was comparable in content with basic cable tier and that operator had verified necessary data. (2) Decline to find effective competition solely based on DBS, and require effective competition petitions to be submitted to local franchising authorities, which would submit them to FCC with its comments. (3) Establish straightforward fines or forfeitures for enforcement. (4) Provide for funding for implementation of Commission’s rules by local communities.
Wireless Communications Assn. (WCA) petitioned FCC for rule change that would allow digital wireless cable systems with 5,000 or more subscribers to have option of delivering Emergency Alert System (EAS) messages through “force tune” technology. Current requirement is for carrying video and audio EAS messages on every programmed channel. WCA said proposed change was in line with intent of FCC’s rules and was needed “to alleviate the financial burden full compliance with the ‘all-channels’ rule imposes on digital wireless cable systems.” WCA said it filed petition in response to recent Enforcement Bureau decision that granted digital wireless cable operator Watch TV temporary waiver of those rules. That operator submitted “undisputed” evidence that all-channels requirement would have imposed “insurmountable” costs, WCA said. Watch TV argued that “force tune” technology, which is software-based solution that automatically tunes viewer’s TV to predesignated EAS channel, was best solution short of permanent waiver of requirements. Enforcement Bureau decided that formal rulemaking on “force tune” issue was needed, but gave Watch TV 30-day waiver that would be extended automatically if petition for rulemaking were submitted. Watch TV provides wireless cable service to 11,000 subscribers in rural western Ohio.
More than 40 national and local consumer groups and others called on FCC Chmn. Powell to hold hearings around country on proposed changes in media ownership rules. Their request, in letter to Powell, takes up charge by Comr. Copps when Commission opened its proceeding on media ownership earlier this year (CD Sept 13 p1). Copps in fact has said he may travel around country and hold field hearings on his own if Commission as whole decides against doing so (CD Oct 3 p3).
As expected, FCC will take up two 3G-related agenda items at its Nov. 7 open meeting, including rulemaking on service rules for 1.7 and 2.1 GHz bands. Earlier this year, Administration released report on how to clear total of 90 MHz for advanced wireless services, including 1710-1755 MHz used by military and 45 MHz of 2110-2170 MHz by nongovt. users. Commission also will consider order that would allocate spectrum in those bands for 3G. Separately, Spectrum Policy Task Force will report on its findings and recommendations on spectrum policy. FCC Chmn. Powell set up task force in June to examine Commission’s policy in that area, including use of unlicensed spectrum and interference issues. He gave broad preview building on some of findings of task force in speech at U. of Colo. late Wed. (CD Oct 31 p1). On other issues, FCC will: (1) Consider order on new broadcast and multichannel equal employment opportunity rules and policies as part of review of its broadcast and cable equal employment policies. (2) Hear report from International Bureau on outcome of recent ITU Plenipotentiary Conference in Marrakesh, Morocco. (3) Consider rulemaking and order on allocation and service rules for dedicated short-range communications services at 5.9 GHz. In 1999, Commission approved using 75 MHz of spectrum at 5.9 GHz for intelligent transportation systems, which cover operations such as traffic monitoring and traveler alerts. Spectrum at 5850-5925 MHz would be used for short-range wireless links to transfer information between vehicles and roadside systems.
Broadcasters, Minority Media & Telecom Council (MMTC) and National Organization for Women (NOW) have been battling especially hard for hearts and minds of FCC commissioners over EEO rules in recent days. MMTC Exec. Dir. David Honig visited Chmn. Powell’s legal adviser Susan Eid to make case that Blumrosens study of discrimination in American industry “can be useful in illuminating intentional discrimination.” Honig said that while question whether FCC should require broadcasters to submit employment data in Form 395-B should be deferred to subsequent rulemaking, data in that form should remain available for statistical analyses of employment trends. NOW said in its ex parte filing that it was generally supportive of FCC’s proposed rules, but suggested some modifications. Specifically, NOW would have FCC require broadcasters to report recruitment source for each hire, total number of persons interviewed for each vacancy and total number of interviewees referred by each source. In addition to Internet, NOW would require broadcasters to use traditional recruitment sources such as newspapers and job fairs. However, state broadcasting associations called MMTC’s filing, including Blumrosens study, “inaccurate -- indeed wildly wrong -- in many respects.” State broadcasters said MMTC undoubtedly would use Form 395-Bs to find stations whose reports show underrepresentation of minorities according to statistical test and use that information to file petitions to deny license renewals. Such statistical tests would fly in face of ruling in Lutheran Church-Missouri Synod v. FCC, which held that FCC’s EEO rules were unconstitutional race-based classification because they pressured broadcasters to hire employees based on race, state broadcasters said. “The Commission not only has a constitutional obligation to avoid pressuring broadcasters into using quotas; the Commission also has an obligation to avoid establishing processes that third parties are likely to use to try to establish unconstitutional hiring quotas,” state broadcasters wrote. By giving MMTC ammunition to make such findings, FCC would be putting public pressure on broadcasters. State broadcasters said Commission shouldn’t collect such data, but, if it must, it should be done by 3rd party acting as clearinghouse for aggregation of such data “on an anonymous, not-attributable basis” so MMTC couldn’t wage campaigns against individual broadcasters. NAB, in letter, said MMTC’s “plain declaration that it will use information from 395-B forms to target stations demonstrates that station-specific employment data will be used to pressure stations to hire minorities and women to avoid lengthy FCC proceedings.” NAB said if FCC must collect such data, it should do so in manner that’s not specific to individual stations. However, NAB also contended collecting data would largely duplicate what already was reported to Equal Employment Opportunities Commission. All this comes as new EEO rules for broadcasting and cable were being circulated on 8th floor with intention of making Commission’s Nov. 7 agenda meeting, sources told us (CD Oct 29 p5). However, whether rules will make agenda, to be released Thurs., was unclear.
Senate Commerce Committee Chmn. Hollings (D-S.C.) remains interested in moving legislation that would consider subsidies to aid broadband rollout, but time ran out this session to float bill on which everyone could agree, said Kevin Kayes, panel’s Democratic staff dir. Kayes spoke Mon. on regulatory panel at Yankee Group Telecom Industry Forum in D.C. “It’s not such a far-fetched idea,” he said of subsidization possibilities. “It shouldn’t be dismissed out of hand.” While Senate drafters went through 4-5 versions of bill that would include subsidies, he told reporters after panel that in discussions with equipment-makers, incumbents and competitors: “Nobody was really ready to subsidize. There was sort of a feeling that this was interesting but nobody was really ready to do this.”
Senate Minority Leader Lott (R-Miss.) and Sen. Craig (R- Ida.) asked FCC Chmn. Powell for his thoughts on cable must- carry rules, particularly as broadcasters began to develop “multicasts” as they transitioned to DTV. In Oct. 11 letter to Powell, they cited Jan. 2001 FCC ruling that limited cable must-carry requirements to primary DTV signal from broadcaster. “We are concerned that this rulemaking will have an increasingly disproportionate effect on local and independent broadcasters, a group that includes many religious and multilingual broadcasters,” letter said: “We are worried that unless these local and independent broadcasters are permitted to continue to broadcast in the full 6 MHz of spectrum, then the constructive and positive programming which they offer will be highly diluted as a percentage of the total channels available on digital cable systems.” Letter said must-carry rules were “beneficial policy” that had been key in fostering availability of local, family-friendly and spiritual programming. It asked for Powell’s thoughts on any action that would ensure that objectives of current must-carry policies were “carried forward” as DTV transition continued.
Paul Gallant, chmn. of FCC’s Media Ownership Working Group, told 30 state and local utility officials that Commission would take public interest into account as it tried to decide new rules for media ownership. He faced skeptical audience attending Consumer Federation of America’s utility conference in Washington Fri. Gallant said courts hade struck down rules on broadcast ownership, so Commission couldn’t simply defend rules as having “a legitimate government purpose.” He said Commission was “no longer free to hypothesize,” but must back up rules with evidence. NBC Washington Vp Robert Okun, another panelist, tried to convince audience that “changes can be positive” but attendees seemed to believe Commission would choose to deregulate broadcast. Several complained that all TV and radio stations were beginning to look and sound alike and gave little attention to local news and public affairs. But Okun said any local TV station that became disconnected from audience would lose that audience: “Localism is profitable.” Okun said maintaining old 35% cap on audience reach didn’t take into account that not nearly that many people watched particular network’s programming at any one time, that many instead watched cable or surfed Internet. “The ability to monopolize anything is much, much reduced at this point,” because of media proliferation,” Okun said. Mark Lloyd, exec. dir. of Civil Rights Forum, disagreed. He began by asking for show of hands if attendees thought there should be more media consolidation. No one did. “I think it will be very difficult to convince the American public that it is okay for 10 or 12 companies to essentially concentrate all the media ownership in local communities,” he said. Lloyd said some companies did provide diverse viewpoints, but they weren’t antagonistic viewpoints, which he said was vital. He compared media ownership to one company’s owning all different brands of soap on store shelves. Lloyd also questioned why, when FCC still had not acted on rulemaking by Commission under former Chmn. William Kennard that asked what public interest obligations of broadcasters would be in digital world, agency had begun rulemaking on broadcasters’ business interests. “That proceeding somehow went away,” Lloyd said. Earlier in week, Comr. Copps had made similar point, saying that rulemaking should be resurrected (CD Oct 3 p3). FCC sources said item still was live issue on 8th floor, but it was unclear what action Commission would take now. However, Lloyd said he believed agency was heavily influenced by partisan politics and, hence, deregulatory agenda. “I think it’s pretty clear to say that we do not have a great deal of confidence that this particular Federal Communications Commission with this chairman and 3 of those from the Republican Party, that we will see… rules establishing public interest obligations to broadcasting and limiting the power of broadcasters to buy more property,” he said.
FCC granted 13 small cable operators 36-month waivers of Commission’s rules on Emergency Alert Systems (EAS). Rules require cable systems serving fewer than 5,000 subscribers from headend to either provide national level EAS messages on all programmed channels or install EAS equipment and provide video interrupt and audio alert on all programmed channels and EAS audio and video messages on at least one programmed channel by Oct. 1, 2002. Commission has said it would grant waiver requests on case-by-case basis upon showing of financial hardship. It also noted it recently amended EAS rules to permit small cable systems to install FCC-certified decoder-only units, rather than both encoders and decoders, if such devices became available and that agency anticipated such systems would provide significant cost savings. Those granted waivers were: PEC Cable of Nichols, Ia., with 77 subscribers; Sherman Cablevision, Sherman Mills, Me., 175; Howard Cable Co., 2 systems in Wis. and one in Mich., 169- 403; S & K TV Systems Inc., with 7 systems in Wis., 72-430; HLM Cable Corp., with 5 systems in Wis., 68-320; HFU L.P., Cal., 225, and Nev. 472; Moosehead Enterprises Inc., 6 systems in Me., each with fewer than 750; Alpine Cable TV, 9 systems in Ia., with 723 total; Dodge County Cablevision, Wis., 336; Powhatan Point Cable Co., 2 systems in Ohio with 308 and 896 subscribers, respectively; TV Assn. of Republic, one system in Wash., 490; Farmers Co-Operative Telephone Co., Ia., 70; J. Feeney Assoc. Inc., doing business as Chain Lakes Cable, 6 systems in N.Y., one in Pa., and 3 Va., 36- 860. In another decision on EAS systems, FCC gave W.A.T.C.H. TV 30-day waiver to allow company to seek revision of Commission’s EAS rules with petition for rulemaking. W.A.T.C.H. operates 9 wireless cable TV systems in Ohio and believes it has alternative technology approach that will be less costly.