NCTA formally asked FCC to open rulemaking on attribution rules. Request came in comments Fri. to Commission on cable ownership limits. Fri. was deadline for first round of comments in rulemaking; replies are due Feb. 4. NCTA Pres. Robert Sachs said last month that his association objected to rule that company with 5% stake in another was considered to have controlling interest in 2nd company (CD Dec 12 p3). NCTA believes attribution is inexorably linked to questions of ownership limits, he said. Filing said attribution rules “should be crafted to ensure that only subscribers who are actually affected by the cable operator’s programming decisions are counted towards the cap.” ACA Pres. Matthew Polka said his group wasn’t submitting comments on cable ownership limits, but would monitor incoming comments for possible reply on behalf of small and rural cable operators. Comcast, which recently won bidding war for AT&T Broadband (CD Dec 20 Special Report) and would become country’s largest MSO, said in its filing that “in light of current marketplace circumstances, cable operators cannot impede the flow of video programming to consumers,” so competition should replace regulation. Proposed Comcast takeover of AT&T Broadband, which would reach some 22 million subscribers, would be only entity that would come close to reaching current de facto limit of 30%. U.S. Appeals Court, D.C., last year struck down limit, saying FCC couldn’t justify its number (CD March 5 p1). Comcast didn’t propose any specific rule or formulation but noted that it currently competed with 2 DBS operators: “Today, competition, investment and innovation and ensure consumer access to a wide range of video programming choices. Today, no one cable operator can act as a bottleneck.” Comcast said court decisions constrained Commission from establishing new limits that would infringe on companies’ First Amendment rights, and any rules FCC adopted should be narrowly tailored and “grounded in demonstrable risks of harm to consumers.” More than 850 comments were filed on behalf of individual consumers who signed form letters opposing loosening cable ownership limits.
Verizon told FCC it shouldn’t require that telecom equipment and facilities be protected against extremely high levels of electromagnetic pulse (EMP) generated by terrorist attack. Comments filed by carrier were in response to petition for notice of proposed rulemaking dated Sept. 25 by Donald Schellhardt and Nickolaus Legett. Petitioners asked Commission to adopt standards to require carriers to install shielding to protect networks against extremely high levels of EMP that could be experienced in terrorist attack. They said such shielding would require that every electronic device in network be completely encased in copper or other material that wouldn’t conduct EMP energy. They proposed that all new equipment installed on or after July 2004 meet standard and all existing equipment be retrofitted by Jan. 2008. Petitioners provided no estimate of cost of providing that level of protection nor how it would be financed. FCC rejected similar request 15 years ago, Verizon wrote, and industry since has addressed problem by adopting standards to deal with reasonably anticipated EMP levels. “In contrast, the vastly higher EMP levels posed by petitioners are more that can be reasonably expected,” Verizon said: “Adding to the level of shielding, as they request, would require a virtual rebuild of the entire telecommunications network, with costs running into the trillions of dollars nationwide, an unrealistic and unnecessary measure.” Existing electronic equipment can’t readily be encased in copper or other material to prevent penetration by EMP at levels petitioners requested, it said. “Instead, each item would need to be redesigned and replaced to prevent EMP from penetrating and damaging it.” Verizon cited measures by Department of Defense, which had considered EMP effects of wide area thermonuclear exchange with former Soviet Union but had concluded extensive EMP shielding was necessary only in its most critical installations. Many electrical protection measures currently used by telecom industry designed to protect against lightning strikes provide adequate protection against reasonably anticipated EMP levels, said Percy Pool, Verizon lead engineer, network engineering, in separate statement. Standards for such protection were issued by T1 committee of Alliance for Telecommunications Industry Solutions (ATIS), he said. EMP fields can affect exposed electronics equipment by: (1) Direct illumination of electronics in line of sight of generation point. (2) Induction of voltages onto cables for power, cable TV, antenna, telecommunications that enter buildings or enclosures that house electronics. Copper shielding proposed by petition wouldn’t effectively protect equipment from latter inducted EMP because “energy is likely to be introduced into the device through cabling and wiring,” Pool said: “Consistent with these published industry standards, which are designed to protect against ‘baseline’ (i.e., reasonably anticipated) EMP levels, Verizon has implemented grounding, bonding and electrical protection measures… both in the central office and in outside plant. These measures will generally mitigate the EMP and direct it away from sensitive equipment so it cannot cause harm, just as it mitigates harm from lightning strikes.” In case of particularly sensitive facilities, such as those serving govt. installations, carriers where requested have installed at customer expense higher level of shielding based on ATIS- developed industry standards to prevent damage from more localized high-power EMP attack. Energy released by EMP device detonated at high altitude -- most likely scenario -- would be dispersed over broad area and energy reaching any office would be attenuated, Pool said: “To the extent that any outage occurs, it will be of short duration, similar to that that may occur during periods of high sunspot activity, and the affected equipment generally will not suffer permanent harm.”
Consumer groups said Comcast’s proposed $72 billion merger with AT&T Broadband would “place a chokehold” over nation’s access to TV, Internet and other broadband services and warned they would try to persuade federal regulators to block deal between nation’s first and 3rd largest cable operators. Two senators called for hearing early next year, saying they had “serious concerns” and want to explore impact of new AT&T Comcast as well as proposed merger of satellite service providers EchoStar and DirecTV. Sens. Kohl (D-Wis.) and DeWine (R-O.), chmn. and ranking minority member, respectively, on Subcommittee on Antitrust, said they were particularly bothered by rising cable rates. “We continue to believe that more competition, rather than additional consolidation, is needed in this industry,” they said. However, Kohl and DeWine said they also recognized potential benefits, such as introduction of cable telephony to more consumers as viable alternative to local telephone companies.
Merger deal announced Tues. night by Comcast Corp. and AT&T comes at time when FCC has no ownership cap in place by which to measure if combination of nation’s first and 3rd largest cable is too big. New company, called AT&T Comcast Corp, will have about 22 million subscribers, be major presence in 17 of nation’s 20 largest cities and be competitor in 41 states. AT&T’s decision, which received unanimous approval by its board Tues., came after Comcast significantly upped its original $44 billion price offered, and rejected, over summer. Under terms of agreement, AT&T will spin off its broadband unit and simultaneously merge it with Comcast. New company assumes nearly $20 billion in debt and other liabilities from AT&T and its subsidiaries, as well as $5 billion of AT&T subsidiary securities held by Microsoft Corp. Microsoft agreed to convert that $5 billion into 115 million shares of new company.
Broadcasters now can buy 49% stake in other TV companies without stake’s counting as attributable interest under FCC rules. Commission ruled this week in 3-1 vote that broadcasters should be granted exemption to single majority shareholder rule. That rule said broadcasters or cable companies that owned 5% or more of other companies were considered owners of those companies for purposes of calculating their audience reach and/or subscriber share. Broadcasters and cable operators have long opposed rule, contending 5% didn’t amount to corporate control.
Having twice been reversed by courts, FCC Wed. proposed new set of equal employment opportunity (EEO) rules that were worded more broadly than 2 sets that preceded them. Commission adopted 2nd Notice of Proposed Rulemaking (NPRM) seeking comments on EEO rules for broadcasting and cable, including multichannel video program distributors (MPVDs). Proposed rules respond to latest decision by US. Appeals Court, D.C., which held that portion of Commission’s EEO rules was unconstitutional (CD Jan 17 p1).
FCC’s attribution rules are inexorably linked to questions about ownership limits and agency should take “a fresh look” at those rules and consider changing them, NCTA Pres. Robert Sachs told reporters Tues. Outlining NCTA’s regulatory strategy for coming year, Sachs said his group would ask Commission to reconsider whether company that held only 5% stake in another actually should be considered as having control of 2nd company. Sachs said attribution rules should be reconsidered across board for cable, broadcast, other media. He said it was unfair that FCC, when looking to limit ownership, didn’t take into account fact that small investments in other media companies didn’t amount to control. “What we want are attribution rules, bottom line, which establish that a company is credited with ownership where it actually controls an entity,” Sachs said. Rules say person or entity has attributable ownership if that person or entity have 5% of voting stock or 33% of combined debt and equity.
Several upcoming proceedings at FCC could “clarify the regulatory scheme that applies to broadband,” FCC Comr. Abernathy said at press breakfast Mon. She noted that Commission had issued notice of inquiry last year that covered issues such as how cable modem service should be classified, particularly whether it was cable service, information service or something else (CD Sept 29 p4). “We hope to move on this issue or issues sometime in the early part of next year,” she said.
FCC Wed. turned back petition for rulemaking filed by Public Employees for Environmental Responsibility (PEER) that had sparked strong opposition from wireless, wireline and undersea cable operators. Commission unanimously adopted order, although Comr. Copps issued separate statement saying PEER had raised “important questions” about how FCC carried out environmental duties mandated by Congress. PEER had asked FCC to change how environmental rules were applied to undersea cables, fiber lines, wireless towers. Group of govt. employees concerned about environment wanted agency to conduct rulemaking to ascertain whether it needed to create Office of Environmental Compliance and separate joint rulemaking with other agencies. Companies ranging from Verizon to Global Crossing had balked at PEER petition, telling FCC such action wasn’t needed and unjustifiably would add to regulatory burdens. Commission rejected PEER arguments that due to explosive growth in wireless and wireline infrastructure since Telecom Act, agency should take fresh look at cumulative impacts of spectrum auctions, tower registrations, undersea cable landing licenses, Sec. 214 authorizations. PEER doesn’t offer “rationale for treating all actions as actually or potentially damaging to the environment,” FCC said. “We do not believe that the evidence of environmental harm proffered by PEER reflects any environmental processing failings by the Commission.” Even if PEER successfully pointed to such shortfalls, “a few examples in no way justify the complete overhaul of the Commission’s long-standing environmental rules across all service areas,” it said. PEER had challenged FCC environmental rules that implemented National Environmental Policy Act (NEPA), which required federal agencies to account for environmental impact of projects they oversaw. PEER had urged FCC to require applications for all Commission actions involving submarine cables, fiber lines and spectrum requiring communications towers to file environmental assessment for public utility facility. Private utility would have to file environmental impact statement. PEER defined public utilities as supplying last-mile connections while private utilities would be parts of network needed to transmit over long distances. FCC said its regulations implementing NEPA already identified 9 types of actions that could have significant environmental impact and evaluate through environmental assessment all actions that involved projects that fit into those categories. In its May 2000 petition, PEER had cited growing number of cases in which laying of fiber cable had damaged coral beds and harmed habitat of endangered marine species. PEER said that in other cases, buildings and towers could have significant effect on environment and historic areas. Copps said that “while this proceeding did not provide adequate record evidence for a restructuring of our policies at this time, the Commission should undertake a thorough review of our obligations under the National Environmental Policy Act and the National Historic Preservation Act.” He said that as part of Chmn. Powell’s recently launched review of FCC procedures, assessment of agency’s responsibilities under NEPA and National Historic Preservation Act should be included. Copps said FCC should: (1) Determine whether it had devoted enough resources to meet its environmental responsibilities under those laws. (2) Examine how accessible such proceedings were to “nontraditional stakeholders” such as small businesses. PEER Gen. Counsel Daniel Meyer told us group planned to file petition for reconsideration at FCC by early Jan. “I do take Commissioner Copps’s separate statement as an indication the Commission knows it’s not addressing environmental concerns from environmentalists in an appropriate manner,” Meyer said. He said one example of types of cumulative environmental impacts that FCC must consider involved wireless towers that hadn’t complied with Sec. 106 review under National Historic Preservation Act. Assessing cumulative impacts of towers, Copps said, “the danger is the actual spectrum auction will have to be environmentally reviewed. That would be a nightmare for industry.” Lack of uniformity in compliance and enforcement means that most of industry has been erecting towers without environmental review, he said.
FCC is set to take up order on ultra-wideband devices (UWB) at Dec. 12 agenda meeting, as parts of Bush administration call for additional time before final decision. As part of extensive agenda for last meeting of year, Commission will consider first report and order to revise Part 15 on UWB devices. FCC Chmn. Powell has told Congress in last year that he anticipated action on item by year-end. Move to put UWB on agenda followed letter Fri. from Commerce Secy. Donald Evans asking for 60 additional days to complete analysis of UWB systems. Evans said he believed more time was needed to complete evaluation of UWB to ensure it would protect critical govt. operations and safety of life systems (CD Dec 4 p5). Deputy Defense Secy. Paul Wolfowitz had asked Evans to back delay in final decision until at least Feb., citing concerns over how critical govt. systems such as GPS would be affected (CD Nov 29 p1). But FCC staffer said that move to put item on agenda preserves Commission’s options to still potentially vote on order at meeting. One possibility is that issues that have been fully coordinated between Commerce Dept. and FCC in next week could still be voted on at meeting, while others that are still in conflict would be put off until Feb. timeframe as requested by Evans, staffer said. Putting it on agenda “gives us more options” over next week, staffer said. Any outstanding issues over which final coordination aren’t reached in time would be put off until next year, as requested by Evans, staffer said. Also on agenda are reallocation and service rules for lower part of 700 MHz band, TV Ch. 52-59. FCC plans to consider report and order on rules to reallocate those channels under Balanced Budget Act of 1997. On common carrier side, FCC will consider: (1) Notice of Proposed Rulemaking (NPRM) to begin “comprehensive examination” of appropriate regulatory framework for ILEC provision of broadband services. Item stems in part from SBC petition for ruling that it was nondominant in providing advanced services and for forbearance from dominant carrier regulation for those services. (2) Triennial review of unbundling obligations of ILECs. Commission will consider NPRM to look at definitions and rules for access to ILEC unbundled network elements. (3) Order on plans for nationwide 1,000-block number pooling and “other strategies to ensure that numbering resources are used efficiently.” Commission also is expected to consider technology-specific number overlays. In mass media area, agency will consider NPRM on new equal employment opportunity rules for broadcast and cable. U.S. Appeals Court, D.C. had overturned earlier rules.