The SEC said it had filed an emergency lawsuit against Presto Telecom and its Chmn. Alfred Vassallo to halt an alleged $11 million securities fraud in San Diego. The complaint, filed in U.S. Dist. Court, San Diego, charged that the defendants induced more than 800 people in 42 states to invest in Presto by stating falsely that: (1) The company had significant business relationships with AT&T, Sprint, MCI and Qwest, which it said had expressed interest in buying Presto or in investing in the company. (2) It was a “partner” to and had “alliances” with Cisco Systems and Unisys. (3) The Commerce Dept. was lobbying Mexican telecom regulators on Presto’s behalf, and investors’ funds would be used to build and operate a telecom network in Mexico. However, the SEC alleged, only 16% of investor and company funds were used for equipment and fiber, while Vassallo himself had misappropriated at least $1.2 million for personal expenses. It also alleged Presto had failed to disclose to prospective investors that the license its affiliated entity received from the Mexican govt. in 1998 to operate a commercial telecom network there was the subject of revocation proceedings that started in 2001. The SEC seeks preliminary and permanent injunctions and other relief, including disgorgement and civil penalties against Presto and Vassallo. Meanwhile, it said the court had ordered the freezing of Presto’s and Vassallo’s assets, the appointment of a temporary receiver over the company and other relief. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed over the company is scheduled for Feb. 9.
An effort to raise FCC fines for indecent broadcasts gained momentum Wed. when the Administration said it would support a House bill that would raise the maximum fines the FCC could levy against a broadcaster. House Telecom Subcommittee Chmn. Upton (R-Mich.) said the bill (HR-3717) was on a “fast track.” The House Telecom Subcommittee examined Wed. ways to curtail indecency on broadcast networks. The FCC told the panel that the Commission was increasing enforcement against broadcasters who carried indecent material. But members pondered other methods that might curtail indecent content, including license revocations and industry self-policing.
It’s time for the 1996 Telecom Act to be reviewed, Hill and FCC panelists said at a Comnet conference in Washington Wed., noting, however, that it could take “some time” before that would be done. House Commerce Committee staffer Greg Rothschild said as VoIP was emerging as one of the critical issues to be addressed by the Commission and Congress, “there is very little in the Act on how to regulate [broadband], and on whether or not it should be regulated… The ‘96 Act has very little application to the questions we are dealing with now.” Citing her previous experience with the 1996 Act, FCC Comr. Adelstein’s aide Lisa Zaina said that when writing a new act it was important to consider how it would be implemented.
With suitors lining up for AT&T Wireless, industry attention has turned to how the FCC is likely to review the first major wireless merger since it lifted the spectrum cap a year ago. As a legal matter, the Commission is expected to view transactions in the context of a national wireless market, sources said. How the FCC handles the first proposed combination among the 6 national providers is being watched closely for signs of how the agency will examine what could be a flurry of consolidation in the sector, industry observers said.
The future of the broadcast ownership cap still is in doubt, after the Senate failed to invoke cloture for the Omnibus Appropriations bill Tues. The Senate rejected the call to end debate on the bill by a vote of 48-45, with 60 votes needed to invoke cloture. The bill includes a provision that would establish a 39% broadcast ownership cap. The provision is authorizing, not appropriations, language, which means it would effectively be a permanent ownership cap. The ownership cap language is part of the Commerce Justice State (CJS) appropriations bill, which also includes funding for the Commerce Dept., FCC and FTC. It was unclear whether Senate Majority Leader Frist (R-Tenn.) would give up efforts to pass the omnibus or would call for another cloture vote in the coming days. However, Gerry Waldron, of the Network Affiliated Stations Alliance (NASA), said he expected the omnibus to be ratified in the near future. “We understand there are larger politics at play,” he said: “We expect it ultimately to pass.” Although a compromise on the 35% cap that NASA sought, Waldron said the compromise was significant because the cap would be permanent. (Technically, the FCC could raise the ownership cap at any time through a rulemaking.) Waldron said NASA was encouraged because Senate Appropriations Chmn. Stevens (R-Alaska) had urged the FCC to treat this as a permanent cap. Media ownership was mentioned during the debate on the bill Tues., but most objections from Democrats were focused on overtime rules and country-of-origin labeling for food products. House leaders have said they wouldn’t reopen debate on the omnibus. The alternative probably would be a continuing resolution (CR) until Sept. 30 -- the end of the fiscal year -- which would freeze funding for those agencies at 2003 levels. Frist warned senators that a CR until Sept. 30 would sap funding for several important programs and Stevens also warned that rejection of the omnibus would eliminate appropriations earmarked for their states.
The Winter 2003 issue of the NCBFAA Quarterly Bulletin contains an article that states that miscellaneous tariff and trade bills are no longer routine, are not predictable, and may not even be possible. The article notes that such bills have increasingly become the vehicle for solving larger, tougher trade and economic issues that have nothing to do with the tedious technical language of miscellaneous tariff and trade bills. (NBFAA Quarterly Bulletin, No. 103-4, Winter 2003, www.ncbfaa.org.)
Congress isn’t expected to pass comprehensive legislation on communications issues this session, many sources said, but that doesn’t mean lawmakers won’t be busy in the communications realm. Most sources provided a laundry list of issues that would get at least some attention from lawmakers who return today (Tues.) for the 2nd session of the 108th Congress. While no large-scale bills are expected, Congress could pass legislation this year to restrict broadcast ownership, fund enhanced 911 (E911) and spectrum relocation, and renew the Satellite Home Viewer Improvement Act (SHVIA). But there’s likely to be a lot of talk on the Hill about communications issues, as VoIP, universal service fund (USF), broadcast decency and cable rates.
LAS VEGAS -- DTV carriage by cable remains a major issue for broadcasters and cable, even as most other issues are being resolved, leading to hopes of a rapid takeoff of DTV, officials said at the CES here late last week. Increasingly, broadcasters want compensation for carriage of their DTV signals, making negotiations more difficult.
Executives of 5 of the largest U.S. CE retail chains told a CES “supersession” panel all indications were that 2004 would be strong. Most cited flat-panel TVs as a category that fared extremely well for them in 2003 and should only perform better this year.
NTIA urged the FCC in a filing to reject a request by Maritel to be the sole frequency coordinator for 2 channels in the Automatic Identification System (AIS). The Commission had issued a public notice seeking feedback on a proposal by Maritel to be the AIS frequency coordinator. NTIA told the Commission it had received letters from the U.S. Coast Guard and the St. Lawrence Seaway Development Corp. (SLSDC) on the adverse impact of Maritel’s proposal. NTIA urged the FCC instead to allocate the maritime VHF channels 87B and 88B exclusively for AIS operations. “These channels are necessary in the United States for AIS operations essential for maritime safety and homeland security,” NTIA said. It said the 1997 World Radio Conference allocated those channels internationally for AIS and they were subject to agreements between the U.S. and Canada. NTIA argued that the public interest “would best be served” by allowing all qualified entities to provide frequency coordination on a competitive basis. The Coast Guard told NTIA last month it “strongly opposes” the request: “Maritel proposes to provide services that are already being provided efficiently by other entities at a fraction of the cost that Maritel proposes to charge.” The Coast Guard said Maritel was seeking the designation to generate revenue “to compensate it for what it perceives to be an unauthorized taking of its licensed spectrum.” SLSDC and the Dept. of Transportation, which owns SLSDC, called Maritel’s proposal “impracticable, unnecessary and an unwanted burden on the U.S. and Canadian maritime commerce of the Great Lakes Seaway System.” SLSDC said the U.S. and Canada required the use of AIS in seaway waters from St. Lambert, Quebec, to the middle of Lake Erie. “For the first time, all vessel control centers in the Seaway share a common electronic vessel information database,” SLSDC said. The 2 channels are permanently assignment to the SLSDC from NTIA, it said. “They are the universal, internationally designated standard channels for shipborne AIS,” it said. Maritel describes itself as the largest U.S. provider of VHF Public Coast (VPC) services and said in a recent FCC filing that it had participated in FCC auctions of VPC station licenses, winning spectrum that included channels 87B and 88B. It said the dispute over those channels involved its obligation under FCC rules to make available to the Coast Guard 2 narrowband offset duplex channels for use with the Ports & Waterways Safety System and the Coast Guard’s desire instead to use channels 87B and 88B on a wideband basis for collision avoidance and marine domain awareness. Maritel has argued its proposal is a way to preserve its auction rights, use the most efficient AIS channel configuration and ensure that non- federal govt. entities also could use AIS technology. The Boat Owners Assn. of the U.S. told the FCC it supported the NTIA position: “The fee structure proposed by Maritel is inappropriate. We do not feel it’s in the public interest, especially given the homeland security ramifications.” The group said the project should be subject to federal bidding and procurement procedures.