MDS America has “proved Northpoint system can co-exist” with DBS on day-to-day basis, CEO Kirk Kirkpatrick told us Wed. in interview on proposed plans for U.S. service. FCC issued experimental license to MDS America Fri. (CD May 7 p7). Company could offer new challenge for Northpoint and to DBS, which is opposed to allowing terrestrial services in 12.2-12.7 GHz band (CD May 8 p7). FCC is considering several spectrum-sharing options for satellite services, but Northpoint debate has been most contentious. MDS America, which competes with Northpoint, may end up as ally in proceeding (CD April 27 p7).

House Telecom Subcommittee Chmn. Upton (R-Mich.) will hold hearing on efforts to increase FCC enforcement authority and will focus on standalone bill he introduced late May 8 that would increase penalties Commission could impose on violators of telecom regulations. Despite recent refusal by House Commerce Committee Chmn. Tauzin (R-La.) to consider measure as amendment to his and ranking Democrat Dingell’s (Mich.) data deregulation bill (HR- 1542), Tauzin said Wed. at markup of HR-1542 that language of Upton bill eventually could be added to Tauzin-Dingell. In recent Subcommittee markup of HR-1542, Tauzin refused to consider Upton’s enforcement measure, which he said wasn’t germane to data deregulation legislation. However, Tauzin said if House Rules Committee granted germaneness waiver, Upton bill (HR-1765) could be attached to Tauzin-Dingell when it reached House floor. HR- 1765 would increase FCC’s statute of limitations to 2 years from one and increase maximum penalty to $1 million per violation from $120,000. It also would double those penalties for repeat offenders. Markup was continuing at our deadline.

Comprehensive review of various state telecom taxes is proposed in bill (SB-394) in Cal. Senate Appropriations Committee. Review is necessary to ensure that rationale for levies was valid in light of developments related to Internet and telecom industry’s “competitive structure,” measure said. It would direct Legislative Analyst to evaluate justifications for levies and equitable treatment of taxpayers. Bill would extend until Jan. 2004 current moratorium on taxes on Internet access, use of online computer services, bandwidth tax and any discriminatory tax on online computer service or Internet access. Intent is to offset scheduled sunset of Cal. Internet Freedom Act Jan. 1, 2002. Measure also would extend prohibition on cities’ requiring franchise fees for cable-delivered Internet services if FCC or court of competent jurisdiction ruled cable modem service wasn’t cable service. Meanwhile, cable is fighting for safeguards against “unfair” competition potential of another bill (SB 23X) that would make it easier for cities to enter energy business in wake of problems of investor-owned utilities (IOUs). Cable anticipated that bill, which would allow new municipal utility districts (MUDs) to acquire IOU infrastructure, including utility poles, could result in cities’ jumping into cable business and raising rates for pole attachments. Cable didn’t want fast-track process to allow MUDs to compete with cable and telecom companies in “unfair manner,” Cal. Cable TV Assn. Govt. Affairs Dir. Gilbert Martinez said. Referring to recent amendments to address cable’s concerns, he said one that would bar MUDs from entering retail cable business wouldn’t suffice because city-owned utilities still could form partnerships with overbuilders such as RCN Corp. and lease their fiber on advantageous terms. What’s needed is level playing field provisions, he said. As for proposed freeze on pole attachment rates for 5 years, Martinez said that still left room for increases after 5 years. Cable wanted new formula for pole attachment rates charged by new MUDs, he said.

U.S. Appeals Court, D.C., seemed more concerned Wed. about procedural questions than merits as it heard arguments in Qwest challenge to FCC’s pricing rules for traffic that travels between ILECs and paging companies. Issue, outgrowth of reciprocal compensation regime, arose as result of dispute between Qwest and TSR Wireless, one-way paging company in Ariz. Qwest had billed TRS for dedicated facilities needed to pass paging calls to TSR customers. FCC sided with paging company and said charges weren’t legal.

FCC Cable Bureau Chief Deborah Lathen, who presided over Commission’s reviews of AOL-Time Warner, AT&T-MediaOne and AT&T- TCI mergers, announced her resignation from agency Wed., effective May 18. Lathen, appointed to her post by former Chmn. William Kennard 3 years ago, wrote in her resignation letter to current Chmn. Powell that she owed “a huge debt of thanks” to Kennard for “entrusting me with the responsibilities of this Bureau.” She also thanked Powell for “your outstanding leadership and personal friendship.” Lathen, who in Dec. had indicated her intention to leave FCC, said she planned to “spend time relaxing and reflecting as I consider new opportunities.” In statement, Powell praised her for her “hard work,” “remarkable contributions” and “leadership.” No replacement has been announced.

Public interest advocates began fresh push for open access to cable modem, DSL and interactive TV (ITV) networks Wed. with calls for “dot-commons” movement that would press for sweeping changes in national broadband policy. In half-day conference at Carnegie Endowment for International Peace, about 100 advocates met to rally support for federal open access mandates on both cable operators and phone companies. They also discussed ways to counter prevailing deregulatory mood in Washington, debating new regulatory and legislative thrusts against media concentration, new rhetorical approaches on diversity issue and budding local efforts to foster competitive broadband networks. “It’s an uphill struggle but I think there are opportunities,” said Gene Kimmelman, co-dir., Consumer Union’s Washington office.

Donna Shalala, ex-Secy. of Health & Human Services, elected to Gannett board… Deborah Lathen resigns as FCC Cable Bureau chief, effective May 18… Troup Coronado, ex-Sinclair Bcst. Group, named asst. vp-federal relations, BellSouth… Sal DiMatteo, ex-Pacific Ocean Post, appointed CFO, National Mobile TV… Hugh Robinson, chmn.-CEO, Tetra Group, retires from Belo board… Changes at Citadel Communications: Thomas Garry, ex- AMFM, appointed pres.-Midwest region; Jerry McKenna, ex-Infinity Bcstg., named pres.-Far West Region… George Ditomassi and Charles Bone join Shop at Home board and office of chmn.

U.S. Dist. Court, Lincoln, Neb., overturned state PSC’s approval of interconnection contract terms requiring AT&T to give Qwest access to AT&T’s rights-of-way. Judge Richard Kopf was ruling on 1997 complaint against PSC action filed by AT&T (Case 4:97CV3286). Case had been delayed pending outcome of legal challenges against FCC’s 1996 carrier interconnection order, in which Commission had ruled only incumbent telcos, not CLECs, had obligation to grant others access to their poles, ducts, rights- of-way. Most federal courts deferred to FCC interpretation, but 9th U.S. Appeals Court, San Francisco, doubted soundness of agency’s ruling. Faced with apparent judicial conflict, Judge Kopf followed lead of other courts and deferred to FCC interpretation, saying it was most consistent with Act’s purpose of promoting local exchange competition.

Sinclair Bcst. said FCC shouldn’t require it to terminate some local marketing agreements (LMAs) until legality of requirement is determined. In petition for stay, Sinclair said it invested millions of dollars in station programming based on “reasonable expectation” of long-term return on investment. Terminations would be required under ownership caps, which are likely to be overturned, Sinclair said. It also said ending LMAs would violate First Amendment.

Skybridge is pushing FCC to quickly issue conditional licenses to 7 applications from 5 companies for Ka-band service because of rapidly “changing market conditions” and impending departure of 3 commissioners, Vp Mark MacGann told us in interview Tues. MacGann, Senior Vp-Business Development & Mktg. Charlene King and attorney Jeffrey Olsen addressed obstacles facing company following Commission announcement last Thurs. (CD May 4 p3) of proposed rulemaking for spectrum-sharing plan for nongeostationary satellite orbit (NGSO) and fixed satellite service (FSS) and to determine intraservice rules for new applications, including Internet, online access, data, video and telephony. MacGann said with much of company financing still expected to come from Wall St., Skybridge would like to show investors company was moving forward.