FCC’s order subjecting noncommercial educational (NCE) and public broadcast stations to competitive bidding for licenses in nonreserved spectrum was effort to interpret “difficult” language of statute and not to expand its auction authority, agency told U.S. Appeals Court, D.C., Fri. Court was hearing oral argument on petition by NPR and others seeking review of Commission’s order. NPR said one part of Sec. 309 of Communications Act stated that FCC’s authority to award licenses through competitive bidding didn’t apply to NCE and public broadcasting applicants. Grey Pash, counsel for FCC, said statute provided several directives and it wasn’t clear that Congress understood problems it could create. Saying it wasn’t easy issue to resolve for agency, he said meaning of statute’s language depended on context. Among statute’s goals was expanding FCC’s auction authority, reducing comparative standards process and recovering for public portion of value of public spectrum, he said. Under NPR’s interpretation, there would be fewer auctions and more comparative proceedings, he said. In support of public broadcasters, he pointed out FCC had made provision for reallocating channels from nonreserved to reserved if need arose. FCC’s determination that exemption didn’t apply to NCE and public broadcasters violated plain language of statute, said Patrick Philbin, lawyer for NPR. Most of questioning from 3-judge panel focused on language of statute, with judges seeming to concur that language wasn’t specific. Judge Raymond Randolph said statute wasn’t talking about applications, but licenses already issued. FCC can exempt applicants only after entire licensing process is over and agency’s problem is what process to use to determine who gets license. “I think Section 2 is a muddle,” he said. Judge David Tatel questioned NPR lawyer on how FCC’s provision for reallocating channels could be in conflict with statute. When Pash sought to present agency’s difficulty in making sense of some provisions of statute, Judge Douglas Ginsburg remarked: “It’s a kind of think-o, not a typo by Congress?” Ginsburg also explored with Pash possibility of using “hybrid” system for selecting mutually exclusive applicants for reserved spectrum suggested by Philbin. FCC says statute provides conflicting directions, he said, but there’s nothing in language that limits exemption for NCE and public broadcasters to reserved spectrum.

Focal Communications signed interconnection agreements with Verizon that called for reciprocal compensation levels similar to what FCC required in latest order (CD April 20 p1) -- 0.15 cents per min. for traffic below 10-1 ratio of originating to terminating traffic, 0.12 cents per min. for traffic that exceeds ratio. Agreements, announced by Focal Wed., cover states where 7 Focal markets are located -- Baltimore, Boston, N.J., N.Y., northern Va., Philadelphia, Washington.

FCC dismissed complaint filed Jan. 24 by Excel Communications and affiliated companies against Qwest alleging carrier had backbilled Excel for primary interexchange carrier charges in violation of Communications Act. Parties said issues raised in complaint had been resolved. (EB 01-MD-03)

In somewhat complex case, U.S. Appeals Court, D.C., Fri. remanded FCC decision requiring ILECs to share their DSL facilities with competitors. Qwest and WorldCom, for different reasons, had appealed FCC’s decision that ILECs’ DSL services qualified for competitive access under Sec. 251 of Telecom Act. Act requires ILECs to make their facilities available through unbundling and resale. After sorting out several other legal issues, court ruled that FCC couldn’t base its DSL decision on standard that since had been vacated in different court suit.

FCC Wireless Bureau Chief Thomas Sugrue outlined several prospects for potentially freeing additional private wireless spectrum Fri., including possibility of user fees, audit of spectrum uses, current secondary spectrum proceeding. Point of user fees for private land mobile radio licenses, idea that has been floated in past and would require change by Congress, wouldn’t be to generate revenue but to increase efficiency of spectrum use, Sugrue said in lunch speech to Land Mobile Communications Council (LMCC) annual meeting in Washington. “The theory is unless there’s a cost placed on bandwidth and coverage, licensees wouldn’t improve their efficiency of both,” he said, noting that FCC couldn’t make change on its own.

VoiceStream, in ex parte filing at FCC in pending proceeding on Deutsche Telekom merger, said VoiceStream CEO John Stanton raised possible impact that delay in Commission’s decision could have on timing of review by Committee on Foreign Investment in U.S. (CFIUS). Filing said Stanton had separate phone conversations April 19 with Comr. Ness and Chmn. Powell on license transfers that were part of DT deal. “In both conversations, Mr. Stanton urged the Commission to give expeditious consideration to the pending applications,” filing said. FCC missed self-imposed deadline of completing 180-day review by April 8 and is expected to announce decision this week.

Following up on earlier letter, ALTS and several CLECs asked FCC in petition filed April 18 to lower Verizon’s charges for use of power in colocated central offices. Petition asked FCC to suspend and investigate Verizon tariff. “CLECs are being forced into bankruptcy because of outrageous practices like this,” said ALTS Pres. John Windhausen (CD April 17 p7, March 28 p4).

Taking another deregulatory step, FCC moved to ease its restrictions on dual-network ownership Thurs., amending rules to allow Big 4 TV networks to own, operate, maintain or control emerging networks UPN and WB. By 3-1 vote, Commission adopted report and order (R&O) eliminating section of dual-network rule that barred mergers between major network and emerging network. As result, Viacom, which already owned financially ailing UPN before buying CBS last May, will be able to keep both networks or sell UPN to any of other 3 major networks if it wants. By same token, AOL Time Warner now could sell WB to any of 4 major networks, although it hasn’t shown any desire to do so.

FCC voted 3-1 late Wed. to adopt long-awaited order reducing carrier-to-carrier payments for Internet-bound dial-up calls. Comr. Furchtgott-Roth dissented. Order ends long debate about high level of reciprocal compensation payments that flow from ILECs to CLECs. Reciprocal compensation is intended to pay one local carrier for terminating call from customer of another local carrier. Because many CLECs signed up ISPs as customers, traffic generally has flowed to CLECs from ILEC. Order caps payments for ISP-bound calls at level that generally is lower than what carriers pay for voice traffic under state-supervised reciprocal compensation agreements.

In its latest status report on nation’s DTV transition, FCC said broadcasters continued to make strides but many challenges remained. Mass Media Bureau Chief Roy Stewart said 38 of 40 stations in top 10 TV markets now were transmitting digital signals, leaving only 2 to go. In next group of markets, number 11 through 30, he said 67 of 79 stations were transmitting digital signals. Overall, he said, there are 190 DTV stations on air, covering 64% of U.S. TV households. He said some DTV markets are particularly flourishing, with 8 operating digital stations in L.A. and 5 in Washington. “We believe the DTV transition is going better than many people give it credit for, although not as fast as some hoped,” he said. “Sometimes, technology takes time.” Stewart said FCC had granted construction permits for 1,090 of 1,688 DTV station allotments, with 598 “nonroutine applications” still pending, largely because of interference or international coordination issues. He said Bureau would “expedite processing for applicants ready and willing to build DTV facilities.” Stewart also cited CEA statistics indicating that manufacturers sold 648,000 sets to dealers last year, up 400% from 1999. But he also mentioned several “caveats:” (1) Sales figures reflect set purchases by dealers, not consumers. (2) Even DTV sales to dealers amount to small fraction of overall TV set sales, which reached 25 million last year. (3) Most sales were of DTV display monitors, not sets with integrated digital tuners. (4) DTV set prices, while falling, continued to be high. Stewart also said that DTV-cable interoperability problems, lack of HDTV and other digital programming and digital copyright protection issues continued to hamper DTV rollout. Comr. Ness welcomed report but chided cable and satellite industries for not doing more to promote DTV transition. “I hope to see some voluntary progress by cable,” she said, noting “lot of reluctance” by industry to carry digital broadcast programming. Ness said she was “pleased” to see discussions between cable operators and public broadcasters about DTV carriage deals (CD April 18 p1). She said she hoped carriage deal between AOL Time Warner and PTV stations would serve as “template” for other carriage agreements.