Operators of small and rural cable systems were waging lobbying campaign on Capitol Hill this week, asking for help as they face unprecedented competition from DBS, plus increasing programming costs from media conglomerates such as Disney, GE, News Corp., Viacom. Group, brought together by American Cable Assn. (ACA) for 3 days, was spending much of Tues. on Hill, making face-to-face contact with key lawmakers. But first order of business was questioning some of those lawmakers’ top advisers in morning panel discussion. Jessica Wallace, majority counsel for House Commerce Committee, sought to assure 50 ACA members that Committee Chmn. Tauzin (R-La.) was keenly aware of issues facing small and rural cable operators. She said Tauzin’s main focus at moment was DTV transition and bringing together various industry sectors in informal setting to try to negotiate solutions on copyright and DTV-cable compatibility issues that wouldn’t require congressional action. Asked about rising costs of programming, Wallace said Tauzin knew it’s problem, especially with regard to sports programming, but said that, as long as people continued to buy those programming packages, there wasn’t much Congress could do.
FCC Wireline Bureau extended by 2 weeks deadline for reply comments in Triennial UNE Review proceeding. June 5 is new date.
Proposed FTC “do not call” telemarketing registry (DNCR) would cover nonprofit organizations soliciting funds through telephone, FTC Consumer Protection Bureau Dir. Howard Beales told Direct Mktg. Assn. (DMA) in Washington Tues. Patriot Act extended FTC jurisdiction to nonprofits when they solicited funds, he said. DMA audience asked many questions about DNCR, including jurisdiction. Beales said FTC hoped FCC would adopt similar rules as FTC so common carriers, which are exempt from FTC jurisdiction, would be covered under DNCR. He said proposed DNCR exempted politicians and religious organizations because of First Amendment concerns.
Citing U.S. Appeals Court, D.C., decision involving biennial review of broadcast ownership rules, CTIA petitioned FCC late Mon. to eliminate “unnecessary regulations” in policy areas such as local number portability (LNP) and Enhanced 911 (E911). Earlier this year, Commission appealed to D.C. Circuit, seeking rehearing of Fox ruling that overturned FCC’s cable-TV station cross-ownership ban (CD Feb 20 p1). Decision is seen as potentially changing burden of proof FCC must use in determining whether rules should be kept or eliminated under biennial reviews. FCC Chmn. Powell has raised concerns that biennial review standard could evolve under ruling from Commission’s having to prove why it eliminates regulation to also include why rules should be kept (CD Feb 21 p1). CTIA Pres. Tom Wheeler said Tues.: “The Fox decision gave clear direction to the FCC: Prove a regulation is vital and indispensable or get rid of it.” Wheeler said CTIA wanted to “help” FCC meet new standard by “jump-starting the 2002 biennial review process.”
Passage of spectrum reform legislation this Congress “is pretty remote and difficult,” Sen. Sam Brownback (R-Kan.) told U.S. Chamber of Commerce Tues. Brownback, co-chmn. of Congressional Wireless Caucus, said in Chamber broadband summit that “it would be a Herculean effort” to delay or set firm date for FCC’s 700 MHz auction. House Commerce Committee Chmn. Tauzin (R-La.) and other committee members recently introduced legislation to delay June 19 auction of upper and lower bands of 700 MHz indefinitely (CD April 25 p1). Senate Appropriations Committee ranking Republican Stevens (Alaska) is drumming up support for proposal he will introduce this week that would compel the FCC to hold the auction (CD April 30 p4).
Amid some wireless industry efforts to delay June 19 700 MHz auctions, FCC held first pre-auction seminar for upper band bidding Tues. (Pre-auction seminar on lower band auction is set for today -- Wed.) “We are ready to go, at least operationally,” Deputy Wireless Bureau Chief Kathleen Ham said. She said CTIA had petition pending at Commission to review bureau decision in April to retain June 19 date for auctions of both upper and lower bands at 700 MHz. “I think we are going to resolve that as soon as possible,” she said. (FCC set expedited filing schedule on CTIA petition late last week, with oppositions to group’s petition due Fri.). Meanwhile, filing window opened Tues. for applicants for Ch. 60-69 auction to submit Form 175 short forms. Deadline for final submission of that preliminary bidding form is May 8. Few FCC presenters at day-long seminar made passing reference to tug-of-war between some large wireless carriers, which want auction delayed, and broadcasters and others that are fighting delay. “The ground may move beneath my feet at any moment,” quipped Stanley Wiggins, attorney with bureau’s Policy Div. More than 30 on-site attendees at seminar included representatives of Verizon, AT&T Wireless, Spectrum Exchange, Nextel. Actual participation in auction, however, isn’t signaled until carrier files short form application that contains financial information. Because meeting was streamed, presence of other participants was less visible. As for pending petitions that could affect availability of licenses, Wiggins cited petition for reconsideration filed by National Public Safety Telecommunications Council (NPSTC) last year. NPSTC objected to FCC decision not to change certain technical rules for commercial operators in 747-762 MHz and 777-792 MHz bands. Group said lack of modifications could “greatly increase” harmful interference to public safety operations.
Cross-section of industry could join bidding when FCC issues auction rules for spectrum for multichannel video distribution and data services (CD April 24 p1). Commission opened up satellite spectrum in 12.2-12.7 GHz to terrestrial companies in effort to advance broadband services in rural areas. Final order is expected this week. Companies are anxiously awaiting rules splitting spectrum into hundreds of geographic licensing areas. It’s unclear how many bidders auction will attract. Satellite companies may want to buy licenses to create satellite-terrestrial combination, using terrestrial spectrum to provide local and broadband service.
Yankees Entertainment & Sports Network (YES) filed antitrust suit against Cablevision, charging cable operator had illegal monopoly that was keeping Cablevision subscribers from viewing YES. YES CEO Leo Hindery told us he was confident U.S. Dist. Court, Manhattan, would find that Cablevision had refused to sign carriage deal with YES for anticompetitive reasons. “They're not solely a cable operator. They're a cable operator and a programmer. And they are not only a cable operator and a programmer but a competitor,” Hindery said, pointing to Cablevision’s Madison Sq. Garden (MSG) and Fox Sports N.Y. networks as examples of networks in which Cablevision has ownership stake and that go head-to-head against YES for sports viewers. “When you have dominance, you have a responsibility not to use it abusively,” he said. Suit, filed Mon., charged violation of Sherman and Clayton Acts and of FCC rules on exclusivity. Specifically with regard to FCC, YES alleged that Cablevision said it would carry YES only if there were cable exclusivity and network was not made available to satellite distributors. YES seeks unspecified monetary and injunctive relief, and declaratory judgment in its favor. Asked whether YES could survive without Cablevision carriage, Hindery conceded that “it’s a huge, important part of our business model,” but said deals with other MSOs would keep YES in business. YES is charging $2 per subscriber and has asked to be carried on basic tier. Cablevision wants to put it on pay tier but has also offered to allow YES channel to set price and keep all money associated with it. Cablevision responded that lawsuit was without merit and best way to resolve issue would be “through negotiation, not litigation.” It said YES was trying to impose “take-it-or-leave-it” demand that wasn’t in best interest of Cablevision subscribers. “YES has rejected every good-faith attempt to resolve this matter,” Cablevision said.
Spectrum Exchange, which is developing private market mechanism to ease 700 MHz band-clearing through secondary auction, told FCC it opposed CTIA request that Commission review Wireless Bureau’s decision to stick to June 19 auction date. FCC set May 3 as deadline for receiving oppositions to CTIA application for review of bureau decision earlier this month. “The major commercial wireless operators, like the incumbents in most industries, at times have an incentive to restrict new capacity to limit competition,” Spectrum Exchange said. “At other times, they do better with restrictions lifted to expand their own capacity. In making spectrum decisions, the Commission should ignore the first voice and listen to the second.” Company countered recent concerns raised by CTIA that activities of Spectrum Clearing Alliance, which includes broadcasters such as Paxson Communications, could raise antitrust concerns. CTIA said “concerted action by a combination of licensees who clearly exercise market power over the disposition of the upper 700 MHz band spectrum” raised antitrust issues and created more uncertainty. Spectrum Exchange said CTIA’s “prolonged effort to keep the 700 MHz band off the market” could be viewed as similar concerted action in cellphone market that raised antitrust concerns. It said CTIA application for review cited Bush Administration budget proposal that would delay statutory auction date requirements for upper and lower bands of 700 MHz and said delay also was proposed in White House budget blueprint of year ago, “yet no new legislation has been enacted.” Spectrum Exchange stressed “compelling public interest” in not delaying June 19 auction date for both upper and lower bands. “We have an opportunity for voluntary clearing to work,” filing said. “But the opportunity is fragile and delay could cause it to quickly slip away.” It warned that if broadcasters concluded that Ch. 60-69 auction would be subject to continued delay, “likelihood of their clearing before the end of the digital transition becomes remote.” Separately, Spectrum Exchange and Intel met with FCC Comr. Martin last week to urge that auction to move forward June 19. In ex parte filing they said voluntary clearing at 700 MHz was “close to becoming a reality. The alternative to a June auction date and to spectrum-clearing arrangements for channels 59-69 is the gross underutilization of this prime spectrum for the foreseeable future.” Intel Communications Policy Dir. Peter Pitsch said Intel had such meetings with all 4 commissioners’ offices and said company’s weighing in on 700 MHz issues shouldn’t imply “anything about our participation in the auction.” Intel has been subject of industry speculation in recent weeks that it may be among companies interested in participating in auction. Short-form filings for upper and lower band are due May 8. Pitsch told us: “We thought it was in the public interest for the auctions to go forward and that the auctions would reduce spectrum scarcity, particularly for wireless Internet applications.” Intel position is that proponents of delaying auction don’t have alternative plans for clearing 700 MHz spectrum and delay would result in those bands’ being “underutilized for years,” Pitsch said.
Verizon Wireless said Mon. that FCC had returned $1.5 billion of deposit for 216 wireless licenses at issue in NextWave re-auction. Commission order March 27 returned 85% of NextWave re-auction deposits to carriers that bid. Verizon Wireless has challenged order in U.S. Appeals Court, D.C., and U.S. Court of Federal Claims to obtain rest of deposit and for ruling that auction “contract” for disputed licenses now was void (CD April 9 p1). Verizon, which owns 55% of Verizon Wireless along with Vodafone, said it planned to use $1.5 billion to reduce commercial paper and overall debt levels. It said it had trimmed overall debt by $1.4 billion in first quarter to $62.9 billion from end of 2001. “The return of $1.5 billion of our deposit is a good start,” Verizon Wireless CEO Denny Strigl said: “This deposit was handed over in good faith to the FCC more than a year ago and its return, along with the remainder of the deposit that the FCC continues to hold, is long overdue… The auction is clearly void or voidable, and we believe a return of the entire deposit and cancellation of our obligations are required.”