“Major shortcoming” of FCC Chmn. Powell’s plan to spur DTV (CD April 5 p1) is that it would allow cable systems to use HDTV cable channels to meet requirement for cable carriage, group of broadcasters said in ex parte filing at FCC. Filing by key broadcast executives representing 99 local DTV stations, including Benedek COO James Yager and LIN TV CEO Gary Chapman, said: “Because cable penetration in our country is 70% and the digital transition will not be complete unless there is 85% broadcast digital penetration, cable carriage of local broadcast stations’ innovative digital programming -- whether a single HDTV stream or multiple streams of programming -- during the DTV transition is essential. We also believe it is essential that cable systems not be allowed to strip out other innovative services that broadcasters develop for their digital capacity.”
When commercial users need more wireless spectrum, “the federal government cannot continue to be the spectrum grocery store,” Badri Younes, Defense Dept. dir. of spectrum management, said Thurs. “This is not right,” he told Washington conference of World Computer & Internet Law Congress, sponsored by FCBA and Computer Law Assn. While he said federal govt. users such as DoD were interested in coming up with solutions on where additional spectrum for 3G would come from, he raised series of questions that he said must be answered first. FCC and NTIA last fall undertook scaled-back assessment of bands available for 3G, including 1710-1770 MHz now occupied by federal govt. users, mostly military. Younes said questions included whether spectrum could be reallocated from existing users without endangering national security and whether FCC had done all it could to ensure that industry had incentives to use spectrum efficiently. Younes also questioned 200 MHz of spectrum that CTIA has cited as needed for provision of advanced wireless services, based on past ITU estimates. Many assumptions on which ITU based estimate “have not been looked at very carefully,” Younes said. In particular, he said that 3G services haven’t developed as quickly as originally thought, with Merrill Lynch estimating that many systems aren’t expected to begin operating until 2005, Younes said. He called for more “realistic” assessment of 3G prospects, compared to optimistic estimates created in late 1990s when financial markets were brighter. “The need is not real,” he said. “We need more time to make public policy decisions on advanced spectrum services.” He reiterated view of several DoD officials at recent public policy forums that there is imbalance in how policy decisions are made when officials weigh national security and public safety needs of federal users versus need to accommodate growth of commercial services. “The current public policy debate shows the imbalance in how spectrum is evaluated and allocated,” Younes said. “Dropped calls should not take precedence over misdropped bombs,” he said. Stressing need for interagency coordination, he raised possibility of “White House-level oversight committee” in which diverse entities could be brought together to decide such issues. Noting difficulties in preliminary assessment of whether parts of 1710-1770 MHz band could be freed for 3G, he said “nobody should assume that band is going to be made available” although DoD, NTIA and FCC are continuing to work together. In keynote, NTIA Dir. Nancy Victory said spectrum search for new technologies or expanded uses of existing ones “often seems to pit the innovators against the incumbents. The debates get cast an either/or proposition. That needs to change.” Outlining themes from recent NTIA Spectrum Summit, Victory noted policymakers “need to remove the clouds over spectrum availability and provide certainty for the deployment of new services.” Among areas of intense debate over additional wireless spectrum is 800 MHz band and spectrum under evaluation for 3G, she said. Victory called recent FCC proposal to examine alternatives for mitigating interference to public safety users at 800 MHz “a good starting point and a catalyst for rethinking how things should be done in the future.” She said federal, state and local public safety systems “need a plan for an effective and orderly transition to a fully interoperable web of systems.”
Efforts by competitors to stop SBC-backed state legislation to require regulatory parity between incumbent telcos and their competitors for DSL and other broadband services proved unsuccessful in first of 4 SBC states to consider such bills this year. Okla. Gov. Frank Keating (R) signed bill (HB-2796) that prohibits Okla. Corp. Commission from regulating high-speed Internet access services such as DSL and all other broadband services, “regardless of the technology or medium used” for providing service. State broadband service regulation of SBC/Southwestern Bell and all other providers in state must cease as of July 1. New law requires carriers to obey any network unbundling requirements imposed by FCC, but otherwise contains no prerequisites or tradeoffs for broadband deregulation. Bill defines broadband as any digital service operating at speeds over 150 kbps.
Financial experts told House members Thurs. that govt. intervention might not be best way to enhance investor confidence in telecom sector. They said best course would be to let market work itself out, although all 3 witnesses agreed it was important for FCC to strongly enforce competitive rules. At hearing before subcommittee of House Financial Services Committee, Legg Mason Managing Dir. Blair Levin said failure in telecom sector wasn’t same as Enron scandal. “There’s a difference between misleading investors and what we're facing in the telecom sector,” which is business models that didn’t work, Levin said. “There is a distinction between deliberately misleading investors and guessing wrong,” he said. Danger is that if you “punish” well-meaning telecom entrepreneurs, no one will want to invest in new technology in future, Levin warned. Paul Glenchur, vp, Schwab Capital Markets, predicted that as “shakeout” occurred in telecom sector, companies with best business models would emerge and market would respond favorably. “The healing process will take time,” he said. Best course is to let market act, Glenchur told Domestic Monetary Policy, Technology & Economic Growth Subcommittee. Govt. intervention can create uncertainty which can be bad for investment, he said. “The capital markets are brutal and are forcing discipline on the market,” Glenchur said. Bryan Mitchell, CEO of MCG Capital, said “there is a proclivity to overinvest and markets do correct.” He said he was particularly concerned about govt. actions such as Tauzin- Dingell bill that he said seemed to artificially interfere with telecom sector’s development. Glenchur said several factors contributed to telecom sector’s downturn, including “land rush mentality” of investment community and demise of dot-com business, which was big customer base for telecom providers. In addition, need to build out networks required new telecom companies to assume great deal of debt and “the economic slowdown worsened the situation,” Glenchur said. Asked by Rep. Maloney (D-N.Y.) whether Congress could do anything to restore investor confidence, Mitchell said problems with telecom industry involved “investor indifference and dissatisfaction” because they weren’t making money rather than questionable financial dealings. Subcommittee hearing was aimed at both energy and telecom industries, with energy segment dealt with in separate panel. Asked by Rep. Grucci (R-N.Y.) whether Congress could help small companies better compete against big telcos, Levin said telecom “really is a big player game” because it takes lot of capital to build out big networks. Although hundreds of new companies formed after Telecom Act, big players were ones with staying power, he said, “and we just have to accept it.”
FCC voted at agenda meeting Thurs. to make Internet- based relay services eligible for reimbursement under Telecom Relay Service (TRS) fund. IP relay service is similar to traditional TRS, but part of its route runs over Internet rather than phone line. TRS enables deaf or otherwise impaired people to communicate by dialing relay center on special TTY (teletypewriter/text phone) and typing in message which worker at relay center then reads to party on other end of call. With IP relay, impaired person would type and send message over computer rather than TTY, which means individual wouldn’t have to buy TTY machine. Relay center is accessed via Web site. FCC’s vote classified IP relay as part of TRS and cleared way for its broader usage by authorizing reimbursement of costs. “The FCC must not allow regulatory artifacts to slow innovation by limiting support for TRS to older technologies,” FCC Comr. Abernathy said. “My only regret is that we did not act sooner to provide flexibility for this service innovation.” FCC also asked for comment on whether it should devise method for allocating TRS calls as intrastate or interstate and, if so, how to do it. TRS is offered by service providers that are reimbursed through TRS fund, financed by fees on common carriers. Sprint spokesman said company had been developing software and interface to enable IP relay and now would “move quickly to implement this service in the states we serve.” WorldCom spokeswoman said FCC’s action was “great news” for IP relay which, she said, was product MCI created and was first to market.
FCC issued memorandum opinion and order Thurs. that, among other issues, rejected arguments that Commission shouldn’t consider use of band manager licensing in future for private wireless services. Decision, unanimously adopted March 14, addressed order and further notice on 1997 Balanced Budget Act changes to Sec. 309(j) and 337 of Communications Act. Action: (1) Reiterated that public safety radio services exemption of Sec. 309(j), which authorized FCC to award spectrum licenses through auction, applied to services and not specific users. FCC affirmed dominant use test previously laid out by Commission as way to ascertain whether particular service qualified for public safety exemption. (2) Retained mandatory 5-year holding period for modification of 800 MHz private land mobile radio service authorization to permit commercial use. (3) Affirmed earlier FCC decision that applicant must demonstrate there was no public safety spectrum available to “satisfy the public safety service use before it can be granted a waiver” under Sec. 337. On band managers, which FCC adopted for 700 MHz guard bands, Commission rejected arguments by several utilities that allowing band managers in utility bands such as 900 MHz appeared to be way to circumvent auction exemption for public safety radio services. “In essence, these entities equate band manager licensing with the use of competitive bidding, which they oppose in the private services,” Commission said, noting it had rejected such arguments in past. Objections of utilities are “premature” because FCC has said it would examine eligibility restrictions in future on service- specific rulemakings, agency said. FCC previously examined scope of public safety radio services exemption and how it would handle cases in which mutually exclusive applications were filed for public safety services. At that time, it concluded exemption applied to specific services, not users. Nearly dozen petitioners argued exemption should apply to specific users and that all private radio spectrum users who met terms of statutory exemption were “auction-exempt.” Energy companies Cinergy and Entergy, for example, argued that FCC lacked authority to conclude that spectrum allocated for use by utilities was subject to competitive bidding. Commission disagreed, noting that Congress specifically referred to “services” in statute. In other areas, United Telecom Council asked FCC to clarify certain spectrum issues for private wireless services, such as whether there would be future allocations for public safety and whether utilities, pipelines, metro transit systems and railroads would have access to existing public safety allocations. FCC said it could create separate designation for public safety services under Part 90, either by allocation or service rules, but it declined to speculate on amount of spectrum that would be available, saying it would be decided in specific proceedings.
Switching off AM digital audio broadcasting (DAB) signal at night shouldn’t be any more “burdensome” for listeners than differentials between analog AM power levels and signal patterns are now, National Radio Systems Committee (NRSC) said in report filed with FCC this week. Report, as expected (CD April 9 p10), recommended AM stations be allowed to operate in-band, on-channel (IBOC) DAB only during daytime hours, at least until more interference testing was done. Allowing AM operation “will facilitate a rapid introduction of IBOC to the AM band with minimal interference concerns,” NRSC said. It said IBOC would cause new interference to adjacent channels, but trade-off was justified because “the AM band has been plagued for decades with high levels of natural and man-made interference.” Other findings: (1) Audio quality for IBOC was significantly improved over analog AM. (2) IBOC daytime coverage area was comparable to analog coverage and might be acceptable in areas where analog wasn’t. (3) Nighttime IBOC coverage area was restricted by interference. (4) IBOC was “substantially more robust” than analog. (5) Ability to carry unrelated data in IBOC signal would be benefit. (6) IBOC provided “superior stereo separation” over analog. (7) IBOC had little effect on host analog signal, and was expected to have little impact on co- channel interference.
FCC granted 5 petitions for waiver of it’s all-or- nothing rule. Three petitions filed by AllTel and CenturyTel relate to pending purchases of exchanges from carriers subject to price cap regulation. Commission said it would allow carriers to continue to operate their existing exchanges under rate-of-return regulation, following acquisitions, until it completes its review of all-or-nothing rule. Petitions also seek guidance on operation of Commission’s interstate access universal service support mechanism. Other 2 petitions involve extensions of previously granted waivers. FCC granted waiver sought by AllTel and extended deadline by which exchanges acquired from Aliant are required to convert to rate-of-return regulation until Commission completes its review. It also granted petition by Puerto Rico Telephone and extended deadline for it to convert to price cap regulation, allowing company to remain under rate-of-regulation until Commission completed its review.
“Congressional action tends to be a blunt instrument” that involves “fights from 5 years ago,” state regulator said Thurs. to explain why regulators were better equipped than legislators to spur broadband. At panel hosted by advisory committee to Congressional Internet Caucus, W.Va. Public Service Commission Dir.-Consumer Advocate Div. Billy Jack Gregg was backed in that assessment by CEA Pres. Gary Shapiro and National Grange Legislative Dir. Leroy Watson, but opposed by CapNet Exec. Dir. Tim Hugo. Hugo also found himself in minority on regulation of new broadband deployment by incumbents, with other 3 reaching rough consensus that old Bell equipment should be subject to existing regulations but new build-outs would operate under new rules. Panel was bit refreshing in that not single member represented ILEC or CLEC, although many arguments echoed theirs, particularly when pro-Bell Tauzin-Dingell bill (HR-1542) was discussed.
Acknowledging that 6-year-old funding program for rural health care hasn’t worked very well, FCC at agenda meeting Thurs. asked for comments on how to improve it. Rural health care (RHC) program, mandated by Telecom Act, was companion to e-rate fund. Both were aimed at broadening availability of advanced services and offered discounted services through use of universal service funds. RHC program envisioned health care clinics’ using federal funds to improve their ability to transfer medical X-rays and other tests over Internet for viewing by distant medical specialists. It’s high time program was reevaluated since only $13 million has been distributed to rural health care providers over last 3 years, Comr. Abernathy said. FCC may have interpreted Telecom Act’s requirements too narrowly and as result too many rural service providers became ineligible for funding, she said. For example, Abernathy said, some rural health care providers have been denied funding because they provide functions beyond health care clinics, such as nursing homes. FCC staff told commissioners they recommended reevaluation because current funding mechanism “has not fully met its potential.” Comr. Copps said program didn’t appear to have “lived up to its potential” since so little was spent and rules should be reviewed “sooner rather than later.” Program has $400 million annual cap. Copps and Chmn. Powell said RHC program had taken on homeland security significance that gave review more urgency. Anthrax scare and related terrorist concerns have heightened importance of sharing medical information, Powell said. Agency said it wanted comments on: (1) How to treat entities that served not only as rural health care providers but had other functions as well. (2) Whether to provide discounts on Internet access charges. (3) Whether to change calculation of discounted services.