FCC returned $2.8 billion (85%) of deposits from Jan. 2001 NextWave re-auction but concluded bidders should continue to be held to nearly $16 billion in bid obligations. “This action will give the bidders access to the bulk of their money while at the same time preserving the results and integrity” of re-auction of PCS licenses that U.S. Appeals Court, D.C., overturned last summer. Verizon Wireless, which has largest deposit of $1.7 billion, had argued to FCC that to extent it had right to void auction contract on NextWave licenses, it chose to do so. Commission said late Wed. it struck “public interest balance between hardship that would be imposed by continued retention of the down payments and the need to protect the integrity of the auction by authorizing refund of a substantial portion of the down payments.” But FCC order specifically turned back Verizon Wireless claim that delay in licensing “entitles it to avoid its obligation to pay the full amount of its winning bids.” Earlier this year, Supreme Court granted FCC request that it hear challenge of D.C. Circuit decision, which had reversed Commission decision to cancel NextWave licenses for missed payment. Result of latest FCC order is that if Supreme Court decision has effect of upholding Jan. 2001 re-auction results, those bidders then could be held to original amounts they agreed to pay for licenses.
Verizon, EarthLink and Brand X Internet filed separate suits against FCC over its decision to declare cable modem service interstate information service. Companies join Media Access Project, which is representing 3 public interest groups (CD March 26 p1), in its bid to have FCC’s decision set aside. Verizon, which filed in U.S. Appeals Court, D.C., argued that Commission was violating First and Fifth Amendments by treating phone companies that offered high- speed data services differently from cable companies that did same. FCC’s decision to call cable modem service information service means cable companies are exempt from regulations affecting common carriers such as Verizon, it said. Commission has separate proceeding examining data delivered via common carriers, and some commissioners are on record as saying they would be inclined to remove regulations in order to reach parity between different deliverers of similar services. Verizon spokeswoman said that despite current proceeding, “we wanted to preserve our argument that cable modem services and our broadband services should be treated the same as a legal matter.” Like MAP, EarthLink filed one- page petition in D.C. Circuit. Brand X filed its petition in 9th U.S. Appeals Court, San Francisco.
FCC issued proposed regulatory fee schedule to collect $218.7 million that Congress requires for FY 2002, 9.3% more than amount collected for FY 2001. Fees recover costs of FCC’s competition, enforcement, spectrum management and consumer information activities. Examples of changes proposed by FCC: (1) Cable systems would pay 53 cents per subscriber, up from 49 cents. (2) Interstate telecom providers, 0.153 cents per revenue dollar, up from 0.132 cents. (3) CMRS (Commercial Mobile Radio Service) mobile providers, 24 cents per unit, down from 27 cents. (4) VHF commercial TV stations in top 10 markets, $47,050, up from $45,100. To calculate proposed fees, FCC increased revenue requirement of each category and then divided by number of units. If number of units has risen, it’s possible that new fees could be lower for some services. FCC asked for comments by April 23, replies by May 3. Proposed fee amounts will be published in Federal Register and will be available on FCC’s Web site at www.fcc.gov/fees/regfees/2002regfees.
NBC executives received no harsh questions from affiliates -- most notably on station charges at FCC against network practices (CD Aug 24 p3) -- in meeting in N.Y. Tues. afternoon. Although allegations still are pending, “that’s essentially a dead issue,” NBC Chmn. Robert Wright told us after nearly 4-hour session. Meeting was scheduled after TvB conference same day (see separate story, this issue) by affiliates, originally without NBC involvement, under association bylaws requiring them to meet annually. However, top NBC executives -- Wright, Pres. Andrew Lack, TV Network Pres. Andy Falco, Sports & Olympics Pres. Dick Ebersol, Entertainment Pres. Jeff Zucker, News Pres. Neal Shapiro -- made presentations, answered questions. Executive of large TV group attending his first NBC affiliates’ meeting expressed “surprise at how upbeat the discussions were.” Falco said “everybody was very happy,” with no divisive issues raised. He told reporters most new affiliation contracts being signed by NBC include payment of compensation, but “we're not universally paying comp… There are so many different deals” that have been and are being negotiated with stations. Outgoing Affiliates’ Chmn. Jack Sander of Belo said meeting “illustrates the high regard that NBC holds for the stations and the strength NBC provides its affiliates.” Roger Ogden of Gannett Bcstg. was elected to replace Sander. Newly elected affiliate board members are Terry Hurley, Cordillera Communications; Marci Burdick, WAGT Augusta, Ga.; Terry Mackin, Hearst-Argyle TV.
Morality in Media, Parents TV Council and others are seeking meeting with FCC Chmn. Powell to complain about “gratuitous sex, violence and foul language on TV,” particularly during 8-9 p.m. “family hour,” they said in letter to Powell. Groups particularly cited Fox’s Boston Public. “Fox and other networks have not made even a minimal effort to protect children, and instead have gone out of their way to market inappropriate material to kids,” letter said. More than score of signing groups also included Christian Coalition, Salvation Army, Prison Fellowship, American Family Assn.
NAB, NCTA and MPAA failed to prove it would serve public interest to delay effective date for video description rules, which take effect April 1, FCC said in order released Tues. Industries had said rules should be stayed pending U.S. Appeals Court, D.C., review. Commission said industries didn’t show they would be irreparably harmed if stay weren’t granted, although they had said it would cost millions of dollars to comply. In opposition, National TV Video Access Coalition (NTVAC) had argued that TV and cable already had made most of investments necessary to provide description, which benefits visually impaired. Parties also had argued visually impaired wouldn’t be harmed by delay because not all of them supported rules, and many of those who did weren’t ready to receive description in form of secondary audio program. FCC also said parties provided essentially no arguments that stay would benefit public interest, other than to restate their claim that they were likely to win in court.
Panelists at opening session of TV Bureau of Advertising conference in N.Y. Tues. agreed more ownership consolidation was in TV’s future. “It’s inevitable,” said Dennis FitzSimons of Tribune Bcstg. via videotape. Viacom Pres. Mel Karmazin said owners of TV stations or groups that remained small would be at “huge disadvantage… It’s better to be strong… Consolidation has been good for the public, not bad,” as well as for advertisers. Larry Divney of Comedy Channel said “there’s no doubt in my mind that consolidation will continue… We will end up competing with ourselves.”
Teledesic modification application may have direct impact on other 2nd-round Ka-band Nongeostationary Satellite Operators (NGSO) Fixed Satellite Service (FSS) applicants, Hughes said in FCC filing March 18. Constant changes in Teledesic system and repeated requests for modification 5 years after licensing indicates system still is in very early stages of development, Hughes said. It said Teledesic also had made no showing about effect of interference on other companies or whether new system would improve sharing environment. Hughes said Teledesic: (1) Shouldn’t receive priority over 2nd round Ka-band applicants for spectrum sharing and coordination. (2) System could constitute major license modification and might need to be treated as newly filed application. (3) Staged Development raised significant issues about ability to provide continuous service. (4) Didn’t deserve preferential treatment because of LeoSat-1 filing. Hughes urged Commission to require Teledesic to make public interference results, carefully monitor Teledesic progress and terminate license if necessary, review whether MEO system realistically could fit into LeoSat 1 technical parameter filed by U.S. at ITU, and consider adoption of EFPD limits in 18.8-19.3 GHz and 28.6-29.1 GHz bands to facilitate use by NGSO systems.
Verizon Tues. refiled application with FCC to offer long distance service in N.J. Company withdrew earlier petition March 19 after Commission raised questions about size of nonrecurring rates Verizon charged competitors for “hot cuts.” To address that concern, carrier said it filed reduced hot cut rate March 20 that mirrored rate established in Feb. in N.Y. Hot cuts occur when customer’s line is disconnected from one provider and reconnected to new one. “This new hot cut rate is now part of the record,” Verizon Senior Vp Thomas Tauke said. “By withdrawing and refiling the application, the procedural issue was resolved and the new hot cut rate was endorsed by more than a dozen CLECs” in N.Y. Verizon said new application also reflected continued growth in competition since first one was submitted. Competitors have added 50,000 lines, increasing total to 610,000. Verizon has Sec. 271 applications pending for 2 other states -- Vt., which FCC must act upon by April 17, and Me., with FCC’s decision due by June 19. AT&T said Verizon’s ability to change hot cut rate to $35 from $160 “with a strike of a pen” showed “the initial application was frivolous.” AT&T contended new application also had “serious problems.” FCC issued “expedited schedule” for gathering comments on new application “because Verizon’s… application follows very closely in time to its recently withdrawn filing [and] relies largely on the same evidence that supported its previous application.” Comments are due April 8; Dept. of Justice evaluation, April 15; replies, April 19. Wireline Bureau staff will be available April 11 and 12 for ex parte meetings if parties want to discuss issues they plan to raise in reply comments. Statutory 90-day deadline for FCC to act on petition is June 24.
As expected (CD March 5 p5), U.S. Dist. Court in Portland, Ore., ruled that 10 cities in Ore. didn’t violate Telecom Act by requiring Qwest to pay revenue-based fees for use of public rights-of-way. Nine of cities levied 7% fees, remaining one charged 4%. Qwest had refused to continue paying those fees after ruling last year by 9th U.S. Appeals Court, San Francisco, that franchise fees that exceeded actual cost of managing rights-of-way violated Telecom Act. U.S. Dist. Judge John Jelderks said in March 22 opinion that Qwest had failed to show cities’ fees impeded companies’ ability to provide telecom service. Instead, “Qwest’s failure to pay the fees breached its franchise agreements with the cities,” agreements that Qwest itself negotiated, judge said. “I conclude that the cities’ revenue-based fees are ‘fair and reasonable compensation’ for Qwest’s use of the cities’ public rights-of-way,” judge said. He acknowledged that in brief filed in unrelated case, FCC “expressed doubts whether [Telecom Act’s Sec. 253] allowed revenue-based fees.” However, he said, “the FCC has not directly addressed the issue.” Judge said “Qwest apparently considered 7% revenue- based fees reasonable when it sponsored the state statute allowing such fees.”