Commerce Secy. Donald Evans repeated Wed. his promise that Commerce Dept. would be “proactive” in stimulating broadband demand. “Broadband is delivered to homes but consumers are not picking it up,” he said. About 70 million homes have access in U.S. but “very few actually use it, about 20%,” he said: “We need to do what we can about the demand side” of broadband access. Innovations such as broadband are “absolutely vital” to U.S. economy, Evans said, with IT alone accounting for 2/3 of productivity growth and 1/4 of economic growth. “Over the next 10 years, broadband is expected to add half a trillion dollars -- $50 billion a year -- to the economy.” Building national broadband network will create more than 1 million new jobs, he said.
FCC Comr. Martin, speaking at FCBA spectrum policy forum late Tues., emphasized need for Commission to focus more on spectrum sharing than on system in which agency was “referee” for mutually exclusive operations. “We should proactively seize opportunities to encourage, and even insist on, more efficient use of current spectrum, particularly through sharing,” Martin said. Historic regulatory process in which FCC sets rules for spectrum sharing through making allocations, setting interference parameters “and then acting as the referee” can create disincentives for sharing, Martin said. Citing pending FCC proposal designed to facilitate secondary market for spectrum, he said agency should move toward such policies that make spectrum sharing easier and “create strong incentives for making use of excess capacity.” Another example he cited was flexible allocations that were technology and service neutral. “Allowing priority access permits flexibility for a higher valued use some of the time, without having to dedicate specific frequencies to those uses all of the time,” Martin said. Citing newly-formed FCC task force on spectrum management, Julius Knapp, deputy chief of Office of Engineering & Technology, said “there’s going to be a lot of activity on re-examining spectrum management, spectrum allocation.” One question FCC increasingly faces on spectrum management is how to measure efficient use, he said, saying one benchmark was bits per Hz. “How do I measure efficiency over a wide area?” he asked. Agency also must take into account economics, such as whether system configuration that gets efficient bits per Hz is feasible to build in first place, he said. Several panelists said key spectrum challenge for FCC was that historical spectrum allocations didn’t necessarily match with how frequencies were used now in market. Stagg Newman, senior telecom practice expert with McKinsey & Co., said: “We have allocated use of spectrum in ways that are not consistent with the uses and the market needs today.” He advocated giving public safety systems priority in existing spectrum when needed in emergencies, “but don’t set aside large blocks of spectrum that may not be well-utilized.” As for 802.11 wireless networking systems, Proxim Chief Technology Officer Kevin Negus said 5 GHz products would dominate usage for high data rate systems in that space in next several years. “The big public policy challenge” for FCC will be rules of engagement between primary or legacy users of spectrum and secondary users such as wireless LANs, he said. “This is going to be a huge challenge, but it’s also going to be a huge opportunity,” Negus said. Several panelists said FCC had been moving toward more flexible spectrum management schemes in areas such as ultra-wideband, software defined radio, secondary markets proceeding, flexible spectrum allocations. Charles Jackson, communications consultant for JTC, said that among engineering and policy issues that FCC faced were questions such as whether it should mandate rule for how wireless LAN listened to channel before it started transmitting.
Changes in FCC Comr. Martin’s office: Monica Shah Desai, legal adviser for wireless and international issues, leaves for Common Carrier Bureau Pricing Div.; Samuel Feder, legal adviser on common carrier issues, will replace Desai, and Daniel Gonzalez, former vp-external and regulatory affairs for XO Communications, joins office as legal adviser on common carrier matters… Stewart Verdery, ex-aide to Senate Asst. Minority Leader Nickles (R-Okla.), joins Vivendi Washington policy office… Jonathan Lamy, ex-aide to Sen. Leahy (D-Vt.), named RIAA dir.-communications, replacing Jano Cabrera, leaving to work for Al Gore… CompTel elections: Richard Burk, CEO, Nii Communications, chmn.; Jerry James, pres., Grande Communications, vice chmn.; Joseph Ambersley, exec. vp, PaeTec, treas… Verizon promoted Terri Dean to pres.-Verizon Connected Solutions, succeeding Robert Burich, retired… Broadband Wireless International Chmn. Albie Shaffer resigns as company progresses through Ch. 11 bankruptcy… Salem Communications promoted Brian Taylor to gen. mgr. of its Denver group of radio stations… Karen Ralph advanced to dir.-human resources, Comcast… Jeff Lucas, ex-NBC, named pres.-advertising sales, USA Network, Sci-Fi Channel, USA cable’s emerging networks… Lee Petro, ex-FCC, joins Fletcher, Heald & Hildreth… Christine Castro, ex-Disney, named senior vp-chief communications officer, Yahoo… Liz Koman, ex-USA Networks, becomes Rainbow Ad Sales senior vp-AMC/WE: Women’s Entertainment ad sales… Danielle Vitale, ex-PSINet, appointed vp-mktg. & distribution, Cambrian Communications.
AFL-CIO is joining 15 public interest and consumer groups to oppose repeal of newspaper-broadcast crossownership ban. They've scheduled March 15 news conference and panel discussion on “the case for retention of the FCC newspaper/broadcast ownership rule,” 9 a.m., National Press Club.
Requests for extensions of May 2002 deadline for DTV buildout from TV stations in markets 31 and above (CD March 6 p12) had topped out at 572 by 4 p.m. Wed. Commission had promised applications would be acted on “rapidly,” and some already have been approved, FCC official told us. Of extension requests filed by Mon. deadline, about 70 were submitted by one law firm -- Wiley, Rein & Fielding.
Compared with many other forms of telecommunications, including fiber and cellular, “satellites tend to be relatively invulnerable” to terrorist attacks, consultant Walter Morgan said. Speaking at Satellite 2002 conference Wed., he said opportunity for rogue nation to jam some satellite systems did exist, but in process, that country would “inadvertently announce themselves to the world” and would inflict only small wound to satellite system: “It certainly [wouldn’t be] fatal.” Possibility of taking control of satellite and steering it off into another orbit is highly unlikely because of command signal encryption, he said.
It can take years for FCC to grant application for satellite spectrum, said Roderick Porter, deputy chief of agency’s Satellite Bureau, as he outlined recently released 65-page order in which Commission proposed new rules for satellite licensing. FCC process in place for more 2 decades has been very successful, he said, but adjustments must be made. As panelist at Satellite 2002 conference in Washington, Porter said: “The business plan of an applicant may or may not be viable [anymore].” Among changes, FCC will issues licenses to satellite operators on first-come, first- served basis, he said: Applications that arrive after early submissions will be placed in queue in order they're received. If application is granted, applicant can’t request amendment without going to back of queue, he said. Commission’s implementation of mandatory electronic filing will allow it to track order in which applications have been filed, Porter said. Plan will save administrative time at commission and allow operators to move forward with business plan, he said. Commission also proposed “streamlining procedure” with uniform application pleading cycle, Porter said. FCC would place time limit on parties attempting to negotiate spectrum-sharing plan, he said, and if agreement weren’t reached, several determining factors that were “not locked in stone” would be used to select winners. Among factors: licensees with fewest satellites, new entrants, licensees that had not missed milestones in last 5 years, most progress made in actual service, commitment to provide service to rural or unserved areas, and preference to first filed in round. Other issues are being considered for each proposal, Porter said. Commission is considering elimination of financial qualifications and expanding milestone requirements because they are “actual measurements,” he said. Milestone expansion could mean stiffer penalties, including cancellation of licenses, forfeiture penalties and prohibiting of future applications, all designed to “discourage speculation,” he said. Commission in past has prevented speculation by banning trafficking in licenses. Overall public interest would be better served by allowing operators to sell licenses, “even at a profit,” Porter said. Commission would require buyer to “stand in shoes” of seller, he said, and couldn’t request any amendments such as extension of grant.
EchoStar’s proposed acquisition of DirecTV faces “enormous barriers” to antitrust approval, Senate Judiciary Committee member Sen. Kohl (D-Wis.) told EchoStar CEO Charles Ergen and DirecTV Chmn. Eddy Hartenstein at end of 2-hour hearing Wed. by Antitrust Subcommittee organized by Chmn. Leahy (D-Vt.). During hearing, Leahy appeared to be lone member to support merger. “If not this proposal to bring full satellite service to rural areas and to help bridge the digital divide, then what?” he asked: “Rural America cannot accept no service.” Kohl, ranking minority member DeWine (R- Ohio) and Sens. Hatch (R-Utah), Spector (R-Pa.) and Brownback (R-Kan.) each expressed deep concerns about deal in questioning of witnesses who included Ergen, Hartenstein, NAB Pres. Edward Fritts, Mo. Attorney Gen. Jeremiah Nixon, former FTC Chmn. Robert Pitofsky and Consumers Union Co-Dir. Gene Kimmelman. Hatch cited concerns about “gatekeeper power.”
Fitch upped its ratings of what it said it presumed would be new AT&T Comcast, provided that FCC and Dept. of Justice (DoJ) approved $72 billion merger of AT&T Broadband and Comcast. Companies have said they hope to close deal by end of year. Following announcement of merger, Fitch put Comcast, Comcast Cable, TCI and MediaOne Group on rating watch negative. It said Tues. that negative watch would be resolved at deal’s closing and it then would assign BBB rating to senior unsecured debt obligations of AT&T Comcast. Fitch said it revised its findings after learning that Comcast already had secured $10 billion funding commitment from 5 financial institutions out of total $12.5 billion that company had said was needed to close deal. Ratings service said its proposed ratings also reflected $300 million in cost savings expected in 2003 due to enhanced size of company, number of subscribers and what would be its leading position in 8 of nation’s top 10 designated market areas. Fitch also assumed in its rating that AT&T would be able to sell its Time Warner Entertainment assets. High-ranking Comcast official confirmed Tues. that AT&T Broadband and Comcast had no intention of holding onto TWE interests, saying they believed that interest to be “a nonperforming asset.” Official said sale of TWE holdings would be used to pare down debt and that companies didn’t intend to challenge FCC’s attribution rules, even if Commission eventually determined those rules to be out of date. “We don’t want it. We don’t need it. We want out,” official said. “Any change in the attribution rule is a moot point.” Comcast Pres. Stephen Burke told shareholders at Bear, Stearns media week conference in Fla. Mon. that merger would yield significant cost savings for combined company. He outlined what he called “a road map” to integrate companies, starting with line-by-line analysis of budgets in each system cluster. By going in and examining how comparably sized systems achieved higher margins, “you would be surprised how quickly local managers address anomalies,” Burke said. Burke and John Alchin, exec. vp-treas., predicted Comcast could integrate AT&T Broadband’s systems and bring their margins in line within 3 years. Burke also addressed problems with Comcast’s transition to its own high-speed data network from Excite@Home, which has folded after going bankrupt. He admitted it had “been a difficult transition” but said problems were behind Comcast now. In telephone interview Tues., David Watson, Comcast’s exec. vp-mktg. & customer service, denied network had suffered major e-mail outages. While he conceded there had been some slowdowns in receiving e-mail, in some cases by as much as 1-1/2 hours depending on time of day, Watson said those issues had been resolved. Problem, he said, was with Sun Microsystems server. Only problem that remained was that Comcast’s 950,000 customers couldn’t retrieve their e-mail remotely over Web, he said. They still can get their e-mail from their own computers, Watson said, but in any case, company expects problem will be resolved “in the next couple of days.” He stressed that Comcast’s new network was “scalable” and shouldn’t have problems supporting growing Internet customer base.
Possibility that ABC parent Disney will replace Nightline with David Letterman’s late night talk show is latest example of how consolidation of media industry is boosting mass entertainment at expense of serious journalism, said media critic Danny Schechter in opening address of Global Entertainment and Media Summit in N.Y.C. March 2-3. Schechter recalled Disney’s assurances, shortly after its acquisition of ABC was announced in 1995, that company was committed to quality news programming. At time, Nightline “was milked for every ounce of credibility,” he said. Now, however, firm is interested only in profits, so lackluster money-makers like news are getting cold shoulder, Schechter said. He said he expected situation to worsen if recent appeals court decision against FCC ownership rules was left standing. Also at conference, rock musician Scooter Scudieri, self-described “First Rock Star” of Internet, told one conference panel that Web was big factor in eliminating his need for agents, managers and record companies. Scudieri said he sold his $8 discs and related items from his firstrockstar.com Web site and handles everything from promotion to fulfillment : “I'm not trying to sell a million records. I'm trying to sell 10,000. If I sell 10,000, I can make a living.”