FCC set June 19 for start of auction for lower 700 MHz band now occupied by Ch. 52-59 TV broadcasters, meaning bidding on spectrum would take place at same time as Ch. 60- 69 auction. Lower 700 MHz band consists of 758 licenses for fixed, mobile and broadcasting services. Both lower and upper bands face congressional deadline of Sept. 30 for auction proceeds to be placed in U.S. Treasury. Spectrum in lower 700 MHz band will be offered for auction as two 12 MHz blocks consisting of pair of 6 MHz segments and two 6 MHz blocks of contiguous, unpaired spectrum in each of 6 economic area groupings (EAGs). Auction also will offer one 12 MHz block consisting of pair of 6 MHz segments in 734 metropolitan statistical areas (MSAs) and rural service areas (RSAs), which are smaller than EAGs. Wireless Bureau seeks comments on options for how 758 licenses in lower band should be grouped: (1) Grouping all licenses together in what would be simultaneous multiple round auction. (2) Or including only 734 MSA/RSA-based licenses in lower band auction and grouping 24 licenses based on economic areas with upper 700 MHz auction, where FCC has adopted similar approach of larger blocks of spectrum. Commission has said it chose combination of larger and smaller geographic areas for lower 700 MHz licenses to accommodate broad range of bidders. Public notice calls for upfront payments for each license and minimum opening bids. Bureau also seeks comments on proposal to award all licenses in lower 700 MHz band auction in single, simultaneous multiple-round auction. Comment is sought on proposed upfront payment for each license, activity rule, bidding procedures such as round structure, reserve price or minimum opening bid and minimum acceptable bids. Comments on those and other issues are due Feb. 6, replies Feb. 13.
Rep. Berman (D-Cal.) called on FCC and Dept. of Justice (DoJ) to investigate Clear Channel Communications and its role in vertical and horizontal integration of TV, radio and concert promotion industries. Berman, ranking minority member of Judiciary Subcommittee on Courts & Intellectual Property, raised concerns that Clear Channel could be abusing its consolidated holdings in those industries. He said in Jan. 22 letter to FCC Chmn. Powell and U.S. Attorney Gen. John Ashcroft that company reportedly was “warehousing” radio and TV stations. Berman said Clear Channel supposedly had arranged for 3rd parties to buy stations in markets where company already exceeded multiple radio and TV station ownership caps: “Clear Channel allegedly has arranged to officially ‘buy’ these stations when, and if, the FCC lifts those caps.” Berman also expressed concern that company reportedly had “punished” recording artists for refusing to use its Clear Channel Entertainment concert promotion service. He said FCC and DoJ should determine whether artists, copyright owners and consumers were being harmed by alleged practice of “burying” noncompliant artists’ radio ads and refusing to play their songs: “These allegations, if true, have obvious, negative implications for consumers, both through higher concert ticket prices and reduced selections of broadcast music. To the extent your respective agencies have jurisdiction to do so, I believe you should investigate and fully prosecute any violations of the antitrust laws or FCC regulations” that may have occurred” in these cases.
In last year, FCC has seen number of filings for rate relief by cable systems more than double and MSOs are acknowledging shift in strategy designed to help them compete more aggressively with DBS at local level. Since last Feb., 47 petitions for determination of effective competition have been filed at FCC, compared with 18 such filings in 2000 and 24 in 1999. Commission officials acknowledge surge in filings seeking freedom from rate regulation by local franchising authorities. Although agency doesn’t regulate rates, local authorities can do so on basic service. While many of filings for relief appear to come from small companies such as Falcon in Drain, Ore., in reality most of those systems have been bought by larger systems operating out of big cities. Most of filings at FCC were by 2 MSOs -- Charter and Time Warner Cable (TWC). Adelphia also filed many in 1999.
FCC was justified in setting new universal service fund at $650 million for variety of reasons, CALLS coalition said in comments filed with Commission Jan. 22. FCC sought comments in response to Sept. 10 remand by 5th U.S. Appeals Court, New Orleans (CD Sept 12 p5). Court told FCC it hadn’t provided enough justification for size of fund and said it wasn’t enough that CALLS coalition recommended it. Coalition said picking CALLS number, based on AT&T study, was justified: (1) “by the interim nature of the proposal.” (2) because it represented agreement of “diverse group of ILECs and IXCs.” (3) because higher fund levels recommended by other parties would be difficult to adjust in future. On last point, CALLS group said universal service funding level probably would require adjustment after 5-year period specified by FCC, and adjusting AT&T figure upward would be easier than adjusting high figure downward. Coalition emphasized that court asked only for explanation of why figure was picked and didn’t “require the FCC to now divine a precise ‘correct’ amount of support.” Qwest, which wasn’t member of CALLS, told Commission $650 million was “insufficient to replace the support that was implicit in interstate access charges prior to the implementation of the CALLS order.” Thus, said Qwest, new fund “fails to comply with the requirement that the Commission replace implicit subsidies with universal service support that is ’specific, predictable and sufficient.'” Qwest said “synthesis model” FCC uses to determine universal service high cost support “indicates that the support mechanism should be at least $950 million.” Competitive Universal Service Coalition, composed of wireline and wireless competitors, said FCC should consolidate that issue with consideration of “broader issues regarding the structure of the high-cost support plan” that was mandated by 10th U.S. Appeals Court, Denver, in another case. Group said $650 million fund created in CALLS order “bears no relationship to the statutory directives of ensuring ‘affordable’ and ‘comparable’ rates.” Broader review would “ensure that the universal service system fully complies with the Act,” it said.
FCC Chmn. Powell will speak April 9 at NAB Convention Chairman’s Breakfast in Las Vegas, organizers said. Powell will do one-on-one interview with ABC’s Sam Donaldson.
Compensation method proposed by satellite digital audio radio service (SDARS) licensees won’t resolve interference issues involving terrestrial repeaters, Verizon Wireless told FCC in ex parte filing last week. Carrier cited concerns raised by other Wireless Communications Services (WCS) licensees over potential interference that terrestrial repeaters above 2 kw would have on WCS operations, among them that proposal by SDARS licensee: (1) Didn’t cover customer- premises equipment. (2) Excluded costs other than costs of filters. (3) Limited compensation to “extremely short period of time,” which carrier said typically would expire before WCS was widely deployed. (4) Capped total compensation at $1 million for all WCS licensees, which Verizon called “a small fraction of the costs imposed on WCS licensees by the interference.” Verizon Wireless also told Commission that interference problems posed by SDARS terrestrial repeaters couldn’t be fixed with “simple and inexpensive technical solution.” It said only feasible way to prevent such interference was to cap power of terrestrial repeaters.
Correction: FCC is expected to return all but 3% of total bid amount that NextWave re-auction winners paid on licenses, not 3% of amount that they had put down on licenses. Sources said that meant agency was expected to return 85% of winners’ down payments. Deposits were 20% of total purchase price.
FCC decision to allow PTV stations to solicit ads on their excess nonbroadcast DTV capacity (CD Oct 12 p2) has been challenged in U.S. Appeals Court, D.C. Media Access Project (MAP), United Church of Christ and Alliance for Community Media (ACM) sought review and overturn of decision on grounds that it violated Communications Act and was “arbitrary and capricious and an abuse of discretion.” Petitioners also sought review of Commission decision to permit PTV stations to offer subscription services on their digital channels. FCC order that made distinction between broadcast service and subscription service violated plain language of statute, MAP Assoc. Dir. Harold Feld said. He conceded PTV stations weren’t receiving support they “require or deserve” from Congress and they were “obviously looking for ways to support DTV transition.” But that solution threatens very soul of PTV, which is supposed to operate differently from commercial TV, he said. Feld said that although PTV stations might start out with noblest of goals, as revenue streams from ads become indispensable “they will continue to pursue it aggressively to the detriment of other programming.” PTV gets spectrum free and enjoys exemptions from various requirements for offering noncommercial educational services, he said, and if they took programming based on ad model, there would be no room for many local and community programmers and independent documentary makers. “There is a real need for us to preserve the public interest in the spectrum,” ACM Exec. Dir. Bunnie Riedel said. It’s “dangerous” for PTV to become commercial entity, she said, because ultimately it will end up losing govt. support. Besides, spectrum “doesn’t belong to PBS or CPB but the people,” Riedel said. Congress “time and again” has called for public-private partnership to create next generation of digital education content, APTS Pres. John Lawson said, and that’s what FCC had asked PTV to pursue on some of its digital spectrum. He said FCC decision was “very well reasoned and tight and we believe that the courts will uphold it.” Lawson said legal action was “sad waste of resources by groups that are supposed to represent the public interest.”
FCC Office of Gen. Counsel appointments: Maureen McLaughlin, ex-Senate Commerce Committee, to senior counsel; Harry Wingo, ex-Skadden, Arps, Slate, Megher & Flom, to special counsel… Promotions at Paramount (replacing Paramount TV Chmn. Kerry McCluggage): Joel Berman to pres.- Paramount Worldwide TV Distribution, and Garry Hart to pres.- Paramount TV Production… Judith O'Neill, ex-Thelen, Reid & Priest, named shareholder and head of N.Y. telecom practice for Greenberg Traurig… Richard Mastoloni promoted to senior vp-treas., Loral Space & Communications, succeeding Nicholas Moren, retiring… Rodney Gelineau, founder of Gateway Growth Funds, joins PayForView Media Group Holdings as pres.-CEO, replacing Marc Pitcher, who resigned but will remain a dir.
FCC shouldn’t raise subscriber line charge (SLC) to $6.50 next year, as envisioned in CALLS plan, because ILECs already are collecting too much revenue with current $5 charge, National Assn. of State Utility Consumer Advocates (NASUCA) said Fri. NASUCA unveiled study that said consumers were paying $641 million too much per year under $5 monthly charge and would be overpaying by $1.8 billion in 2003 if charge were raised to $6.50 per month. SLC is flat charge added to phone bills to recover variety of local loop costs. NASUCA said study showed not only that current rates were high enough but also that “residential and single-line business customers are currently paying implicit subsidies to the carriers and thus supporting the carriers’ other customers and stockholders.” Group said another problem was that customers with costs at or below $5 were paying $1.1 million too much while those with costs over $5 were paying $472 million less than cost. Group said it wasn’t asking FCC to rectify that situation in this proceeding but only to stop increases in SLC. However, it said, FCC should open another proceeding to improve its cost allocation procedures. In response, BellSouth said CALLS plan was devised to allow rates to gravitate to underlying costs. It doesn’t make sense in competitive environment to continue to charge residential customers rates that are below cost, BellSouth Vp Robert Blau said: “No one ever intended, as NASUCA argues, for retail rates to be based on the ‘most efficient network’ model devised for wholesale rates.”