FCC Chmn. Powell is uncomfortable with ownership caps when their primary purpose is to guard against anticompetitive behavior, he said at Precursor Group dinner in Washington late Thurs. Cap used for that purpose can “catch some it shouldn’t and let some go it shouldn’t,” he said in answer to question. Furthermore, “once it’s on the books, it takes forever to get it off” even if it’s obviously outdated. He said, for example, that 35% national ownership cap for broadcasters was 30 years old and conditions had changed since it was adopted. Antitrust process is better deterrent for anticompetitive behavior, he said. In answer to another question, Powell said that in general he believed “if you can’t prove a reason to continue a rule, it shouldn’t stay.” He said he didn’t buy “it does no harm” argument. In speech to institutional investors and others attending dinner, Powell said he was tired of “hand-wringing” over success of Telecom Act, still firmly believed in market over regulation to stimulate new services and wondered whether oligopolies were as bad as monopolies. He said he thought concern about effectiveness of Telecom Act was based on “exaggerated expectations.” When “bottom fell out” recently in CLEC business, blame was placed on Act instead of looking at fallacy of “Field of Dreams approach” taken by new entrants and investors, he said. They assumed that if they built something, “they will come” and threw money at startups, Powell said. But sometimes people “sniff it and go home.” Regulatory intervention isn’t answer, he said. “Way too many companies seek regulatory changes rather than using that same energy in the market.” He said he believed there was role for enforcement but “only where there’s clear evidence of abusive control.” There’s no such thing as natural monopoly, “but I'm not sure there’s not a natural oligopoly,” Powell said. If there’s heavy concentration of 3 or 4 companies, “is that okay or does there have to be a place for the small guy?” He said “my sympathies say yes” but then he looked at what happened when Wal- Mart came to rural America: “We lost something when we couldn’t go to the corner drug store but it wasn’t prices or choice.”
FCC’s limits on cable horizontal and vertical ownership don’t meet the requirement of burdening speech as little as necessary, unanimous U.S. Appeals Court, D.C., said in reversing and remanding limits to Commission. FCC rules say no MSO can own cable systems with more than 30% of national cable subscribers, and programming in which MSO has attributable interest can fill no more than 40% of channels on cable system. Appeals court also said FCC should consider growth of DBS in setting ownership limits.
KAME-TV Reno faces $50,000 fine for repeated violations of ad limits in children’s TV, FCC said in notice of apparent liability. Station admitted violating limits 301 times in 1997 and 1998. Commission said station also failed to establish effective program to ensure compliance.
FCC Enforcement Bureau fined 2 telecom carriers for not contributing to universal service program: (1) It issued final order telling N. American Telephone Network to pay $55,000. Agency said it wasn’t convinced by company’s response to notice of apparent liability (NAL) issued earlier. (2) It proposed $46,700 fine against Advanced Telecom Network.
Major broadcast networks that used electronic newsroom captioning to satisfy closed-captioning requirements in 1997 may continue to use technique, FCC said in clarification letter to CBS. Instead of live captioning, technique essentially uses scripts of newscasts as closed captions. Commission said technique meets its “no-backsliding” requirement.
U.S. Copyright Office (CO) expects to open inquiry into copyright compulsory licensing for streaming media within next week, said CO attorney Bill Roberts. Inquiry is first step in potentially setting rules that will “determine a lot of how music is delivered in the future over the Internet,” Roberts told Precursor Group conference in Washington Fri. CO expects to allow about 45 days for comments, 30 days for replies, then decide whether to proceed to rulemaking or issue final rule, he said.
FCC’s EEO rules shouldn’t have been overturned entirely just because U.S. Appeals Court, D.C., objected to one portion of them (CD Jan 17 p1), Commission said in petition for rehearing or en banc hearing. Petition, filed Fri., said federal agency was entitled to have provisions treated as severable “when it clearly states its intent and when such intent is rational.” Minority Media & Telecom Council and civil rights groups also were expected to file notices of appeal after our deadline Fri. FCC said it could institute proceeding to set EEO rules without “offending provision,” but that would waste agency’s resources and could lead to additional litigation. Commission said so-called “Option B” rejected by court wasn’t essential to its EEO rules, but was “adopted at the request of broadcasters to provide them with additional flexibility.” FCC Comr. Tristani supported petition, but said she was “disappointed” that agency declined to seek review of entire Appeals Court decision, rather than just bid to retain Option A.
FCC determined that Time Warner (TW) was subject to effective competition in Waco, Tex., and revoked city’s certification to regulate basic cable service. Granting TW petition, Commission said company had demonstrated that Clearsource, franchised cable operator that also provides LEC service in Waco, provided comparable programming as required by LEC effective competition test. TW also provided evidence that there were no regulatory, technical or other impediments to Clearsource’s provision of cable service in Waco and that it was able to provide cable that overlapped TW’s service, agency said. TW’s petition was unopposed.
In long-form applications for C-block licenses made public last week, financial details emerged on relationships of designated entities with noncontrolling, larger carriers. Black Crow Wireless, designated entity with backing from U.S. Cellular Corp. (USCC), told FCC that Black Crow has right to require USCC to buy its interest. “Significantly, there is no corresponding ‘call’ right on the general partner’s [Black Crow’s] interest,” filing said. Petitions to deny long-form applications are due Fri. for auction of 422 licenses that closed in Jan. and raised $17 billion (CD March 1 p3). Dobson Communications said it reached PCS transfer rights agreement with AT&T Wireless. Dobson subsidiary DCC PCS won 14 licenses at auction for $546 million. Agreement with AT&T Wireless provides that if Dobson wants to sell or transfer its interest in any PCS license it won at auction it will first offer spectrum to AT&T Wireless. If AT&T Wireless declines to buy licenses, Dobson said it could sell them to any other party. Application also describes Dobson-AT&T Wireless joint venture that depends on outcome of auction. Each agreed to contribute at least one 10 MHz license in agreed-upon markets. Dobson would then retain control of venture, which would use AT&T brand. Designated entity Cook Inlet/VS GSM (CIVS), in which VoiceStream has noncontrolling interest, said VoiceStream had “neither de jure nor de facto control.” Cook Inlet won 22 licenses for $506.38 million and VoiceStream PCS was high bidder for 19 licenses for $482.65 million. Cook Inlet Wireless, subsidiary of Alaska Native Regional Corp. Cook Inlet Region, controls CIVS. Filing said VoiceStream will have contributed $149.4 million in venture and Cook Inlet 50.1% ($150 million) pending approval of license applications. If CIVS converts existing $207 million note held by VoiceStream, latter would hold 70% of equity in designated entity. CIVS also can call on VoiceStream for additional cash commitments, bringing its equity interest up to 85% but leaving CIVS in control of management authority, filing said.
Minn. Gov. Jesse Ventura (Ind.) picked 3 finalists from 38 applicants to succeed Minn. PUC Comr. Joel Jacobs, whose term expired in Jan. but who has stayed on until successor is picked. Finalists are: Gibbon, Minn., attorney Paul Glaeser, with background in economic development; Eric Malinen, ex-FCC senior legal adviser with background in wireless services and telecom- based business development, and Colin Wightman, engineering dept. chmn. and prof. at Minn. State U., Mankato, with background in energy systems engineering.