FCC told 9th U.S. Appeals Court, San Francisco, that it had “reasonably” concluded that cable modem service was interstate information service. “The Commission’s reading of the statute makes good sense,” agency wrote court last week. Court is reviewing FCC’s classification of cable modem service, which is being challenged by Earthlink, Verizon, WorldCom, consumer groups and several others. In March, FCC said that cable modem service was interstate information service and that Internet delivered over cable wasn’t subject to common carrier regulations (CD March 15 p1). Ruling went to heart of questions about rights of local franchising authorities, their ability to levy taxes on such services, whether cable modem ever would be subject to universal service requirements and whether cable operators would have to offer “open access” to Internet service providers (ISPs). In its filing, FCC said court’s ruling 2 years ago in AT&T v. Portland, Ore., didn’t require agency to classify cable modem as telecom service, just that law classified telecom component of cable modem service as such. Because Telecom Act doesn’t define clearly how it should be classified, “this court must defer to the FCC’s reasonable interpretation of ambiguous statutory terms,” Commission said. Agency said it believed cable operators were using telecom to provide end users with information service. Therefore, it said, it concluded that cable operators’ offering of telecom to ISPs constituted private carrier service, not common carrier telecom service. FCC said it asserted federal jurisdiction properly because Internet communications frequently crossed state and national boundaries. Court should reject any suggestion that agency’s order “somehow impairs the ability of local governments to manage their rights of way,” agency said: “The Commission has not yet decided how (if at all) its classification of cable modem service will affect local regulation of rights-of-way.” That question is subject of separate proceeding. FCC in March opened rulemaking to examine which govt. agencies, if any, had power to regulate cable modem service and invited comment on whether, “in light of marketplace developments, it is necessary or appropriate at this time” to require multiple ISP access. FCC asked court to dismiss challenge by Verizon, which said Commission should adopt same classification for wireline broadband services. Again, FCC said that question was part of separate proceeding and shouldn’t be considered by court.
Notable CROSS rulings
FCC Comr. Copps leveled some of his harshest criticisms to date against his own agency Fri., saying Commission was “miles and miles away” from acting like “a credible regulatory agency” in its proceeding on media ownership. Addressing more than 100 people at Washington meeting of American Women in Radio & TV (AWRT), Copps said he couldn’t understand why Chmn. Powell and FCC’s Media Bureau were so reluctant to hold hearings on effects of media consolidation on public interest.
Protection of universal service will be top priority for NTCA in next session of Congress, but bankruptcy and spectrum management also will be on its agenda. In news conference Wed., NTCA officials said Assn. would lobby for “fair and stable contribution methodology” for universal service fund (USF) and modifications of portability and identical support rules to prevent competitive carriers from claiming funds to detriment of local rural incumbents.
CHICAGO -- Speakers at NARUC annual meeting here Tues. said incumbent telcos, CLECs and regulators had mutual interest in making telecom market once again attractive to investors and in resolving role of unbundled network element platforms (UNE-Ps) in development of competition. Speakers agreed investment and UNE-P issues were linked but remained far apart on how matters could be addressed.
FCC’s Spectrum Policy Task Force outlined to Commission Thurs. its recommendations for updating agency’s decades-old spectrum management regime, concluding access to spectrum was bigger problem than scarcity. Full report of 39 recommendations is expected to be released next week, with notice of inquiry planned for consideration at Dec. 11 FCC meeting.
More than 40 national and local consumer groups and others called on FCC Chmn. Powell to hold hearings around country on proposed changes in media ownership rules. Their request, in letter to Powell, takes up charge by Comr. Copps when Commission opened its proceeding on media ownership earlier this year (CD Sept 13 p1). Copps in fact has said he may travel around country and hold field hearings on his own if Commission as whole decides against doing so (CD Oct 3 p3).
Three attorneys arguing appeal of FCC approval of Fox Bcstg. purchase of Chris-Craft TV stations before U.S. Appeals Court, D.C., Fri. had little chance to make their arguments because of repeated interruptions by 2 members of 3-judge panel. After FCC attorney Grey Pash had used up all his allotted minutes, presiding Judge Harry Edwards said: “I'll give you one more second. You're way over your time,” then promptly asked Pash another question. Judge David Tatel joined in with repeated questions and statements, while Judge Raymond Randolph didn’t say word until rebuttal by Angela Campbell, attorney for appellants. Case had been appealed by United Church of Christ and Media Access Project (MAP), who said granting 2-year waiver of newspaper cross-ownership rule (instead of standard 6 months) to Fox parent News Corp. wasn’t in public interest. Campbell, who argued deal shouldn’t have been approved without public hearing, responded “yes” when Tatel suggested “your whole argument is whether the sale was in the public interest.” Edwards said public interest could be “variable, depending on what we're looking at.” Pash said public interest determination came with waiver -- and FCC order explained why. Responded Edwards: “I don’t see how [order] gets you where you want to go” on public interest mandate: “Where is the policy statement on public interest in this case?” Answering his own question, Edwards said it wasn’t there. Fox attorney John Roberts argued FCC had adequately applied and explained public interest in its order and said none of cases cited in support of MAP’s position by Campbell involved broadcast licensees. Edwards called Roberts’s argument “very strange opinion [but] it may be right.” FCC approved Fox purchase of Christ-Craft stations in Aug. 2001, and deal was consummated last Aug. after Fox had swapped TV stations required by FCC to comply with duopoly rule. Following hearing, MAP Pres. Andrew Schwartzman told reporters Commission “should be anxious… There’s a reasonable chance for reversal.”
FCC established pleading cycle for request by Alltel subsidiary CenturyTel Wireless and CenturyTel for partial waiver of FCC’s cellular cross-interest rule. Comments are due Nov. 18, with oppositions Dec. 2 and replies Dec. 9. CenturyTel plans to transfer to CenturyTel Wireless its stake in Lafayette MSA, which has B-side cellular license for parts of rural service area in La. Companies told FCC that CenturyTel Wireless couldn’t buy this stake in Lafayette without waiver of cellular cross-interest rule because Alltel holds A-side cellular license for overlapping part of same RSA through its subsidiary Radiofone.
Saying it lacked oversight, General Accounting Office (GAO) dismissed protests filed by Sprint and Global Crossing over hotly disputed, $450 million defense network contract awarded to WorldCom. Defense Information Systems Agency (DISA) awarded IP network contract to WorldCom before carrier filed for bankruptcy. Sprint and Global Crossing protested after WorldCom disclosed in June it had overstated earnings by $3.8 billion in 2001 and 2002. Carriers argued that DISA’s contract decision was based on faulty financial information from WorldCom, which meant Defense Research & Engineering Network (DREN) contract award should be void.
FCC officials were up in arms Thurs. over remarks by Center for Digital Democracy (CDD) Exec. Dir. Jeffrey Chester who said that media ownership studies released earlier in week were designed to “please the chairman” (CD Oct 2 p1). Chester later also suggested that 2 outside researchers, Prof. David Pritchard of U. of Wis.-Milwaukee and Asst. Prof. Mara Einstein of Queens College, City U. of N.Y., were influenced by large media companies with interests in deregulation. FCC Media Bureau Chief Kenneth Ferree said he was particularly upset at notion that members of FCC staff did their research with eye toward pleasing Chmn. Powell. “I flat out take umbrage at these personal attacks,” Ferree told us. “We didn’t cook this thing up.” He said he was open to criticisms of studies on their merits and in fact was hoping for that, “but to go after these professionals, these are honorable people, is just really a low blow.” Separately, Chester questioned integrity of study on viewpoint diversity in cross-owned newspapers and TV stations done by Pritchard. Pritchard acknowledged that his original research on subject was paid for by Quebecor Media of Canada but said FCC contacted him after he had article published in Communications Law Journal, and he FCC paid him to conduct expanded research project. Pritchard explained in phone interview that when he originally was approached by Quebecor, he told company officials that he did “objective social science” and would retain right to publish his findings, whether or not they supported Quebecor. Pritchard, chmn. of Dept. of Journalism & Mass Communication, said he had conducted similar research that was sharply critical of media consolidation for Center for the Study of Media at Laval U. in Canada. FCC never tried to influence his findings, he said: “I got no pressure whatsoever from anybody at the Commission that the results should go one way or the other. And I think the study, I think it’s not black and white.” He said his work was “rigorously objective” and he would “never cater to the whims of a funder.” Pritchard studied 10 commonly owned newspaper-TV combinations and their coverage of 2000 Presidential campaign. He said he found 5 combinations exhibited similar slant, 5 exhibited divergent slants. Chester had pointed to Einstein’s job from 1994 to early 1999 as dir.-mktg., NBC TV, as evidence that she brought bias to her work. Einstein, of Dept. of Media Studies, denied that, saying core of study originally was doctoral dissertation and had nothing to do with her old job. Her study found that financial interest and syndication rules didn’t improve program diversity and that TV networks were significantly influenced by financial incentives associated with programming ownership. “This was done as completely independent research,” she said. Ferree said researchers were chosen by FCC’s Media Ownership Working Group because of their expertise, not ideology, and Powell and his office weren’t involved in choosing them. “None of them were picked to get some particular result,” Ferree said. What’s more, he said, FCC still is reviewing studies and they could be interpreted any number of ways, even as evidence that current media ownership rules were working. “We're a long way from trying to figure out what these all mean,” he said. Chester, for his part, stood by earlier comments, telling us he believed “the FCC process is a corruptive process.” CDD will raise what it charges are inconsistencies in regulatory treatment of cable companies, specifically lack of open access requirements, when it files comments on recent FCC media ownership reports. Chester told New America Foundation Wed. that media ownership issues related to open-access requirements for cable. American Civil Liberties Union (ACLU) has joined CDD in push to require cable companies to open networks to competitive ISPs. ACLU and CDD said there were fears that cable companies could restrict access to Web sites, particularly those affiliated with cable companies’ competitors. Chester said FCC was using Internet as rationale for loosening media ownership rules under premise it provided outlet for different viewpoints. But without open access rules on cable or media ownership restrictions, cable is likely to dominate Internet content and access in future, he said. “This gives [cable companies] what they want in a pretty package,” Chester said. “The Internet as we know it is an endangered species. This is a clear attempt by a handful of companies to extend their control from TV viewership to broadband.”