LAS VEGAS Role of govt. in broadcast content regulation remained divisive among FCC officials at NAB convention here Mon. FCC Comr. Ness said content regulation generally shouldn’t be govt. responsibility, but broadcasters “have a responsibility” to “draw a distinction between what sells well and what serves the public well.” However, Jay Friedman, aide to FCC Comr. Tristani, said idea that First Amendment foreclosed regulation of TV violence was wrong.
Notable CROSS rulings
Alcatel lawsuit against Loral for allegedly violating its contract by negotiating sale and improperly passing “confidential information” to rival Lockheed Martin (LM) may be decided by international arbitrator if 2 sides can’t resolve their differences, officials said. Complaint alleges Loral has “ignored contractual rights” of Alcatel, withheld information from Alcatel about Loral operations and held negotiations with 3rd parties such as LM. Suit is first public claim that Loral is negotiating with LM, though Loral CEO Bernard Schwartz in March 31 news conference at Satellite 2001 had mentioned sale or merger was possible (CD April 4 p4). Official close to LM expressed skepticism about Lockheed-Loral deal, saying: “You have to consider the source.”
Leap Wireless urged FCC to not roll back wireless spectrum cap, saying market for commercial mobile radio services hadn’t developed enough to justify eliminating ownership restrictions. Like larger carriers that touted research by economists to bolster position that cap should be altered (CD April 17 p2), Leap cited data from U. of Md. economics prof. Peter Cramton to illustrate that cap had public interest benefits. Company said Cramton research showed that its entry into market would drive down prices average of 37% and provide consumers with replacement for landline phones. Leap also took issue with extent to which large carriers needed more spectrum. “To be sure, they would prefer to have more spectrum, but no carrier could possibly need more than 45 MHz,” Leap said in comments at FCC on notice of proposed rulemaking examining whether there still is need for spectrum cap and cellular cross-ownership rules. Leap cited extent to which carriers could increase efficiency of existing spectrum holdings by upgrading subscribers to digital from analog. Carrier cited example of AT&T, which it said had 30% analog subscribership and could double system capacity by upgrading that component. Leap also argued that carriers shouldn’t have cap lifted to accommodate additional spectrum needs of 3G services. “To the extent that 3G equipment may create a demand for additional capacity, it will also furnish added supply: We can expect 3G equipment at the very least to double the spectral efficiency of existing equipment.” Rural Telecommunications Group and OPASTCO told Commission that spectrum cap and cellular-cross interest rules were “now obsolete.” Groups wrote: “These rules so constrain carriers that they have had a negative impact on the growth of competition in rural and underserved markets and in the rollout of new technologies in these markets.” Existing cap of 45 MHz, except in rural markets where it is 55 MHz, has anticompetitive effect because it potentially makes introduction of new services and expansion into adjacent areas illegal, groups said.
Several large wireless interests marshaled new research from economists to bolster arguments to FCC for relaxing spectrum cap, proposal that raised concern of some small carriers and largest wireless reseller WorldCom. In proposed rulemaking earlier this year (CD Jan 23 p1), FCC reopened examination of whether spectrum cap and cellular cross-interest rule for commercial mobile radio service (CMRS) providers still were needed. Spectrum aggregation limits are 45 MHz in most markets, except rural areas, where cap is 55 MHz. In comments to date, CTIA, Sprint PCS and Verizon Wireless presented economic data to show how wireless competition had grown, although Sprint’s numbers indicated largest markets “remain concentrated.” As for cross-ownership rules, Verizon wrote: “Duopoly market structure -- the entire premise for this rule -- of course is gone.”
FCC Chmn. Powell expressed strong doubts about future importance of traditional over-the-air TV in nation where more than 80% of households rely on cable and satellite for their TV viewing. In news conference on TV issues at Commission hq Thurs., Powell said he didn’t see agency intervening much further in such marketplace issues as disputes over DTV standards and network affiliate practices because he wasn’t sure how most consumers were affected. With combined cable and satellite penetration seemingly on its way toward 90% of U.S. TV homes, he argued that such broadcasting industry battles were relevant to increasingly fewer viewers.
Don’t expect FCC to be as eager to place issue-oriented conditions on merging companies as past Commissions, FCC Chmn. Powell told reporters in news conference Thurs. on telecom issues. He said FCC votes depended on all 5 commissioners but he wouldn’t be pushing for kind of conditions that were imposed on SBC- Ameritech, Bell Atlantic-GTE and other mergers. Powell held 2 news conferences for trade reporters Thurs., answering questions on video issues in morning session (see separate story) and telecom questions in afternoon.
U.S. residents are buying Canadian satellite equipment that can receive channels that have no rights to distribute programming in U.S., said Peter Classon, pres. of Canada’s 2nd largest satellite TV distributor, Star Choice Communications. “It’s a reverse gray market,” he said, referring to more typical schemes of Canadians’ using U.S. addresses in order to receive U.S. channels. Classon said his company just became aware of problem and was investigating how widespread the practice was and what remedies were available: “We're gathering facts as to whether or not there’s an awful lot of receivers activated at one address.”
Allowing JumpTV to stream video of U.S. TV stations into Canada “could cripple, if not destroy, the U.S. and Canadian successful system of free, local, over-the-air television,” NAB said in petition filed Mon. with Copyright Board Canada. NAB said JumpTV’s promises to prevent U.S. consumers from accessing U.S. video from its site couldn’t be proved, and allowing Internet streaming into U.S. would violate international copyright rules.
Ill. Supreme Court ruled wireless carriers were exempt from municipal telecom right-of-way tax. Decision settles dispute over municipal infrastructure maintenance tax authorized by 1998 state law. Localities under that law could impose 1% tax on carriers, which passed it along to their subscribers. Chicago could levy 2% tax. About 380 of state’s 1,290 municipalities have chosen to impose tax, intended to help localities recover costs of maintaining public rights-of-way used by telecom carriers for their network facilities. Court was ruling on cross appeals by local govts. and telecom carriers growing out of lower court decision that tax was unconstitutional. State Supreme Court upheld application of tax to wireline carriers but said it couldn’t be applied to wireless carriers because they used airwaves and not terrestrial public rights-of-way. Court disregarded arguments by municipalities that main purpose of tax was to provide cities with additional needed revenue. It said that if that was legislature’s intent, it wouldn’t have associated tax with use of rights-of-way. Court called it “absurd” to impose right-of-way tax on wireless providers “who do not own, operate or maintain any equipment within public rights-of-way.” Tax brings city of Chicago $45 million annually in revenues, with $10 million from wireless carriers. City also may have to refund $30 million collected from wireless carriers since tax was authorized in 1998. Decision will take effect with April 26 official publication of decision.
FCC review of broadcast station ownership caps won’t focus solely on market concentration rule, but also will take programming diversity into consideration, Chmn. Powell said March 29. He told House Telecom Subcommittee that Commission in May also would review broadcast-newspaper cross-ownership restrictions. NAB spokesman said it was “delighted that the FCC is going to expeditiously review” cross-ownership issue.