321 de minimis

FCC Enforcement Bureau fined WCOM(FM) Bayamon, P.R., $16,800 for “willful and repeated violations” of indecency rules, agency said. Bureau originally proposed $21,000 fine, but reduced it based on lack of prior violations.

With nod to growth of high-speed wireless devices in unlicensed spectrum, FCC unanimously approved further notice of proposed rulemaking at Thurs. agenda meeting to update its Part 15 rules for spread spectrum systems. Changes, sought by group of companies including 3Com, Cisco and Texas Instruments, would reduce amount of spectrum that must be used for frequency hopping spread spectrum systems at 2.4 GHz. Proposal responds to petition for partial reconsideration or clarification filed by 3Com and others over Aug. 2000 decision. That order had altered Commission’s Part 15 rules spectrum to allow spread spectrum devices in 2.4 GHz band to use wider frequency hopping channels for first time. Proposal adopted by FCC Thurs. also would eliminate processing gain requirement for direct sequence spread spectrum systems and would allow new digital transmission technologies to operate under same rules as spread spectrum systems. In general, proposal appears to update Part 15 rules to allow operation of technologies that employ smart hopping techniques to avoid interference in band. In general, changes aim to address coexistence of increased applications in 2.4 GHz, including by wireless technologies based on Bluetooth, Wi-Fi and HomeRF wireless networking systems.

Speaking at European Institute roundtable in Washington Thurs., Robert Verrue, dir.-gen. Information Society for European Commission (EC), demurred from making predictions about proposed framework directive on transparent telecom mechanisms and market power definitions. Last month at meeting of Telecom Council, European Union member states balked at proposals, expressing displeasure over changes to how market power is defined and possibility that EC could require members to amend national regulatory measures, Verrue said in lunch speech. National regulators at council meeting also disagreed with extent to which proposal would place spectrum decisions within scope of proceeding on transparent regulations, he said. “The Commission does not agree with these changes,” Verrue said. Directive is now headed to European Parliament for 2nd reading, where decision will be made over whether to reinstate some or all of original concepts put forward by EC, he said. “At this stage, I am making no predictions about what the final outcome will be,” he said. “The package represents a balance between flexibility and harmonization. The Commission will be seeking to maintain this balance in the final legislative package.” During question and answer session, Verrue was asked about telecom issues he expects to emerge in upcoming dialogue between U.S. and EU. “The time would be right in comparing the U.S. experience in local loop unbundling with what we are trying to do,” Verrue said. In next several days, EC will be posting report on its Web site outlining experience in EU to date with local loop unbundling initiatives. In just past 6 months, progress has been seen, Verrue noted. “A lot is being undertaken but at the same time it’s not enough,” he said. Other telecom issues that may come up in dialogue with U.S. are license specifications, he said. Verrue declined to comment on recent FCC approval of pending VoiceStream-Deutsche Telekom merger, saying only: “I'm happy to be at the end of it.” Panel discussion earlier in day centered around international experiences with deploying 3rd generation wireless systems. Ruprecht Niepold, head of EC’s mobile and satellite communications unit, said one policy alternative for addressing challenges of building out 3G networks might be network sharing, which he said ranges conceptually from site sharing to deeper cooperation among wireless players. In Netherlands, five 3G license-holders are talking to each other about setting up possible model for infrastructure sharing, he said. In part, this model would entail independent company deploying 3G infrastructure network, which all operators would have access to, he said. Such system would be transition until fuller deployment of 3G services, he said. Under this type of model, “regulators will have to be vigilant on how and under what terms infrastructure could be shared,” said Michael Kennedy, corporate vp-dir. of Motorola’s global govt. relations office.

U.S. Appeals Court, D.C., seemed more concerned Wed. about procedural questions than merits as it heard arguments in Qwest challenge to FCC’s pricing rules for traffic that travels between ILECs and paging companies. Issue, outgrowth of reciprocal compensation regime, arose as result of dispute between Qwest and TSR Wireless, one-way paging company in Ariz. Qwest had billed TRS for dedicated facilities needed to pass paging calls to TSR customers. FCC sided with paging company and said charges weren’t legal.

Skybridge is pushing FCC to quickly issue conditional licenses to 7 applications from 5 companies for Ka-band service because of rapidly “changing market conditions” and impending departure of 3 commissioners, Vp Mark MacGann told us in interview Tues. MacGann, Senior Vp-Business Development & Mktg. Charlene King and attorney Jeffrey Olsen addressed obstacles facing company following Commission announcement last Thurs. (CD May 4 p3) of proposed rulemaking for spectrum-sharing plan for nongeostationary satellite orbit (NGSO) and fixed satellite service (FSS) and to determine intraservice rules for new applications, including Internet, online access, data, video and telephony. MacGann said with much of company financing still expected to come from Wall St., Skybridge would like to show investors company was moving forward.

Cablevision Systems posted $1.13 billion first-quarter profit vs. year-earlier $115.5 million loss, thanks to sale of $1.4 billion in cable assets. Cablevision, which still had operating loss of $56.3 million, credited most of gain to $825 million sale of 20% stake in 4 national cable networks to MGM. Company said adjusted operating cash flow edged up 2% to $213.6 million on pro forma basis on net revenue increases of 6% in its cable and commercial telephony and data operations and 23% in Rainbow Media Group programming networks. Cablevision, which has just under 3 million cable subscribers, said it added 9,000 basic and 5,000 Optimum TV customers in quarter and 65,000 cable modem subscribers to reach total of 303,800, generating $22.9 million in revenue. In earnings conference call Tues., CEO James Dolan said MSO would install 100,000 Sony digital cable set-top boxes this fall and another 1.1 million by year-end 2002. Target is to have digital service pass 2.4 million homes and have 500,000 customers by late next year, he said. New digital box will feature IP telephony, e- mail and video-on-demand (VoD) services at start, with latter platform being supplied by SeaChange International. Cablevision officials declined comment on pricing for digital service and impact it might have on subscriber revenue, which now averages $49.80 per month. Company said it would spend more than $400 million over 3 years, including $270 million in 2002, to upgrade to digital cable, plus $360 million on set-tops. It forecast 5% take rate for VoD, half its original projection.

International calling prices continued to decline last year, FCC said. Agency in May 4 report prepared for Senate Commerce Committee ranking Democrat Hollings (S.C.) credited 1997 World Trade Organization (WTO) Basic Telecommunications Agreement for price declines. In 1996, year before FCC Benchmarks Order and WTO agreement, average price of international phone call originating from U.S. was 74 cents per min. By 1998, rate had fallen 25% to 55 cents, in 1999 to 51 cents. FCC expects even lower rates by 2003 as order is implemented fully. Prices on competitive routes fell more dramatically, report said, to as low as 10 cents on U.S.-U.K. route.

XM hopes it will be ready to “roll” with launch today (Tues.) of 2nd satellite, nicknamed “Roll.” Company launched first satellite, “Rock,” March 18 after problems postponed scheduled Jan. 8 flight for “Roll,” originally due to be XM’s first satellite in orbit (CD Jan 11 p2).

Writers of TV programs and movies will receive Internet and DVD residuals for first time under agreement reached late Fri. by Writers Guild of America (WGA) and Alliance of Motion Picture & TV Producers. Deal was reached after 3 month of negotiations (with one month hiatus) and will cost studios about $41 million more in next 3 years than under 3-year contract that expired June 1, WGA said. At news conference announcing deal, Alliance refused to estimate cost of new agreement to its members. Under agreement, writers will receive 3% increase in minimum pay for screenplays and teleplays, with a 1.2% residual for TV shows or movies distributed on Internet -- plus payment for original Internet content that later is adopted for TV or movies. Significant part of deal is agreement by Fox TV Network to begin in 2 years to pay residuals to writers equal to that paid by ABC, NBC and CBS in 2 years; under old contract, Fox had been paying only partial residuals as “fledgling” network. Following WGA-Alliance deal, there’s much optimism in Hollywood that Alliance also will now be able to reach quick agreement with Screen Actors Guild (SAG) and American Federation of TV & Radio Artists (AFTRA), whose contract with movie makers and networks expires June 30. Actors unions already have outlined areas they want to negotiate and they were said to be more limited and less demanding than in previous talks. After WGA agreement, actors issued statement saying they would study deal “to see if it will be helpful in finding a way to address the specific needs of actors.” SAG negotiations will be led by Brian Walton, head of WGA until 3 years ago.

Federal court decision last week on ILEC access charges has ramifications for other proceedings such as FCC’s attempts to overhaul access charge and universal service regimes for rural telcos, industry observers said Mon. Fifth U.S. Appeals Court, New Orleans, ruled May 3 that ILECs couldn’t recover their Universal Service Fund (USF) contributions through access charges levied on long distance companies. Court, which remanded FCC regulations for 2nd time on this issue, said such action constituted implicit subsidy, which is barred by Telecom Act. At issue are contributions that all carriers must make to USF. Long distance companies, for example, recover those contributions directly from their customers. FCC in 1997 ordered ILECs to recover their costs from long distance companies as part of access charges. Fifth Circuit remanded that rule in 1999 because of implicit subsidy problem. Commission rewrote rule and said ILECs no longer were required to recover costs from access charges but were permitted to do so if they wished. FCC said it interpreted court’s decision to mean it couldn’t require contributions through access charges but instead had to give ILECs choice of how they recovered contributions. In latest ruling, court said FCC interpretation was wrong. It said ILECs couldn’t recover universal service contributions from access charges, period: “The distinction the agency draws between ‘require’ and ‘permit’ is one without a difference.” Court said its original ruling “turned on the recovery method per se, not whether the Commission permitted or mandated it.” AT&T Vp Joel Lubin said he was cheered by strong language court used in defining access charge recovery as implicit subsidy. Lubin said court’s ruling could affect decision FCC is expected to make Thurs. on rural universal service. At very least, proposals under study by FCC, such as one proposed by Multi-Assn. Group, should be revised to eliminate implicit USF subsidies in access charges, he said. AT&T and several other carriers proposed such action to FCC last month, Lubin said, so court’s ruling was pleasant coincidence. Appeals Court ruling doesn’t have as much effect on large price-cap-regulated ILECs because FCC directed them last year to stop recovering USF contributions through access charges. Action was taken as part of Commission’s adoption of CALLS proposal. Lubin said court’s strong statements barring implicit subsidies in access charges applied to other industry practices as well. Among them, he said, is practice of pooling carrier common line (CCL) charges for rural carriers. Because National Exchange Carrier Assn. (NECA) pools those charges, by nature they are not cost-based, he said. Pooling access charges discourages competition, he said. Competitors such as Western Wireless can’t share in that subsidy because it’s “buried in the pool,” he said. Judge Emilio Garza wrote decision. Also on panel were Judges Eugene Davis and Donald Pogue. Pogue concurred because he disagreed with 1999 decision, saying it might have gone too far