Level 3 said it would provide Prodigy with dial-up modem Internet access service. Agreement follows Level 3’s buying rights to offer service to former customers of NaviPath, which suspended dial-up operations week ago. With addition of Prodigy, Level 3 provides service to 9 largest dial-up Internet service providers (ISPs) in U.S. Company said it had signed or was pursuing deals with other NaviPath ISP customers. Level 3 platform will allow Prodigy to support pending ITU v.92 modem standard intended to replace v.90, or 56 kbps modem, now used by dial-up ISPs. NaviPath had been one of few ISPs to begin tests of v.92 modems. New modems use updated chipset to improve dial-up services, which proponents say will slow migration of dial-up customers to broadband DSL or cable modems. Improvements include: (1) Quicker connections of 18-20 sec., compared with current 30-35 sec. with v.90. (2) Faster uploads from revised data compression to 48 kbps from 33.6 kbps. (3) Modem-on-hold function allows users to put data connection on pause while answering incoming phone call.

Proposal for terrestrial DTV copy protection and encryption by 5 Hollywood studios has been delivered to Digital Transmission Licensing Authority (DTLA), Pres. Michael Ayers told us (CD July 23 p6, July 19 p3). Memo of Understanding among Disney, MGM, Paramount, 20th Century Fox and Universal will embrace DTLA’s Digital Transmission Content Protection (DTCP) for cable and satellite DTV, as Sony and Warner have, and proposed digital watermark for terrestrial broadcasts, Disney Exec. Vp-Govt. Relations Preston Padden told us last week. Ayers said DTLA had no comment on studios’ proposal yet, pending review by member companies. Meanwhile, he offered additional details on how hard- disc PVRs would function under DTCP’s “Copy Never” mode for time- sensitive pay-per-view or video-on-demand programming. Content owner would allow PVR to capture program and pause it during viewing for “rolling windows” at least 90 min. after each increment is received, Ayers said. For example, if 2-hour movie is paused 15 min. into viewing, increment of program beginning at 15th minute would be accessible for at least next 90 min. Same 90-min. viewing window would apply to all subsequent pauses, he told us. Studios are free to offer less restrictive windows, but 90 min. is minimum viewing period, Ayers said. After increments are viewed, they no longer are accessible from PVR. Pause increments needn’t be time-based but could be counted according to frames, megabytes transmitted, etc., Ayers told us.

5C digital copy protection technology standard developed by TV set makers and software developers can accommodate watermark technology designed to protect over-air broadcasts against unauthorized copying, Digital Transmission Licensing Administrator (DTLA) Michael Ayers confirmed (CD July 19 p3). Although 5C system doesn’t incorporate own watermark, it won’t strip out one or more “consensus watermarks” that might be agreed upon by industry groups, he told us. Ayers also said 5C’s strictest “copy never” restrictions still would permit personal video recorder users to pause pay-per-view, video-on-demand and other time- sensitive programming for at least 90 min. after movie or show had ended.

Cracking Hollywood’s solid wall of opposition to 5C digital copy protection technology standards, Sony Pictures Entertainment and Warner Bros. signed long-term licensing agreements with leading TV set makers and software developers. As expected, accords between 2 studios and Digital Transmission Licensing Administrator (DTLA) mean Sony and Warner Bros. digital programming distributed through cable and satellite set-top boxes will be encrypted against copying by TV viewers and Internet users without studios’ permission, with copying restrictions varying according to 3 general classes of programming. But deals don’t cover over-air broadcasts, main sticking point that still prevents other 5 major studios from reaching agreement on copy protection standards. Terms weren’t disclosed.

TiVo reported slightly smaller loss than expected by Wall St. in its first quarter ended April 30 and said it received patent covering “many of the key inventions” for its personal video recording (PVR) equipment and software. TiVo said its quarterly net loss more than doubled to $50.2 million from $23.4 million in year-ago period. It said revenue grew to $3.2 million from $499,000 year earlier as it added 35,000 new subscribers to its PVR service to reach 189,000. It said it now had more than 200,000 customers. Separately, TiVo said U.S. Patent & Trademark Office awarded company patent for such core PVR features as time- shifting programs, processing and synchronizing various multimedia streams in TV signal and storage format that supports pausing, fast-forwarding, rewinding, instant replays and slow motion. TiVo Chief Technology Officer James Barton said company, seeking fresh licensing revenue, would aggressively enforce its patent.

Adelphia plans to start offering video-on-demand (VoD) service on subscription basis in 2 markets, after signing programming deals with HBO, Showtime Networks and Starz Encore Group. Speaking at investors’ conference late last week, Jim Brown, vp-finance, said Adelphia would roll out subscription VoD service in Cleveland and western Pa. next month. He said Adelphia would offer service as part of its overall premium-channel package, instead of charging separate, extra fee for VoD, making it first major cable operator to do so. Such other MSOs as AOL Time Warner, Charter and Insight have been tinkering with charging additional fees for VoD services that also feature such personal video recorder (PVR) functions as fast-forward, stop, rewind and pause controls.

As expected, state regulators offered support while most competitors opposed Verizon’s request to offer long distance service to its small customer base in Conn. Only surprise in comments filed with FCC Mon. came from AT&T, which told agency it wouldn’t object to application as long as Verizon was held to its promise to maintain same rates, terms and conditions in Conn. as it offered in N.Y. state. Verizon serves only 2 communities in Conn., both using equipment located in N.Y. state, where carrier already has received Sec. 271 long distance approval from FCC.

In light of sweeping 9th U.S. Appeals Court, San Francisco, ruling that municipalities had “very limited and proscribed” role in regulating telecom services (CD May 1 p7), Portland, Ore., is abandoning efforts to address issue of imposing franchise fees for cable modem services, city official said. Court had invalidated telecom ordinances of Auburn and more than dozen other Wash. cities on ground that federal law allowed “control over rights-of- way itself, not control over companies with facilities on rights- of-way.” City in Feb. had released draft telecom ordinance (CD Feb 7 p7) designed in part to stem loss of potential revenue from cable modem franchise fee following earlier 9th Circuit decision classifying cable-delivered Internet as telecom service. That was in response to incumbent cable provider AT&T’s insistence that it didn’t require telecom franchise for its high-speed Internet service in view of court ruling. Official said court in latest decision had held that federal law preempted requirements for fees unrelated to local cost of managing public rights-of-way, although city’s franchise process managed other aspects of how companies used rights-of-way. Cities are left in new world of telecom convergence without much guidance from federal law, he said, and although Portland “strongly disagreed” with court’s interpretation of federal law it didn’t want to get into costly litigation. “I imagine that cities in the 9th Circuit jurisdiction will give pause to proposals for new telecom regulations or laws,” official said.

ReplayTV signed long-term licensing agreement with Motorola to integrate former’s personal video recording (PVR) technology into Motorola’s digital cable set-top boxes, starting in fall. Under agreement, companies said, ReplayTV will be “a primary provider of core PVR software” for Motorola’s new advanced digital boxes, permitting cable subscribers to pause, rewind, fast-forward and record even live TV shows on their set-tops. Terms weren’t announced.

White House announced Fri. it intended to nominate 3 Washington insiders as FCC Commissioners: (1) Kevin Martin, FCC transition leader for President Bush and former aide to FCC Comr. Furchtgott-Roth. (2) Kathleen Abernathy, vp of startup network provider Broadband Office Communications, who is former U S West regulatory vp and one-time adviser to ex-FCC Comr. James Quello. (3) Mike Copps, who worked for Sen. Hollings (D-S.C.) for 15 years before leaving Hill in 1980s to work in private industry and finally Commerce Dept. in international trade area. Formal nomination won’t happen for several weeks while paperwork is prepared and security clearances completed. After that comes Senate confirmation process.