FCC Wireless Bureau granted request for waiver of cellular cross-interest rule for Alltel subsidiary CenturyTel Wireless. Order, released Fri., allows CenturyTel Wireless to acquire limited partnership in Lafayette MSA from CenturyTel. Last summer CenturyTel closed on $1.6 billion sale of its wireless business to Alltel. At the time, companies didn’t submit CenturyTel’s 49% noncontrolling stake in Lafayette to FCC for approval because Alltel’s acquisition of that interest would have been barred by cellular cross- interest rule. Instead, companies submitted separate waiver requests. Lafayette has B-side cellular license for parts of rural service area in La. CenturyTel needed waiver because Alltel held A-side cellular license for overlapping part of same rural service area (RSA) through its subsidiary Radiofone. Cellular cross-interest rule, which FCC recently lifted for urban areas but kept intact for rural markets, bars carrier with controlling stake in licensee for one channel block in cellular geographic service area from owning more than 5% in licensee for other channel block in overlapping cellular area. Bureau had to decide whether waiver of cellular cross-interest rule for part of Iberville Parish, La., would create “significant likelihood of substantial competitive harm” and whether it was in public interest. Agency said it used not just overlap area of licensees’ to judge competitive risk but broader Baton Rouge Basic Trading Area as relevant market. Six wireless operators serve that area --Alltel, AT&T Wireless, Cingular, Nextel, Sprint PCS, Verizon Wireless. No operator offers geographic differential pricing in area, order said, which means consumers face same set of price and service options regardless of where they live in area. Under deal, general partner in Lafayette partnership agreement retains operational control, with Alltel simply replacing CenturyTel as minority partner without control, FCC said. “This transaction is not in the nature of a horizontal consolidation,” it said. “The number of competitors is not reduced and concentration not increased in any market.” Agency concluded “the market is in general competitive with 6 providers offering service at similar prices.” Overlap area is very small in relation to larger Baton Rouge market and it’s not likely Alltel or Cingular would have incentive or ability to charge discriminatory prices in either smaller overlap market or larger Baton Rouge area, Commission said.
Notable CROSS rulings
Sen. Feingold (D-Wis.) re-introduced radio ownership bill just in time for today’s (Thurs.) Senate Commerce Committee hearing on issue. He will be lead witness in hearing that drew concern from committee members in hearing on telecom competition earlier this month. Senators on both sides of isle raised concerns about media consolidation and radio was mentioned frequently.
FCC granted Comcast 45-day extension to divest or integrate 5 SMATV systems in areas where Comcast and AT&T Broadband overlapped. At the time Commission approved Comcast’s merger with AT&T Broadband, it conditioned that approval on Comcast complying with cable-SMATV cross- ownership rule within 60 days of merger’s closing. Merger closed Nov. 18, so deadline for compliance was Jan. 17. Comcast said it had either divested or integrated most systems in question but on 5 of them needed more time, through March 3, to complete negotiations, satisfy local franchise requirements and finalize divestiture or integration of systems. Comcast argued, and FCC agreed, that extension wouldn’t unduly harm diversity or competition in relevant markets.
Docket for FCC’s rulemaking on broadcast ownership showed consumer groups and unions generally pitted against companies. Comments were due Thurs. (CD Jan 3 p1), and FCC’s Web site, which generally runs behind, had logged 1,669 filings as of Fri. afternoon.
NAB proposed that FCC adopt new approach to boost prospects of struggling local broadcasters by allowing duopolies under certain circumstances. Under NAB’s proposal, Commission would adopt presumptive “10/10” rule for allowing TV duopolies in designated market areas (DMAs). Under that standard, 2 stations each with year-long average 7 a.m.-1 a.m. share of less than 10 could be commonly owned, and station with share of 10 or more could be co-owned with another with share of less than 10. “This reformed rule would provide needed financial relief for struggling lower rated stations, especially those in medium and small markets, while still promoting diversity and competition by preventing the combination of 2 high-rated stations in the same market,” NAB said in filing at FCC.
Among annual awards given by Legg Mason’s Washington office for odd occurrences in policy circles was Mother Teresa Award to Qwest CEO Richard Notebaert for saying Qwest didn’t compete in other Bell territories because it would be “wrong.” Others: (1) Mathematician of the Year award to Sen. Lott (R-Miss.) for saying Jonathan Adelstein was too young to be on FCC, even though he was older than Chmn. Powell or Comr. Martin. (2) St. Peter’s Dilemma Award to John Rigas for policy of not running pornography on Adelphia cable systems while apparently committing fraud. (3) “Miss Manners Award for prompt thank-you notes” to USTA for announcing, less than week after House passed Tauzin-Dingell bill, that Rep. Dingell (D-Mich.) would get its Telecom Lifetime Achievement Award. (4) Seize the Day award to SBC executive for saying WorldCom’s financial troubles were caused by unbundled network element platforms (UNE-Ps). (5) Award for “best PR move” went to Wi-Fi for changing its name from 802.11b because “nothing named 802.11b could ever be hot.” (6) Sen. Lieberman (D-Conn.) got “Marshall McLuhan Medium Is the Message Award” for launching “national broadband strategy” with e-mail glitch that spammed reporters with dozens of copies of his White Paper. (7) Ex-Qwest CEO Joseph Nacchio got “Impossible Dream” Award because he “managed to drive a Bell company to the brink of bankruptcy.” (8) Ex-WorldCom CEO Bernard Ebbers got similar award because he “managed to bring MCI to the brink of bankruptcy.” (9) U.S. Appeals Court, D.C., got special award for striking down FCC’s cable-bcst. cross-ownership rules on ground that agency could retain rules only if they were “necessary” to serve public interest: “The FCC asked the court to define ‘necessary’ [and] the court responded that it was not necessary to define ‘necessary’ to judge the rule not necessary.” (10) Legg Mason also cited several “meetings we'd most like to attend,” including “any meeting” between FCC Chmn. Powell and Comr. Martin.
Global Crossing told FCC it supported AT&T’s petition to make phone-to-phone IP telephony services exempt from access charges. Commission should “move decisively to protect all Internet-protocol-based telephony services… from de facto regulation unless and until… the Commission addresses the unique characteristics of IP telephony in a rulemaking proceeding,” company said. FCC “must be careful not to hold back the natural development of these services by imposing inflated costs and outdated regulatory models on this interconnection,” Global Crossing said. It also urged FCC to “explicitly rule that the classification of IP telephony is within its exclusive jurisdiction and thus subject to federal preemption.” That would assure that “national policies regarding interstate IP telephony traffic would not frustrated by a patchwork of conflicting state decisions,” company said. USTA urged FCC to deny petition, saying “there is absolutely no parallel policy justification for carving out a different access rate for AT&T in the circumstances presented in its petition.” USTA said petition asked basic policy question of whether customer-determined information, without any change, could be defined as information service rather than telecommunications because of platform used to transmit it: “USTA submits that such transmission is telecommunications regardless of the fact that it is transmitted over AT&T’s Internet backbone facilities.” USTA also warned of “devastating” effect on universal service “if carriers are permitted to escape classification as telecommunications services providers solely by migrating customer transmissions to IP-based networks.”
Coalition of labor groups released new study Wed. critiquing research put forth by FCC and calling on agency to defend its current media ownership rules as public’s only protection against what they described as dangerous industry consolidation. AFL-CIO, Writers Guild of America (WGA), American Federation of TV & Radio Artists (AFTRA), and Newspaper Guild/Communications Workers of America (CWA) predicted loosening rules would lead inevitably to more mergers and acquisitions in media and, as byproduct, erode U.S. democracy by stifling diversity and silencing some voices.
FCC might give some relief to ILECs concerned about uncollectible access charges, but probably not to extent they sought in requests pending at Commission, Legg Mason analysts said in report. “The agency may, after scaling back and tightening up the proposed criteria, provide at least some ILECs greater authority to require security deposits or advanced payments,” report said. “Smaller, rural incumbents could be the biggest beneficiaries because the problem is relatively greater for them.” Such action would have greatest effect on long distance companies and competitive LECs, while wireless carriers would see least impact because their monthly access bills were smaller by comparison, Legg Mason said. BellSouth, SBC, Verizon and rural ILECs affiliated with National Exchange Carrier Assn. (NECA) have filed new tariffs at FCC that would increase their ability to collect deposits from companies they considered not credit worthy. Tariffs have been opposed by AT&T, Sprint and others that argue proposed criteria for deposits is too sweeping. FCC must act by Jan. 2 on BellSouth’s tariff revision, first one filed, but agency could move sooner by issuing general guidelines, report said. Meanwhile, NECA defended its request for stronger deposit provisions, contending that existing rules didn’t adequately protect small telcos against defaults. Small rural telcos are owed about $70 million as result of Global Crossing and WorldCom bankruptcies, NECA told FCC Thurs. in response to oppositions. NECA said its proposal to use bond ratings as criteria for creditworthiness was “standard objective measure of a company’s ability to pay debts.” Shortening termination notice period to 10 days from current 30 leaves “ample time for customers to dispute or pay their bills.”
ANAHEIM -- Regulators shouldn’t be too quick to set rules for broadband services because those technologies still are in nascent stages, cable attorneys said on panel at Western Show here Wed. Speaking to audience of 30 on legal issues facing cable operators, NCTA Senior Vp-Law & Regulatory Policy Daniel Brenner said he hoped FCC won in case before 9th U.S. Appeals Court, San Francisco, in which Media Access Project, Brand X and others challenged Commission’s decision to declare cable modem “interstate information service.”