SAN FRANCISCO -- Judge’s order late Fri. permitting bankrupt @Home Corp. to cut cable modem service to 14 of its 15 cable partners set off 2 scrambles -- one by cable lawyers vowing to seek U.S. Dist. Court stay before weekend and other by @Home and cable operators to negotiate, under 12-hour deadline, sweeter revenue cut for @Home. At stake was: (1) whether more than 3 million residential customers would lose their high-speed access -- and with it access to e-mail and in some cases their own Web pages; (2) how much blame cable operators would catch; and (3)how much @Home might be worth coming out of bankruptcy sale or reorganization.

Whether Tues. Supreme Court decision dismissing appeal of 1995 Adarand case will have any impact on pending appeal of U.S. Appeals Court, D.C., rejection of FCC EEO rules depends on who you ask. Govt. official, who asked not to be named, said order would have no impact at all, while Andrew Schwartzman of Media Access Project believed it would. Had Supreme Court issued decision on new Adarand appeal (dealing with nonbroadcast matters but cited by Appeals Court in twice rejecting FCC rules as unconstitutional [CD Jan 17 p1]), he told us, ruling “would have had a dramatic impact” on pending appeal of rejection of FCC rules by lower court and would have made it much more likely that Supreme Court would accept that appeal. Govt. didn’t appeal FCC EEO ruling, but Minority Media Telecom Council (MMTC) did. After first accepting case, Supreme Court refused to issue opinion in latest Adarand appeal because, it said, new issues were brought up that never were considered by lower courts: “Petitioner [Adarand Constructors Inc.] urges us to take on this task ourselves and apply strict scrutiny to a complex web of statutes and regulations without benefit of any lower court review.” Justices haven’t announced whether they would accept MMTC appeal of FCC rules and U.S. Solicitor Gen. hasn’t filed govt.’s position with Supreme Court. Appeals Court rejected first set of FCC EEO rules in 1998, 2nd set of rules last Jan. In not joining MMTC appeal, FCC Chmn. Powell has said agency soon will come up with new set of EEO requirements that it expects will withstand court review.

Rather than rely on cable industry and public alone to provide data on FCC’s pending proceedings on cable access and horizontal ownership rules, Commission staff will do its own research and seek independent data to support any decisions by agency, Cable Bureau Chief Ken Ferree said Tues. at Schwab Capital Markets conference. When cable rulemakings were issued, Chmn. Powell and other commissioners stressed that they were depending on industry and public to provide data on which to develop record and base their decisions. However, public interest groups have complained that they lack resources to support such research and would be seriously outgunned by billion-dollar cable industry.

Public broadcasters will be allowed to accept ad money, as long as they limit those ads to programming on their excess DTV channel capacity that isn’t broadcast to general public, FCC ruled 3-1 Thurs. Commission said public broadcasters could solicit funding outside traditional sources -- donations from viewers, philanthropic organizations, corporate underwriters, govt. subsidies. It said ruling was intended to help public broadcasters make transition to DTV from analog, but it has no sunset provision, meaning alternative revenue streams still will be available after DTV transition is complete. Mass Media Bureau Chief Roy Stuart said money also could go into producing programming. Examples of kinds of services that may be offered as ancillary or supplementary in digital TV signal include subscription video, paging or voice messaging services, computer software distribution, data transmissions, interactive materials. FCC officials didn’t rule out subscription video offerings such as premium services much like HBO or Showtime delivered over cable systems. Commission did rule that noncommercial educational (NCE) TV licensees must pay fee to federal Treasury of 5% of gross revenue generated by those extra services, just like commercial broadcasters. Currently, public TV (PTV) doesn’t run commercials, but conversion to DTV would allow them to support several programming streams.

Media watchdogs say they're closely monitoring negotiations between Viacom’s UPN and advertisers for signs that product placements will become rampant in cable network’s fall shows. With increasingly bleak economy and tough ad environment for TV concerns, watchdogs expressed reservations about $30 million deal between UPN and advertisers represented by Omnicom Group, including Cingular Wireless, Gillette, McDonald’s, State Farm Insurance and others. Deal already is done, UPN official said, but details of “value-added” elements still were being worked out. Still on table are product placements in shows themselves, logo “bugs” in corner of TV screen and other corporate sponsorship ideas. “If commercial speech overwhelms artistic expression, that’s a source of concern,” critical observer said.

Industry analysts expressed doubts that consumer groups would be successful with their challenge to FCC rules capping number of subscribers cable companies could reach (CD Aug 6 p9). Analysts said it was unlikely U.S. Supreme Court would take case, but if it did, justices were likely to affirm ruling of U.S. Appeals Court, D.C., that overturned cap. Andrew Schwartzman of Media Access Project, which appealed to Supreme Court on behalf of Consumer Federation of America and Consumers Union, acknowledged high court was unlikely to take case, especially since FCC and Justice had bowed out. “We are not overly optimistic,” Schwartzman said. Nevertheless, public’s interest merits appeal, he said.

DBS industry will leave behind most of U.S. TV stations when new spot beam satellites are launched, according to study by Equal Airwaves Right Now (EARN), organization supported by 20 broadcast companies and consumer groups. At least 2/3 of U.S. market (1,100 TV stations) won’t receive local TV signals, said EARN study, The Left Behind Project. In news conference at National Press Club Tues., group cited new study as demonstrating why FCC should license competing services such as Northpoint. EARN Exec. Dir. Peter Pitts said “satellite giants” made decisions on must-carry “based on pure profit and politics” with no consideration of “public interest.” He said policy on local TV carriage was “wrong.”

U.S. Appeals Court, D.C., rejected petition by public interest groups for full court to reconsider its earlier decision striking down 30% cable ownership cap. In order received Mon. by Media Access Project, which represented consumer groups, D.C. Circuit turned down request to review March cap decision by 3- judge panel. Media Access Project Pres. Andrew Schwartzman said groups probably would file appeal of decision at U.S. Supreme Court, even though FCC Chmn. Powell had indicated that he probably would not go that route.

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.

In his first meeting with reporters as FCC chmn., Michael Powell was very upfront on several issues -- such as consumer protection, cable rates and 35% TV station ownership cap -- which has lead to both praise and criticism for positions he took (CD Feb 7 p2). On plus side, NBC Washington Vp Robert Okun predicted Powell would be “an assertive chairman with a market-oriented agenda, which is very refreshing.” Washington attorney Richard Wiley, who chaired FCC 1974-1977, called Powell’s statements “very learned, very erudite… He laid out his philosophy in very candid terms.”