Assuming FCC will declare Thurs. how cable modem service should be classified, Commission also is poised to adopt Notice of Proposed Rulemaking (NPRM) examining who has jurisdiction to regulate service. Question is important because, if FCC classifies cable modem service as “information service,” as is widely expected, cable operators could be vulnerable to additional demands from local franchising authorities (LFAs) for new taxes, fees, etc., Cable Bureau Chief Kenneth Ferree, who soon will head up new Media Bureau, said in interview Mon. He said NPRM would take “granular” look at implications of particular classification, whether it be as “information service,” “telecom service,” “cable service” or some other animal. He declined to say which it would be, but gave some insight into NPRM that’s expected at FCC’s agenda meeting: “The second step is, well, what does that [classification] mean? What are the implications?” Specifically, NPRM will seek to determine who has jurisdiction and what role FCC and LFAs will have in overseeing cable modem service. Ferree said he would like to see issue resolved before end of 2002.
Court of International Trade activity
Despite efforts by U.S. Trade Representative (USTR) to bring Mexico, Japan and S. Africa into compliance with World Trade Organization (WTO) telecom market-opening commitments, carriers and equipment suppliers told USTR that progress still lagged. In annual USTR comment period, communications companies also singled out new WTO member China as needing to step up reform efforts, particularly on challenges that loom for creating independent telecom regulator. USTR sought comments as part of annual review on effectiveness of U.S. trade agreements involving telecom products and services, including WTO basic telecom agreement. This marks first comment period on operation of U.S. telecom trade agreements opened during tenure of U.S. Trade Representative Robert Zoellick. Compared with last year, fewer comments focused on compliance with telecom market-opening commitments of European Union member states. Ranks of companies providing USTR feedback also didn’t include past commenters such as Global Crossing and Covad, both of which have entered Chapter 11 protection since last year’s comment period.
Competitive telecom industry is “at a crossroads” because decisions made by policymakers this year will determine its future, CompTel Pres. Russell Frisby said Thurs. at news briefing. There’s too much focus on Bell company investment and not enough on real innovators, competitive telcos, Frisby said. CompTel has 5 policy objectives for year, he said: (1) Assuring CLECs have access to Bell networks is most important, with CompTel paying particular attention to FCC’s triennial review of policy for unbundled network elements (UNEs). CompTel wants increased availability of unbundled local switching and UNE combinations, he said. FCC’s proposals to set performance standards for UNEs and special access also are key to network access, as is defeat of Tauzin-Dingell bill, Frisby said. (2) Assuring cost-based pricing, with CompTel anxiously awaiting U.S. Supreme Court decision on legality of TELRIC (Total Element Long-Run Incremental Cost) pricing, which it supports. (3) Enforcing rules because without that, “the results of all procompetitive FCC proceedings will be moot.” (4) Providing “reasonable and nondiscriminatory access” to rights-of-way, following up on CompTel’s recommendation last year that uniform process be set. (5) Assuring international market access. CompTel is concerned that “growing number of countries” aren’t complying with trade agreements, he said.
Gemstar TV Guide International and EchoStar, Pioneer and Scientific Atlanta will square off at International Trade Commission (ITC) Dec. 3 in 10-day trial on Gemstar’s allegations that 3 other companies infringed on patents covering its interactive program guide (IPG). ITC has power only to issue injunction barring sale of infringing product. But its ruling, expected by March, is likely to weigh on separate patent infringement suit Gemstar filed against same companies that’s pending in U.S. Dist. Court, Atlanta, Gemstar CEO Henry Yuen told analysts in earnings conference call late Wed.
Telecom bills in Wis., Ill., Minn. and Mich. legislatures are staying alive but may not see final action this year, which means they all would carry over to 2002 sessions. Wis. Senate unanimously passed bill prohibiting information providers from transferring calls from toll-free numbers to pay-per-call service numbers or international numbers. Bill (SB-35) would make offense criminal misdemeanor punishable by fine of up to $10,000 and up to 90 days in jail. Measure now is before Assembly’s Information Policy & Technology Committee. Bill also would require preamble at start of pay-per-call service directing callers to inform Wis. Dept. of Agriculture, Trade & Consumer Protection if they were connected without consent. Telecom carriers also would be required to furnish Wis. Dept. of Justice with data on call transfers between toll-free and pay-per-call numbers or international numbers. Legislation would prohibit telephone carriers from billing for pay-per- call providers convicted of rule violations, but would allow PSC to grant waivers from billing ban on case-by-case basis. Wis. Senate also passed bill (SB-260) that would conform state wireless service taxation to federal Mobile Telecom Sourcing Act. Wis. bill would tax mobile services if customers’ “place of primary use is within this state, regardless of where service originates or terminates.” Bill now is before Assembly Ways & Means Committee. Recent Ill. bill to prohibit publicly funded schools from selling their students’ personal information to marketers (HB-3641) has been assigned to House Rules Committee. But with only 6 session days remaining before Ill. House adjourns for year, it probably will be carried over to 2002 session. State Rep. John Curry (D-Mt. Zion), bill sponsor, said legislation would ensure that tax-supported school districts or public colleges and universities protected student identities. Bill would bar institutions from selling lists of student names, postal addresses, phone numbers or e-mail addresses to financial institutions that issued credit or debit cards or to commercial business enterprises such as retailers or telemarketers. New bill in Minn. legislature would prohibit toll charges for phone calls that originated and terminated within same school district. Supporters said bill (HF-2585) would help parents and students in sprawling rural school districts who now paid toll charges on calls between school and home. Measure has strong support from rural Democrats but strong resistance is expected from House Republicans. Bill is before House Regulated Industries Committee. Mich. Senate Judiciary Committee recessed for Thanksgiving break without taking action on House-passed “cybercourt” bill (HB- 4140) that would establish electronic online court with full legal authority to address business-to-business civil disputes over $25,000. Bill was scheduled for consideration Nov. 8 but was taken off calendar just before committee session. Panel will return Nov. 28 and will remain in session until mid-Dec.
New Iridium still is awaiting FCC approval of license transfer, months after offering service under new ownership (CD June 7 p3). Space System License, Inc., Wireless SP and Motorola are waiting for Commission to act on Sept. 6 request for consent to assignment of licenses previously used by bankrupt predecessor. “It’s under review,” FCC official said: “We will take action when we finish our review.” Companies said license transfer would serve public interest because they would facilitate rejuvenation of Iridium System from bankruptcy court process and serve vital national defense needs.
EchoStar had no comment on charges by Gemstar International Chmn. Henry Yuen that some of problems with his company’s stock could be traced back to dealings with DirecTV and Echostar. Yuen said in conference call that “rumors and misinformation” were being spread by EchoStar on litigation involving 2 companies. Gemstar and EchoStar are involved in patent infringement dispute in U.S. Dist. Court, Denver, and at International Trade Commission (ITC). GemStar is best known for interactive program guide (IPG) technology. Company financial fortunes have fluctuated in part because it has been involved in several patent lawsuits over use of IPG technology. In last year, EchoStar has become fastest growing DBS company, outpacing rival DirecTV, according to financial statements.
Reflecting her background as FCC staffer and corporate lobbyist, new FCC Comr. Abernathy said one of her top priorities is to speed Commission’s decisionmaking and make its processes more “transparent” so public can better track issues. In interview with Communications Daily Fri., Abernathy said Commission’s delay in ruling on News Corp.’s proposed purchase of Chris-Craft Industries TV stations was one example of why she believed that changes ought to be made. “That’s [the delay is] unfortunate,” she said, noting that Chris-Craft license transfers have lingered at agency for 8 months. “I'd like it to move faster,” she said, while declining to say how Commission should rule on issue of local station concentration.
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.”
Not content to sue its rivals for alleged patent infringement in U.S. courts, Gemstar-TV Guide International also is filing complaints against them internationally. Gemstar and its subsidiary Starsight Telecast brought legal claims against Pioneer, Scientific-Atlanta (S-A), EchoStar and SCI Systems to International Trade Commission (ITC) Thurs., charging they illegally imported set-top boxes featuring interactive program guides that infringed on Gemstar’s U.S. patents. Gemstar and Starsight said they were seeking exclusion orders from ITC that would ban importation of offending boxes and stop them from being sold in U.S. immediately. Gemstar also is seeking injunctive relief and other damages from Pioneer, S-A and EchoStar in patent infringement suits filed earlier in separate federal courts. S-A spokesman said company hadn’t seen Gemstar’s ITC complaint but didn’t believe it had infringed on “any valid Gemstar or Starsight patents.” Spokesman also said S-A “will vigorously defend this new action and continue to pursue our patent and antitrust actions against the Gemstar companies here in Atlanta.”