U.S. Trade Representative’s (USTR) office urged FCC to approve proposed U.S.-Mexico settlement rates only for 2002 for now. USTR said Commission should consider deferring approval of 2003 rates “until it becomes clear whether and when the Mexican government intends to reform its long distance rules.” USTR submitted comments June 17 on requests for waivers by WorldCom and AT&T on Commission’s international settlements policy to change accounting rate for services with Telmex. Telmex, WorldCom and AT&T reached agreements to change settlement rates for 2001 through 2003. Agreements introduce 3 new rates for 2002 and 2003 based on final destination of call, with weighted average of 8-9 cents per min. “These rates appear a positive step,” USTR said. “However, the new average rate still appears to be at least double the actual cost of terminating these calls in Mexico and differs only marginally from the single 10 cent rate proposed for 2003 in the WorldCom-Telmex agreement that was filed with the Commission last year.” In March, WorldCom petitioned FCC for waiver to lower accounting rate for international traffic it exchanged with Telmex. That would lower average 19-cent rate now in effect with Telmex. It would provide rate of 15 cents in each direction for 2001 and 13.5 cents in each direction for 2002. For 2003, different rates would apply based on whether traffic was northbound or southbound and, in some cases, in which cities it terminated. WorldCom argued that deal would be in public interest because it would move settlement rates “much closer” to cost-based levels on U.S.-Mexico route and would shift it to levels “far below” 19 cents benchmark rate set by FCC. AT&T petitioned FCC in April to implement similar rates. “While AT&T would like to obtain greater reductions, Mexico’s restrictions on competition continue to prevent the negotiation of competitive, cost-based rates on the U.S.-Mexico route,” AT&T said. USTR told FCC it was “particularly disappointing” that pacts don’t consider even deeper reductions for 2003. “Thus, while the rate reductions proposed in the petitions for waiver are a step forward, the proposed rates are still far above cost -- reflecting the power Mexico’s international long distance rules give to Telmex to negotiate these rates,” USTR said. It said Mexico needed to reform those rules to let competing suppliers negotiate rates and to promote “the public interest of achieving cost-based settlement rates.” Telmex in March filing asked Mexican regulator Cofetel to repeal critical provisions of what U.S. had termed anticompetitive international long distance rules. USTR said: “With this filing, the principal Mexican and U.S. telecom providers are now actively seeking to open the cross- border basic telecommunications market to competition.” But it said Mexican govt. hadn’t yet moved to reform rules and create competitive international telecom market. By approving only proposed rates for 2002, FCC could wait until it was easier to evaluate whether additional reductions for 2003 and beyond were likely, USTR said.
Notable CROSS rulings
All 6 pending FCC proceedings dealing with broadcast ownership rules will be combined into “omnibus blockbuster report and order” to be sent to commissioners for action in spring, Media Bureau Chief Kenneth Ferree said Mon. Briefing reporters on Bureau’s plans, he said results of several studies now under way (some from outside Commission) would be available by late summer and soon thereafter Bureau would release its proposed report and order for comments. That’s expected to take until end of year, he said, after which staff will work on recommendations to be sent to commissioners in spring.
Sen. Feingold (D-Wis.) told Senate Thurs. he would introduce legislation in coming weeks to address increasing consolidation of radio stations, which he attributed to 1996 Telecom Act. “In just 5 years since its passage, the effects of the Telecommunications Act have been far worse than we imagine,” said Judiciary Committee member Feingold. He said Act accounted for “seismic changes” in radio industry and he had heard concerns that owners of multiple radio stations hade established exclusive agreements with independent promoters that collected fee in exchange for access to airwaves. “I'm very troubled by these allegations,” he said. Feingold also said concert and promotion industries had seen adverse results of consolidation under Act. However, he didn’t say how proposed bill would address consolidation.
There’s not going to be broadband legislation this year so it’s up to FCC and state regulators to take action to assure competition, Rep. Pickering (R-Miss.) told American Enterprise Institute conference Tues. Although Tauzin- Dingell measure passed House, there are several “contradictory efforts” in Senate, Pickering said, including legislation sponsored by Senate Commerce Committee Chmn. Hollings (D-S.C.), bills by Sens. Breaux (D-La.) and Nickles (R-Okla.) which would give directives to the FCC, several bills that target broadband buildout requirements in underserved areas and initiative by Sen. McCain (R-Ariz.). “The likely outcome is nothing will happen… not out of wisdom but out of lack of consensus,” he said.
Lockheed and Loral may be moving toward merger of satellite manufacturing operations, but they wouldn’t comment on reports that their top officials had been meeting quietly on possible consolidation for several months. Speculation that 2 of 3 largest companies eventually could join manufacturing units have surfaced repeatedly in last 5 years. Reports have heightened recently with declining U.S. satellite market and growing dominance of Boeing and European manufacturers. Timing and industry climate also could be right for companies to obtain regulatory approval from FCC and Dept. of Justice, some believe.
House Commerce Committee Chmn. Tauzin (R-La.) and Telecom Subcommittee Chmn. Upton (R-Mich.) urged FCC to repeal broadcast-newspaper cross-ownership rule and “expeditiously complete the rulemaking process” on issue begun in Sept. In June 4 letter to FCC Chmn. Powell, Tauzin and Upton said media markets had changed since 1975 when cross-ownership rules, preventing common ownership of broadcast station and daily newspaper in same market, were adopted. “We believe the explosion of media sources should eliminate any concern regarding a lack of diversity of views in the marketplace and competition, which have been the principles of justifications for the rule,” letter said. Cable, direct broadcast satellite and Internet have opened new media outlets, making repeal of rule “long overdue,” letter said. NAB supports repealing rule, with spokesman saying “it’s a relic of a bygone era.”
FCC granted 12-month waiver of radio-TV cross-ownership rules to allow Clear Channel to acquire Ackerley Media Group stations. Waiver for 5 markets was opposed by Buckley Bcstg. and informal objection was raised by Rep. Farr (D-Cal.), but Commission said waiver was in public interest.
FCC should repeal radio-TV cross-ownership rule because it no longer is necessary to promote economic competition and diversity, Viacom said in petition for Commission rulemaking. Petition called rule “historical anomaly,” saying FCC had “based all of its recent radio ownership decisions on the presumption that radio and television stations compete in different advertising markets.” Separate ownership also isn’t necessary for diversity of ideas, Viacom said, because marketplace for ideas “is rich and robust” with addition of new cable channels, Internet, other sources. It noted that radio-TV cross-ownership rule was only broadcast-related cross-ownership rule not currently under review.
Bush Administration is unclear on whether to develop national broadband strategy (CD May 23 p1), but Senate Governmental Affairs Chmn. Lieberman (D-Conn.) said Tues. he would introduce legislation requiring plan. “For high-tech industries and the American economy at large, bringing on the broadband boom can spark the next sustained surge of economic growth,” Lieberman said while visiting Internet services company called Wind River in Alameda, Cal.: “Unfortunately, the case for making broadband deployment a pivotal piece of our economic puzzle has yet to be understood adequately by government.” At his Cal. appearance, Lieberman released 61- page White Paper, Broadband: A 21st Century Technology Productivity Strategy, that defended active govt. involvement in broadband rollout by comparing it with federal promotion of railroads, electricity, telephone, radio, TV, interstate highways and launch of men to moon. He acknowledged term “broadband” itself to many Americans was “as obscure as the word ‘Internet’ was in 1990.” Lieberman defined broadband as referring to Internet carrying capacity, and said compared with dial-up Internet “it is like the difference between the word ‘car’ and the word ‘NASCAR.'”
Qwest vowed to appeal Minn. PUC decision fining carrier $900,000 for knowingly engaging in anticompetitive conduct by refusing to perform network operation tests requested by CLEC AT&T so it could begin providing local service using unbundled network element platforms (UNE-Ps). PUC’s 3-2 ruling came on penalty phase of AT&T’s complaint (Case P- 421/C-01-391). Agency last month ruled Qwest had acted in anticompetitive fashion and in violation of its interconnection agreement with AT&T by delaying requested tests by 4 months, to May 2001 from Jan. and then conducting tests only after PUC ordered they be performed. PUC delayed imposing penalties pending further review of record to determine whether delay was deliberate act. PUC majority concluded Qwest knew its actions were improper and imposed fine, but final amount represented compromise among majority members as to size. Qwest said it was disappointed by ruling and said it would ask PUC to reconsider, but if plea were denied it would appeal to state courts. Qwest said PUC hearing examiner disallowed material testimony on AT&T’s market intentions and whether AT&T’s request was made in good faith. Qwest contended AT&T wasn’t interested in local market entry, but wanted to use tests to delay Qwest’s interLATA long distance entry bid. It also said PUC hearing examiner improperly dismissed Qwest’s cross-complaint alleging AT&T had no intention of providing Minn. local service. Even though requested tests were completed successfully in Dec., it said AT&T still hadn’t entered Minn. local market. AT&T applauded decision and said it was especially significant because it marked first time any Bell company had been formally convicted by a state commission of intentional anticompetitive behavior. Qwest said Minn. decision shouldn’t have any effect on its interLATA entry chances because last month’s results of regionwide operation support system tests demonstrated that Qwest had opened its local market and was meeting its Telecom Act obligations to local competitors.