Federal Communications Commission (FCC)

Federal Election Commission should consider rewriting its proposed rulemaking on electioneering communications “so as to avoid the possibility of overbroad enforcement of the statute and constitutional challenge to it,” FCC said in comments to FEC. FEC is considering portion of Bipartisan Campaign Reform Act (BCRA) passed earlier this year involving political announcements on broadcast, cable and satellite systems. Act itself is under multiple constitutional challenges already, and several FEC commissioners said at hearing last week (CD Aug 29 p1) that much of their work in rulemaking might be rendered moot by court. FCC’s concern was fact that FEC was supposed to regulate only electioneering communications reaching more than 50,000 people. FCC Mass Media Bureau Chief Ken Ferree wrote that whenever data on potential viewership or listenership were “incomplete or ambiguous, the process should err on the side of permitting the communications to take place without restriction, rather than the opposite.” Otherwise, Ferree wrote, rule could be “deemed unconstitutionally overbroad.” His primary concern in his 3 pages of comments was burden FEC was looking at placing on FCC in terms of creating online database of electioneering communications. BCRA designates FCC for creating that database as part of agency’s Web site, but Ferree said he wanted “to make clear that this undertaking could be extraordinarily complex and will require the expenditure of substantial resources in terms of time, money and personnel.” Among burdens: (1) FCC would have to integrate population information, congressional and state boundary geographic information, and service area data for broadcast, cable and satellite systems. (2) New technology would have to be acquired to create database, as existing databases couldn’t be used because they contained much proprietary information that FCC couldn’t disclose. (3) New forms and electronic filing systems would be needed, which would “require spending significant funds.” Ferree said he was confident agency could meet BCRA requirement, but emphasized that FEC’s rulemaking must “simplify the task as much as possible.” He also said rulemaking sought comment on how to define reach of given communications, and asked that FCC be allowed to make that determination, “based upon our expertise and available data resources.”

Federal Election Commission (FEC) “should not exacerbate the constitutional problems” already raised by court appeals of new campaign finance law, NAB said. In comments for record in FEC hearing (CD Aug 29 p1), NAB said that while FEC was “statutorily obligated” to adopt new political spending rules while judicial review was pending, agency shouldn’t interpret “electioneering communications so broadly as to encompass communications beyond paid advertisements.” New law doesn’t empower FEC to regulate all political broadcasts, only “certain electioneering communications” that should be limited to “paid advertisements,” NAB said. In adopting rules, NAB said FEC “must be cognizant of the limits of its authority and expertise and not unjustifiably expand that authority” to encompass matters that are under FCC jurisdiction and expertise.

When Comcast rolls out Voice-over-IP service in Philadelphia next year, as company has said it will do, many in telecom industry and at FCC will be waiting to see how much market share VoIP takes from traditional telephone business. Although no proceeding is teed up on issue at FCC, some among Commission’s staff are thinking about how that new service will be regulated, given that industry analysts predict VoIP eventually will compete and perhaps even overtake circuit-switched telephony delivered by CLECs. Technical issues aside, Comr. Abernathy last week laid out principles of new services doctrine she believes should include light regulatory touch, at least in beginning, while services such as VoIP remain immature competitors (CD Aug 20 p2).

With partial dissent by Comr. Martin, FCC gave only narrow relief to radar detector industry Wed., providing 30 more days to market devices that meet Part 15 limits on emissions in 11.7-12.2 GHz band but denying request for more time to make and sell compliant devices. Commission also turned down request by RadioShack to allow radar detectors that didn’t meet new emissions limits to be marketed for 6 months beyond original Sept. 27 deadline. FCC adopted emission limits earlier this summer to protect VSAT satellite terminals that complained they were suffering interference from radar detectors. Latest order, which FCC adopted Tues. and released Wed., said radar detector industry had failed to show its request for stay of rules wouldn’t cause substantial harm to other parties in proceeding, including VSAT operators. If marketing cutoff date had been delayed to extent sought by industry and RadioShack, FCC said “conservatively” up to 300,000 noncompliant detectors would have been sold.

Federal Election Commission held hearing Wed. on its rulemaking that would create carveouts from regulation of what Chmn. David Mason (R) called “a new term” -- “electioneering communications” -- despite fact that underlying law, Bipartisan Campaign Reform Act (BCRA) of 2002, is undergoing multiple court challenges. Under BCRA, any electioneering communication on broadcast, cable or satellite airing within 30 days of primary or 60 days of general election for federal office would have to meet strict rules. Any funder of such communication that spent more than $10,000 annually on such communications would need to disclose communication within 24 hours, and corporations and labor groups would be prevented from funding such communications during that window. Guidelines were inserted, according to BCRA’s authors -- Senate Commerce Committee Chmn. McCain (R-Ariz.) and Sen. Feingold (D-Wis.), Reps. Shays (R-Conn.) and Meehan (D-Mass.), and the electioneering communications authors, Sens. Snowe (R-Me.) and Jeffords (I- Vt.) -- to provide U.S. courts with bright line test to ensure law wasn’t overturned on First Amendment grounds. Hanging over FEC hearing, however, was very real possibility that BCRA rulemakings would in part or in whole be rendered moot by courts. FEC is expected to approve final rules on electioneering communications by Sept. 26.

When Media Bureau Chief Kenneth Ferree first announced that Commission would try using abstract study methodologies to examine cable company consolidation, he said there was possibility study (CD Nov 8 p3) would be found useless and FCC would “throw it out the window.” Despite Commission’s admission that study contained computational errors -- which it said have since been corrected -- and abundance of criticism, even from sworn enemies in telecom industry, FCC insists study has some merit. How much merit it should be given, however, when Commission makes determinations about cable concentration continues to be subject of debate. Staff members we spoke with said privately that study, Horizontal Concentration in the Cable Television Industry: An Experimental Analysis, would be given little weight, if only because it was merely one piece of evidence in proceeding on cable ownership limits.

Legg Mason said in research note Wed. that while govt. won in 70% of cases before U.S. Supreme Court, there were some vulnerabilities in govt.’s legal argument in NextWave case that “could tip the balance in NextWave’s favor.” Firm also said it appeared unlikely that winners of Jan. 2001 NextWave re-auction ultimately would have to pay for spectrum at total $16 billion set in that bidding. Pending high court review, FCC has refunded all but 15% of deposits paid by winning bidders, who would be required to pay full amount they bid on spectrum if court reversed U.S. Appeals Court, D.C., decision that had ruled against Commission’s cancellation of NextWave licenses for missed payment. Meanwhile, Wall St. Journal editorial Wed. took FCC to task over “ongoing NextWave spectrum fiasco,” arguing Commission decision to not release re-auction winners from their bid obligations “is paying havoc with an industry already in chaos.” Editorial said Verizon Wireless had $8.7 billion liability, “money it can’t effectively touch because of the 10-day future payment obligation.” It said FCC booked $4.8 billion that NextWave bid on those PCS licenses in federal budget in 1997 and then booked $16 billion from 2001 re- auction, as well, minus money lost from NextWave. “Chairman Michael Powell keeps promising a telecom revival, but this FCC money-grubbing doesn’t help,” editorial said. “The re- auction is tying up much-needed investment capital.” Journal referred to recent study by American Enterprise Institute economist Gregory Sidak that concluded that if released, $16 billion in NextWave re-auction overhang would increase gross domestic product by $19-$52 billion. Separately, Legg Mason cited mounting pressure for FCC to remove $16 billion re- auction overhang. CTIA and group of economists have urged FCC to cancel auction or allow winning bidders to opt out of obligations, citing drag on carrier finances. “Although the FCC may not act until after the Supreme Court decision, we believe that the FCC will find it increasingly difficult to stand by an abstract commitment to the integrity of the auction process in the face of mounting claims that such a position stands in the way of contributing to economic recovery,” Legg Mason said. Analyst report said it believed re-auction winners ultimately wouldn’t be compelled to pay prices set in bidding. Among vulnerabilities in arguments in case govt. has laid out to Supreme Court, Legg Mason cited: (1) Congress has carved out exceptions for other govt. actions taken to promote regulatory objectives, but not for spectrum auctions. (2) Justices may follow reasoning of D.C. Circuit, which focused on Sec. 525 of U.S. Bankruptcy Code, which stipulates federal agency can’t cancel license solely for nonpayment of debt dischargeable in bankruptcy. “It’s difficult to argue that the FCC cancelled the license for a reason other than solely because of NextWave’s failure to pay a dischargeable debt.” (3) High court could conclude that FCC created tension between Communications Act and bankruptcy law “by permitting the C-block auction winners to pay off unguaranteed debts in installments over 10 years.” However, report said that among factors that weighed in govt.’s favor in Supreme Court case was strong argument that D.C. Circuit’s decision placed Sec. 525 in conflict with Communications Act provision directing FCC to allocate spectrum by auction. Sidak study, set for Mon. release, is expected to say economic stimulus of releasing carriers from re-auction would free $12-$38 billion by end of 2005, date by which NextWave- related litigation is expected to play out if FCC wins at Supreme Court because of outstanding issues that would be taken up at D.C. Circuit.

Wireless experts and policymakers urged wireless ISPs (WISPs) Mon. to reach voluntary agreements in areas such as interference standards to stave off new regulations and vie for new spectrum. “The Federal Communications Commission isn’t really interested in setting protocol or etiquette standards,” said Alan Scrime, chief of FCC Office of Engineering & Technology’s Policy & Rules Div., at WISP.X conference in Washington. “It’s interested in providing the environmental enablers that will allow an industry like yours to set its own standards so that it can grow.” Participants at opening of 2-day conference were told by panelists to focus on industry protocols and standards to fend off need for additional spectrum regulations. But experts also focused on what could be additional regulatory obligations in offing, including potential expansion of pool of contributors to universal service fund.

ASPEN -- New technologies and services such as Wi-Fi and Voice-over-IP (VoIP) should be sheltered from burdensome regulation in their infancies, with regulators perhaps even acting proactively to promote their growth and spur competition with incumbent industries, FCC and Commerce Dept. officials said here Mon. Speaking at Aspen Summit organized by Progress & Freedom Foundation, FCC Comrs. Kathleen Abernathy and Kevin Martin, along with NTIA Dir. Nancy Victory, agreed on need for what Abernathy called new services doctrine, and even drew some support from industry representatives who would find themselves at regulatory disadvantage in such model.

President Bush touted deployment of broadband as vital for economic recovery during economic forum in Waco, Tex. Bush’s comments on broadband were brief and made half-way through his address at closing session of forum, but several telecom companies and associations reacted to news with various interpretations. “In order to make sure the economy grows, we must bring the promise of broadband technology to millions of Americans,” Bush said. He emphasized that broadband shouldn’t be taxed and that technology would keep America on “cutting edge of innovation.” “If you want something to be used more, you don’t tax it,” he said. “The Federal Communications Commission is focusing on policies to encourage high-speed Internet service for every home and every business in America.” Industry is still waiting for comprehensive broadband policy to come from administration. In fact, Sen. Lieberman (D-Conn.) has introduced legislation that would compel administration to develop policy.