CABLE, BROADCAST, DBS, CE, PHONE PLAYERS DUEL OVER ITV POLICY 
  
04/06/2001 
Public Broadcasting Report 
(c) Copyright 2001 Warren Communications News, Inc. All Rights Reserved. 
Cable operators, programming networks, broadcasters, DBS providers, consumer 
electronics interests, Bell companies, ISPs, sports leagues, software 
developers, electronic program guide creators, personal video recording firms 
and consumer groups all battled over possible interactive TV (ITV) 
regulations at FCC. In comments filed in response to Commission's ITV 
inquiry, 28 entities debated whether federal govt. should regulate nascent 
interactive market in wake of AOL's takeover of Time Warner (TW) earlier this 
year. They also feuded over how govt. should define interactive services if 
it chose to regulate them.
Pushing for "technologically neutral nondiscrimination safeguards" on such 
vertically integrated MSOs as AOL TW, group of major programmers urged FCC to 
mandate that all broadband distributors carrying any ITV signals forward 
signals for all programmers on their cable systems. Group, consisting of 
Disney, Univision, USA Networks and Viacom/CBS, also called on Commission to 
ban discriminatory routing or caching practices that would permit cable 
operators to send their affiliated programming at faster speeds than rival 
networks. Programmers contended that consumers shouldn't have to buy 
additional set-top box to receive unaffiliated ITV services. "It is far 
easier and requires far less intrusive government regulation to prevent 
monopoly power from distorting a relatively new market than it is to combat 
monopoly power already unleashed in a more developed market," group said. 
Public interest groups, ALTV, APTS, BellSouth, EarthLink, Gemstar-TV Guide 
International, MSTV, NAB, PBS (PBR March 23 p3) and SBC Communications all 
made similar arguments in favor of FCC's adopting ITV rules. For instance, 
joint filing by Media Access Project, Consumers Union, Consumer Federation of 
America and Center for Media Education called on Commission "to move 
expeditiously to begin a rulemaking establishing open access for providers of 
enhancements on all platforms, whether cable, DBS, DTV or new technologies 
yet unknown." They contended that agency's failure to act would allow cable 
MSOs to "become the gatekeepers of what has thus far been a gateless online 
community" and devastate independent content providers. Without safeguards, 
they said, "ITV is likely to become a digital mirror image of the current 
closed multichannel cable model."
Regulatory opponents countered that imposing ITV restrictions on cable 
systems would discourage them from starting new services, hampering 
development of emerging industry. Opponents, including AOL TW, AT&T, 
Cablevision Systems, Charter, Canal Plus Technologies, Comcast, NCTA, NFL, 
OpenTV, Progress&Freedom Foundation and group of 4 programmers, declared it 
was too early to impose obligations on ITV providers. They said early 
regulation would be unworkable, creating administrative nightmare.
Calling even "the threat of regulation" of ITV market "a major mistake," 
NCTA, for example, argued that "there is simply no basis for assuming a 
problem and proposing regulatory solutions." Saying FCC deliberately had 
refrained from imposing similar rules on cable high-speed data services, 
which are much further along in development, NCTA said Commission should 
refrain from regulating ITV services for same reason. It also warned that 
agency had very limited authority to regulate ITV services under 
Communications Act and easily could violate First Amendment rights of cable 
operators if it tried to do so. Calling inquiry "a peculiar and misguided 
proceeding," NCTA said First Amendment "would seem to preclude the very 
regulations suggested by the notice which would interfere with cable 
operators' constitutionally protected editorial judgments."
Taking different tacks, DBS providers EchoStar and DirecTV said in separate 
filings that they wanted FCC to keep close tabs on cable operators so they 
wouldn't use their market power to keep interactive TV services from other 
multichannel operators, including satellite TV companies. DBS companies said 
they were concerned that cable companies might have unfair advantage in 
marketplace if both industries were regulated in same way by Commission.
DirecTV said it was "premature" for agency to fully regulate ITV services, 
but it favored "continued monitoring by the FCC of the potential for 
anticompetitive behavior by cable operators." "Regulatory intervention at 
this nascent stage of ITV development makes little sense," DirecTV said: 
"There are as yet no dominant providers of ITV services, and the marketplace 
is still in the process of sorting out the technological standards" that it 
will follow during future delivery. EchoStar said there was "absolutely no 
basis for imposing" ITV carriage obligations on distributors lacking market 
power in any relevant market such as itself. Such action would penalize new 
entrants and favor incumbent cable operators, filing said.
FCC/CAPITOL HILL
In action that will significantly limit number of low-power FM (LPFM) 
stations to be licensed, FCC released decision April 2 saying LPFM stations 
must meet same 3rd adjacent channel interference protection requirement as 
full-power stations. Order implements requirements of rider on FCC 
appropriations bill signed into law in Dec. Commission expects to complete 
action on its LPFM licensing window in few months, it said in order, and then 
will direct Mass Media Bureau to open window to allow LPFM applicants that 
didn't meet 3rd channel requirements to try to come into compliance. FCC 
Chmn. Powell said action allowed Commission to begin granting construction 
permits for at least some LPFM stations, and agency had begun independent 
testing to determine impact of LPFM stations on full-power FM stations and 
translators. As part of order, FCC also implemented congressional mandate 
that denies LPFM license to former pirate radio operators. FCC Comr. 
Furchtgott-Roth issued separate statement saying he supported move to 
implement congressional mandate but believed FCC should have delayed LPFM 
licensing while it went through rulemaking process in order to comply with 
Administrative Procedure Act.
------
Sen. Cochran (R-Miss.) introduced S-604 to reauthorize PTV's Ready to Learn 
and Ready to Teach programs. Bill also would graduate Mathline, a component 
of programs providing professional development models for teachers of 
mathematics, to TeacherLine, more comprehensive professional development tool 
for K-12 teachers. Citing research by U. of Ala. and U. of Kan., Cochran said 
Ready to Learn was having positive impact on children and their parents. 
Studies showed that Ready to Learn families read books together more often 
and for longer periods than nonparticipants. Surprisingly, studies said Ready 
to Learn children watched 40% less TV and were more likely to choose 
educational programs when they did watch, he said. Advent of digital 
broadcasting, which allows broadcast of multiple video channels and data 
simultaneously, will make it possible for instructional materials to be 
distributed on full-time, continuous channels when teachers and students need 
it, Cochran said.
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FCC regulatory fees would increase average of 7.75% for FY 2001, agency said 
in proposed rulemaking released March 29. Fees generally followed previous 2 
years' practice of across-board increase to meet congressional mandate for 
FCC to recoup larger portion of its operating budget through regulatory fees. 
Congress required Commission to collect $200.1 million in regulatory fees 
this year, up $14.4 million from FY 2000. In early years, FCC attempted to 
base regulatory fees on actual cost of regulation, but it generally has used 
across-board increases since FY 1999. It said it hoped to have new cost 
accounting system in place in time for setting fees for FY 2002. Comments on 
fees are due April 27, replies May 7 (MD 01-76).
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Heads of 4 national public broadcasting organizations and many local PTV 
station managers expressed appreciation at April 3 gathering in Washington to 
Public Broadcasting Caucus in House which now has 70 members. Saying public 
broadcasting always had enjoyed strong support in Congress, CPB Pres. Robert 
Coonrod said new group would be asset in furthering that support "for our 
mission of providing valuable education services to the American people." NPR 
Pres. Kevin Klose said he hoped caucus would serve as effective forum for 
discussion of complex policy issues facing public radio. Pres. Pat Mitchell 
said "PBS looks forward to working with the caucus to strengthen the unique 
and important role that public television plays in providing nonviolent and 
educational programs and services to America's children and their families." 
New APTS Pres. John Lawson said caucus came at "critical" time, when PTV 
stations were bracing for transition to DTV.
------
If FCC reallocates any part of Instructional TV Fixed Service (ITFS) spectrum 
or 3G mobile device service, "the capacity, usefulness and value of ITFS 
would be significantly reduced," Miss. Humanities Council said in ex parte 
filing on notice of proposed rulemaking on 3G spectrum allocations. Even if 
only part of spectrum is taken away, many educational institutions would 
either lose their ITFS service altogether or face new equipment costs, 
service disruption, cutbacks, lower quality of service and signal 
interference, council said. "In either scenario, the ITFS community would be 
incapable of supporting advanced wireless services and promoting the 
development of broadband services to the educational community and to 
underserved communities nationwide," it said.
------
FCC Chmn. Powell called on Congress to bolster agency's enforcement powers, 
measure he said was necessary to protect consumers as Commission executed 
streamlined business plan that's "aligned with the realities of a dynamic and 
converging marketplace." He also told House Telecom Subcommittee at hearing 
March 29 that legislative approval was necessary to carry out his bureau 
restructuring plan, which still was being formulated, and his "policy vision" 
of making FCC more "efficient, effective and responsive." Powell said FCC, if 
given sufficient enforcement capabilities, would guarantee "fairness to all, 
and allegiance to none," but warned potential regulatory violators that 
Commission likewise would levy severe penalties. "If you cheat, I'm going to 
hurt you, and hurt you hard," he said. Ability to impose heavier fines and 
having fewer time constraints to carry out enforcement action via changes in 
statute of limitations are 2 tools Congress could give FCC, Powell said. If 
Commission can fine a company only $15,000 when companies earn millions or 
even billions of dollars annually, then they will view fines "just as the 
cost of business" and have less incentive to comply, he said. Commerce 
Committee Chmn. Tauzin (R-La.) said Powell spent 3 years as commissioner 
"watching how not to run the FCC" and expressed confidence that under his 
leadership it "would become an agency that fosters innovation and investment 
rather than one that inhibits the deployment of new services." He told Powell 
he would work with him to "rationalize the structure" of agency so services, 
rather than service providers, are subject to regulatory or deregulatory 
framework.
------
Communications lawyers on Washington Legal Foundation panel on FCC and 
Communications Policy split 2-2 on whether major revamp of FCC was needed 
immediately. "It's hard to disagree about the need to overhaul the FCC," said 
attorney Nick Allard of Latham&Watkins. Moderator and former FCC Chmn. 
Richard Wiley did disagree, sharply, with Allard -- who called for abolishing 
4 of 5 commission seats and actively involving Commerce Dept. and NTIA in 
regulation of various communications industries. What FCC needs, countered 
Wiley, is more delegation of authority to staff and more rapid decisions -- 
something that can be accomplished with present structure -- and "Chmn. 
Powell can get it done." Because of congressional respect for Powell, any 
agency reform "is going to come first from the FCC itself," rather than from 
Hill, Wiley predicted. Panelist Charles Kennedy of Morrison&Foerster 
generally agreed with Allard, while David Poe of LeBoeuf, Lamb, Greene&MacRae 
partly sided with Wiley. Commission doesn't need revamping for short term, 
Poe said, but major overhaul may be necessary in long term. Kennedy said FCC 
operations were "outmoded... We are going to have to make some fundamental 
changes... if things don't turn around." Allard listed 10 questions that must 
be answered on FCC's future, including whether competition was prerequisite 
for deregulation or was it other way around and did Commission's current 
organizational structure make sense. Poe said Powell had shown "he's not 
afraid to grapple" with tough issues and that there were many "ambiguities 
and contradictions" in 1996 Telecom Act. "Statutory reform" of FCC is needed, 
he said, but it will be very hard to get Congress to pass legislation on 
issue. On digital TV, Poe said FCC had tried to push broadcasters into new 
technology but "you can't make a market if the market isn't there."
------
FCC set deadlines March 28 for comment on its proposed rulemaking on DTV 
must-carry issue following publication of notice in Federal Register. 
Commission tentatively concluded in Jan. against imposing dual-carriage 
obligations on cable operators during current digital broadcasting transition 
but left issue open for final determination. Comments are due May 10, replies 
June 25.
------
Rep. Boucher (D-Va.) challenged TV copyright owners concerned about piracy 
from digital set-top boxes to "present a united front" on what home copying 
they would accept in exchange for encryption technologies. At kickoff of 
American U. Washington College of Law's new Glushko-Samuelson Intellectual 
Property (IP) Clinic, he said he hoped Congress would approve measure akin to 
Sec. 1201(k) of Digital Millennium Copyright Act. That Act requires VCRs to 
respond to technologies encoded on videocassettes to stop people from copying 
films where there's no reasonable expectation of being allowed to do so (as, 
for example, when movies are rented from video store). 

Folder Name: Cable Open Access 
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