FCC ACTION ON 800 MHZ INTERFERENCE TEED UP FOR 2004

At a wide-ranging meeting, the FCC took up no items for action but heard reports from bureau chiefs and other senior staff reviewing steps taken in 2003 and broad agendas for 2004. Comr. Adelstein asked several times about the impact of an expected “major hit” in FCC spending levels, either under the continuing resolution (CR) now in effect or the omnibus budget package that has yet to pass the Senate. “This obviously will be a lean budget year,” FCC Managing Dir. Andrew Fishel said. He told reporters after the meeting that the omnibus spending bill would trim $7 million from FCC spending this fiscal year and the CR now in effect would mark a reduction of $3 million below that. Given the expectation of a budget reduction, FCC offices would have to curb some activities, although senior staff offered few details about what might change this year. “One of the principles we will be guided by is to protect at all costs the jobs and benefits of our employees,” FCC Chmn. Powell said. “That is the last possible thing we would look at, under my leadership at least.”

Most bureaus and offices outlined reductions in backlogs of pending items over the last year. Consumer & Governmental Affairs Bureau Chief Dane Snowden said that although his bureau for 2 years earlier had ended the year with no backlog, it closed 2003 with a “modest” backlog of 161 formal complaints. He attributed that to a 4th-quarter surge in complaints involving the national Do Not Call registry and wireless local number portability (LNP), which took effect in the top 100 markets Nov. 24. The FCC said that as of Dec. 24 it had received 2,394 consumer complaints about wireless LNP, with most having to do with delays in porting numbers between carriers. Those 2 factors caused monthly complaints to surge to 13,808 in the 4th quarter from 7,585 in the 3rd quarter, Snowden said. “We anticipate that complaint activity will soon return to normal levels,” he said, and the backlog should be eliminated by the end of this quarter.

International Bureau Chief Don Abelson said the Bureau’s plans this year included a “thorough review” of the current benchmark policy for international settlement rates. Last year, then NTIA Dir. Nancy Victory said the FCC should look into the feasibility of downward revisions in existing benchmarks, considering that the original benchmark rates were determined using an analysis of existing tariffs and weren’t based on actual costs. As for efficient spectrum use, the Bureau said its activities would include a Big Leo review and a focus on the DTV transition along U.S. borders. Muleta said 2004 goals included a report and order on air- ground telecom services, a secondary markets order, finalization of a program agreement on tower siting and a proposal on wireless broadband above 5 GHz.

Asked by Comr. Copps about potential changes in the FCC’s ultra-wideband (UWB) rules this year, Office of Engineering & Technology Chief Edmond Thomas said industry had asked the Commission to keep the current regulations stable to help bring new technology to market. “What I would expect in the next year is to see more and more consumer products coming out of ultra-wideband,” Thomas said. OET plans to continue to closely monitor the UWB industry and its potential impact on incumbents this year to assess whether any changes are needed, he said. “If they are, we will be bringing recommendations,” Thomas said.

On the 800 MHz proceeding, Muleta told reporters that, starting in Oct., his bureau turned more attention to a possible windfall for Nextel based on rebanding scenarios. The bureau hasn’t made recommendations to the 8th floor in the proceeding but has presented scenarios on the impacts of different solutions, he said. “We are churning through that,” he said of the 1.9 GHz valuation issue, “there’s been a lot of analysis.” In Nov, Nextel filed 2 studies at the FCC that defended the “consensus plan” backed by it, the Assn. of Public Safety Communications Officials and others. One study said the plan would produce benefits that outweighed potential costs to the govt. in terms of spectrum auction proceeds it would give up. Nextel and the plan’s backers have proposed a spectrum swap in which parts of 700, 800 and 900 MHz would be reconfigured, with Nextel giving up some spectrum in return for bands elsewhere, including a block at 1.9 GHz. CTIA, Verizon Wireless and other critics have argued that Nextel would receive a windfall by giving up less attractive spectrum for contiguous bands at 800 MHz and valuable spectrum at 1.9 GHz.

Other questions that Muleta said remained to be answered included: (1) How the FCC would address the cost issue under Nextel’s spectrum swap proposal if the carrier’s pledge of $850 million for relocating public safety and private wireless incumbents turned out to be wrong. “The question is, if you are off, what do you do?” he asked. “Is there a backstop number?” (2) What the FCC could do about interference to public safety at 800 MHz? “That’s a very important question that needs to be addressed.” Powell indicated this week that a decision on how to fix public safety interference in the band could come in the next “couple of months” (CD Jan 15 p6).

Asked by Comr. Martin about the timing of an 800 MHz decision, Muleta said his hope would be to “bring it home as quickly as possible -- hopefully in the next 3 or 4 months.”

Wireline Bureau Chief William Maher said his bureau had reduced its backlog 75% since July even as it suffered a 7% staff reduction, including 16 fewer attorneys. In 2003, Maher said the bureau addressed 96 Sec. 214 applications, including 28 bankruptcies. Under Sec. 214 of the Communications Act, companies that want to discontinue common carrier services must seek permission from the FCC, which can stipulate that service be continued for a minimum of 30 additional days. He said the total of bankruptcies was 51% down from the previous year.

As for budget issues, FCC spending levels for 2004 would fall even further under the CR than the omnibus appropriations package because cost-of-living increases already have taken effect, meaning it’s costing the agency more money in 2004 to operate current programs than in 2003, Fishel said. The CR spending levels would be $10 million below the FCC’s request. While the agency is awaiting final congressional action, Fishel noted that Powell had pledged to protect staff salaries. He said they made up 95% of the Commission’s budget. Any reductions were likely to affect discretionary funding, such as staff travel and field equipment. The Commission’s budget for 2003 was $271 million. Muleta said cuts in spending wouldn’t change the bureau’s policy priorities but would mean changes in spending areas such as its auctions program and equipment maintenance.

Must-Carry Still Tops Media Issues

The FCC must-carry decision still could be a ways off. Media Bureau Chief Kenneth Ferree told reporters after the meeting that because the puzzle had so many pieces, the bureau in next few weeks would send a formal proposal to all commissioners. That will provide a jumping-off point for their discussions and opinions, he said. “This is a tough one,” Ferree said. “There are a number of different issues that come up in digital carriage. They're all hard issues. There’s a lot of complexity. There’s a lot of interplay between the issues.” Ferree said he believed there was a “certain degree of fluidity” in commissioners’ thinking on carriage, so it was impossible to predict the outcome.

In his presentation to the commissioners, Ferree was asked by Comr. Copps about the status of a March 2001 Network Affiliated Stations Alliance (NASA) petition seeking an FCC investigation of Big 4 TV network practices. NASA said the FCC wasn’t enforcing its network-affiliate relations rules. Ferree reminded Copps that the bureau had sent a proposal to the 8th floor roughly a year ago, but the commissioners couldn’t agree. Ferree said bureau staff members were working with the Gen. Counsel’s office to come up with a “defensible approach.”

Ferree said the bureau also sent up a proposal on cable ownership 6 months ago but was asked to “do a better job in explaining why we were making the cuts we were and a better job of justifying the cuts.” He said he was asking the new chief economist, Martin Perry, an expert in vertical integration, to take a look. Perry started at the FCC this month.

Enforcement Bureau Chief David Solomon said the staff was auditing cable-originated children’s programming to determine whether it adhered to limits on advertisements. Asked why the bureau was focusing on cable, he said the rules applied to cable and broadcast. The bureau won’t come out with a formal audit but enforcement action could result in 3- 4 months, he said. Solomon said the staff wasn’t focusing so much on cable network programming as on local, cable- originated programming. He said complaints on indecency were up dramatically, from 13,922 against 389 programs in 2002 to 240,342 on 375 programs in 2003. Questioned by Copps, Solomon said the bureau did have the power to issue fines on each utterance of an indecent word, not just a single penalty against a program with multiple indecencies.

Looking ahead, Ferree predicted action this year on broadband as the FCC sought to justify its cable modem classification in court, pushed forward with the digital TV transition on must-carry and further studied broadcast localism. Ferree said the bureau must begin another biennial review of media ownership and continue work on homeland security.