Congress Has Time Left for Pending Telecom Bills

Sources said congressional negotiators could still reach agreement on pending issues such as spectrum relocation trust fund, E-911 funding and adjustments to accounting procedures for E-rate and universal service fund, which were stalled partly over unrelated boxing legislation. Senate Commerce Committee Chmn. McCain (R- Ariz.) placed holds on several bills, including the telecom-related measures, in an effort to include boxing legislation in the package. Congress is scheduled to return Dec. 7 to reopen negotiations on intelligence legislation, and sources said other outstanding bills could be reviewed.

The weekend also saw the passage of SHVIA, the lone communications-related “must pass” bill of the session. Both DBS and broadcast industry officials claimed victory. The 2-dish provision -- which prevents DBS providers from offering local channels on a 2nd dish -- is a blow to EchoStar. But sources said it appeared EchoStar had little chance of preventing passage, as its 2-dish policy was seen by members of Congress as discriminatory against minority and religious broadcasters. The bill gives EchoStar 18 months to end the practice, though the original House proposal had sought to end the practice in a year.

There was dispute, however, over whether the bill would create a so-called “digital white area” for DBS providers. NAB Pres. Edward Fritts said the bill would “thwart efforts to establish ‘digital white areas.'” Broadcast sources said SHVIA included several provisions that protected local broadcasters from digital distant programming once local-to-local programming was offered by DBS. But DBS sources said the bill established mechanisms to allow DBS to broadcast distant digital signals in areas where broadcasters’ digital signals don’t reach. A DBS source said the bill would put pressure on local broadcasters to offer a full-power digital signal by the 2006 and 2007 deadline set forth in the bill, or face distant digital competition offered by DBS.

Several public statements seemed to contradict Fritts’s statement that “digital white area” was “thwarted.” McCain said: “I am pleased that passage of this bill will, for the first time, ensure that these same Americans can enjoy digital High-Definition television programming via satellite, even if they are unable to receive the broadcast signal over-the-air. The idea is simple: A consumer who pays good money for an expensive high definition television set should not be denied the ability to enjoy exclusive network programming like the Super Bowl or the All-Star game in high definition merely because he lives in a rural area. This is the right result for rural Americans.” EchoStar said: “The forward-thinking digital white area provision will motivate local broadcasters to build their towers and broadcast at full power in order to serve their communities. These changes will also help accelerate the digital transition and ensure the return of the 700 MHz spectrum to the government.” CEA also praised the white area provisions: “The so-called ‘white areas’ provision of the bill will allow satellite broadcasters to transmit DTV and high-definition (HDTV) network programming to television viewers who currently cannot receive these broadcasts from their local ABC, NBC, CBS or FOX affiliate. Just as these viewers can receive network broadcasts in standard definition via satellite, they now will be able to view them in the full glory of HDTV.”

In addition to Adelstein, the Senate approved several nominees. Michael Gallagher, NTIA dir. who was appointed through a recess nomination, was formally approved by the Senate. The Senate also approved: Ben Wu, Asst. Secy.- Commerce for technology policy; John Dudas, U.S. Patent & Trademark Office dir.; and Gay Hart Gaines, Claudia Puig and Ernest Wilson for the Corp. for Public Bcstg.

The FCC’s FY 2005 appropriation was set at $281 million, $7 million more than last year, in the omnibus spending bill approved over the weekend. The FCC had asked for $293 million, $19 million more than the current $274 million.

Calling Card Language Added

The appropriations bill included report language that could stymie an FCC attempt to take long-delayed action on AT&T’s request for permission not to pay universal service and access charges on its enhanced prepaid calling cards. The language directs the FCC not to take any action that would increase rates on prepaid calling card services used by military personnel. The military is among AT&T’s customers for the cards, which also are sold wholesale to large retailers such as Wal-Mart and Sam’s Club. AT&T has argued that its cards offer an information service so they shouldn’t be subject to such regulatory fees. The FCC postponed action on the AT&T petition until after the election (CD July 28 p3), reportedly because of White House concern that turning down the AT&T petition could have caused campaign unpleasantness by increasing phone costs for members of the military. Since the language was in a conference report rather than the bill, it wasn’t clear how much it could affect FCC actions.

An AT&T spokeswoman said the company was “pleased that Congress has directed the FCC to ensure that members of the military can affordably stay in touch with their friends and family.” USTA urged the FCC in a letter Mon. to move ahead with action on the AT&T petition, noting the company’s SEC filings show it has withheld about $500 million in access and universal service payments. USTA said: “AT&T’s actions in withholding payment of intrastate access charges and contributions to the USF are also likely to have the effect of a snowball rolling down a hill, picking up speed, and becoming the size of a boulder that will crash and cause significant damage to the telecommunications industry by unraveling the universal service program and the access charge regime.” WilTel in a Nov. 19 ex parte filing said the FCC has a responsibility to undertake “strong enforcement of the current rules against those companies who seek to evade payments by mischaracterizing their telecommunications offerings as ‘information services’… Access and USF payments are crucial to all players and temptations to evade them are enormous.”

E-Rate Accounting Problem Awaits Action

USAC Chmn. Frank Gumper said carrier contributions into the universal service fund (USF) could rise significantly unless Congress eased the accounting problem facing the universal service fund (CD Nov 1 p1). There’s still hope that Congress will act when it returns in early Dec. but Gumper, a Verizon consultant, said that may be a long shot. “If Congress doesn’t pass legislation exempting the USF from the ADA [Anti-Deficiency Act], I don’t see how we can avoid a significant increase for the contribution factor,” he warned. USAC is scheduled to release new revenue figures Dec. 2, along with an estimate of how that translates into a carrier “contribution factor,” Gumper said. The agency then will give the public 14 days to comment on the contribution factor, which would go into effect Jan. 1.

The FCC’s decision to apply the ADA to USAC has disrupted USAC’s procedure of sending out funding “commitment” letters to schools and libraries before having the full amount of USF contributions from telecom carriers on hand to pay the schools. The procedure is used because schools and libraries need to know federal E- rate subsidies are coming before they can enter into contracts with suppliers. However, the ADA doesn’t allow a govt. agency to make funding “obligations” without having the funds in hand and the USAC commitment letters have been interpreted as “obligations.” As a result, USAC must change its funding cycle, which could cause some schools to have to cancel ongoing telecom and Internet service, he said. Gumper said schools and libraries pay for these services month-to-month and some are worried they are losing their reserve funds because of the delay caused by changing the funding cycle. “Some schools say they will have to disconnect service,” meaning their computers will go dead, Gumper said.

Medley Global Advisors said the USAC measure faced a “scoring” problem, with Congress estimating it would increase the budget, which Gumper said he doesn’t understand since the ADA exemption wouldn’t result in any new money for the USF. “At this point adoption prospects… are low, which is highly problematic for recipients of E-rate funds,” Medley said.