The markup of the FCC Reauthorization Act (S-1264) has been postponed one week as the Senate Commerce Committee prepares for a meeting Thurs. that will include efforts to roll back the Commission’s June 2 media ownership vote. A committee spokeswoman said the panel would mark up S-1264 June 26. She said Committee Chmn. McCain (R-Ariz.) wanted to delay the markup since the bill had been introduced only recently (CD June 16 p1) and senators needed more time to digest it. It would make sweeping changes in FCC procedures, including giving the agency more power to regulate media ownership and raising fines for rule violations.

The Minority Media & Telecom Council (MMTC) filed a motion for a stay and a petition for reconsideration in a bid to block the FCC from instituting its new media ownership rules. MMTC objects to the auction rules, saying they “will lead to substantial gamesmanship and fraud, imperiling fatally the Commission’s only significant policy aimed at fostering minority broadcast ownership -- auction bidding credits.” MMTC said the auction rules contained a major flaw that it said allowed an auction bidder to conceal from opponents that it actually wasn’t entitled to bidding credits for a new entrant. The flaw allows companies that aren’t new entrants to create a “shell” new-entrant structure, then later revert back to what it had planned originally. “Genuine new entrants, including many minorities, will be unable to raise financing to participate in an easily corruptible auction system; or if they do participate, their chances of prevailing against well-financed fraud artists will be minimal,” MMTC said in its motion for a stay. Only a stay can prevent the “disaster” of the FCC’s proceeding with Auction #37, in which the Commission is offering “probably the last new FM facilities in medium-sized and small communities” across the country, the Council said: “Once these approximately 350 construction permits are issued, they cannot be realistically be recalled.” MMTC said it was a “national scandal” that only 1.3% of the asset value of the radio industry was controlled by minorities. It suggested a remedy would be to post on the auction Web site the loss of any attributes that entitled applicants to bidding credits. Auctions would feature next-day status reports on bidding, allowing for post-auction payment adjustments. “Thus, the burden on the Commission and on bidders of preventing auction gamesmanship is virtually zero,” MMTC said. An FCC spokeswoman said the filings wouldn’t affect the timing of the release of the media ownership order, which is expected this week. The agency isn’t required to act on MMTC’s motion or petition within a certain time frame, she said.

Legislation introduced Fri. by Senate Commerce Committee Chmn. John McCain (R-Ariz.) would make sweeping changes in the FCC’s operation, such as raising the fees for rule violations, preventing the use of bankruptcy to avoid spectrum payments and preventing nongovernmental entities from reimbursing travel costs for FCC officials. The bill also would make several changes in the media ownership review process.

The House overwhelmingly passed the Commercial Spectrum Enhancement Act (HR-1320), with 406 members approving the bill that would create a trust fund for govt. spectrum relocation, and only 10 members against the bill, 9 of them Republicans. The bill was widely expected to pass after appropriators dropped their concerns.

The FTC used reauthorization hearings in the House and Senate Wed. to push a sweeping proposal that, among other things, would end the 70-year exemption of telecom common carriers from FTC deceptive practices and unfair competition rules. The proposal prompted wariness from some House lawmakers, who worried about potential clashes between that agency and the FCC. Others questioned whether recommendations aimed at stepping up the FTC’s ability to fight cross-border fraud and spam via more extensive information-gathering and sharing powers raised privacy concerns.

The man many believe will soon be named chmn. of the Republican National Committee (RNC) is a high-profile Washington lobbyist with such clients as Microsoft, RIAA, ASCAP, Sony, Verizon, SBC, BellSouth, DirecTV and VeriSign. Ed Gillespie is the co-founder with former Clinton counsel Jack Quinn of Quinn Gillespie, a 3-year-old shop that’s highly active in tech and telecom lobbying. Gillespie is expected to take a leave from his firm should he assume the RNC position. The firm has walked a tightrope at times on such contentious issues as digital rights management (DRM), while aggressively promoting Bell deregulation.

The U.S. Appeals Court, D.C., refused Wed. to stay a lower court order requiring Verizon Internet Services Inc. to reveal the identities of 2 subscribers alleged to have committed massive online music copyright infringement. In a one-page order, the appeals court said Verizon “has not shown so great a likelihood of success on the merits as to outweigh the clearly greater harm that would accrue to [RIAA] if the stay were granted.” The ruling means the ISP must divulge its customers’ information even as it pursues an appeal of the district court’s Jan. 23 order directing it to comply with a subpoena issued under Sec. 512(h) of the Digital Millennium Copyright Act (DMCA). Not surprisingly, RIAA Pres. Cary Sherman applauded the Wed. order, saying it “confirms our long-held position that music pirates must be held accountable for their actions and not be allowed to hide behind the company that provides their Internet service.” Verizon intends to comply with RIAA’s subpoenas “within the next 24 hours or so,” said Vp & Assoc. Gen. Counsel-Internet Policy Sarah Deutsch. At this point, she said, the ISP “feels it has no choice but to comply.” However, Deutsch said, the ISP is still concerned about the privacy, due process and safety issues it has raised, given RIAA’s stated intent to serve many DMCA subpoenas on Verizon and other service providers. Those issues may be addressed in a bill said to be on the way from Sen. Brownback (R-Kans.), she said. One section of the measure would require anyone who produces a digital media product to obtain a subpoena after filing a lawsuit in order to obtain the names of alleged infringers. Brownback’s office didn’t return a call by our deadline. The underlying appeal is set for oral argument before the D.C. Circuit Sept. 16 at 9:30 a.m.

Senate Commerce Committee members will have an opportunity to vote on the 35% broadcast ownership cap, despite the fact that Committee Chmn. McCain (R-Ariz.) is likely to vote against it, he promised at a committee hearing Wed. that examined the FCC’s media ownership proceeding. McCain said he would let the committee consider a bill that would codify a 35% ownership cap, but he didn’t support the proposal. The bill (S-1046), by Senate Appropriations Committee Chmn. Stevens (R-Alaska) with considerable Republican support, will be on the agenda of the June 19 committee executive session. While McCain said he wouldn’t vote for a 35% cap, he said there should be some form of cap, but the difficulty was finding the right balance: “I am not sure that even an expert agency can predict with precision where the lines should be drawn.”

ATLANTA -- Significant consolidation within the telecom industry is almost inevitable within the next 2-3 years, AT&T Chmn. David Dorman told reporters at Supercomm here Tues., although he seemed to indicate his company wouldn’t be a major part of the move. In a keynote, Dorman said the industry was in the midst of a 10-year boom-and-bust cycle impelled by the 1996 Telecom Act and wasn’t likely to achieve stability for another 2-3 years.

The 3-2 vote by the FCC Mon. to ease some of its media ownership rules lay bare a deep ideological split at the Commission, evoking strong emotions and lofty rhetoric on both sides of the debate. Although Chmn. Powell described the Commission’s action as resulting from the most exhaustive and comprehensive review of broadcast ownership rules ever undertaken, he said the end product was a modest, though “very significant” change. On the other side, Comr. Adelstein called the decision “the most sweeping and destructive rollback of consumer protection rules in the history of American broadcasting.” As expected (CD June 2 p1) Republicans Powell, Abernathy and Martin voted for the changes in the Report and Order, and Democrats Copps and Adelstein voted against them.