The Senate is likely to address the broadcast ownership cap, although it remains unclear whether there is enough support to reverse the FCC’s decision Mon. to ease ownership rules, congressional leaders said after the FCC meeting. Senate Commerce Committee ranking Democrat Hollings (S.C.) said he believed Committee Chmn. McCain (R-Ariz.) would let the committee vote on legislation (S-1046) that would preserve the 35% cap, even though there were indications that McCain himself didn’t support retaining the cap. “I'm convinced we can get a majority vote” in the Commerce Committee, said Hollings, who informally surveyed the panel’s members. The FCC commissioners will appear before the committee Wed. to answer questions about the media ownership ruling.

FCC Comr. Adelstein took the unusual step Thurs. of criticizing the Commission’s new media ownership rules even before they are issued, warning that the plan “looks like it will make a bad situation for minorities in broadcasting far worse.” Responding to a proposal that radio station clusters could stay intact if the owners kept them or sold them to minorities or women, Adelstein said even if the FCC added “a token provision that potentially affects at most a handful of stations,” minorities would find it harder in more concentrated and expensive media markets to raise capital, own outlets or to have their voices heard. He likened it to taking away somebody’s house and offering instead a voucher for a weekend at a Holiday Inn. “It’s better than nothing, but they'll still end up homeless,” Adelstein said.

After the 3rd media ownership hearing in 3 weeks, Senate Commerce Committee Chmn. McCain (R-Ariz.) still is unsure of how to address media ownership concerns. “I don’t know where that answer is,” he said of how many media outlets one owner should be allowed to have. “We need to look at this issue with great care so as to preserve diversity and localism.” McCain said he would call the FCC before the committee shortly after it issued its ruling on media ownership June 2.

The nominee for Justice Dept. Antitrust Div. chief said it was the FCC’s duty to monitor the media marketplace for diversity and said the DoJ evaluates media mergers on solely economic factors. Hewitt Pate, the acting Antitrust Div. dir. who was nominated for the top post, told the Senate Judiciary Committee Wed. that the DoJ has to “proceed under the standards of the Sherman Antitrust Act” and limit the scope of merger reviews to the economic affect it would have on the marketplace. “We make our case specifically on anticompetitive issues,” Pate said. He appeared likely to be confirmed.

The Canadian Radio-TV & Telecom Commission (CRTC) can’t require power companies to make their poles available to cable companies, Canada’s Supreme Court ruled Fri. in Canadian Cable TV Assn. v. Barrie Public Utilities. But the Canadian Cable TV Assn. (CCTA) immediately called on the federal govt. to change the law to broaden CRTC’s powers, saying the result would be higher costs for consumers.

The Tex. Attorney Gen., along with several competitive phone companies, urged the FCC to continue a requirement that SBC provide long distance service in Tex. through a separate subsidiary. Sec. 272 of the Telecom Act requires Bell companies to operate their long distance services through such affiliates for 3 years after they get FCC approval to enter the long distance market in each state. With SBC’s 3 years ending in July for Tex., the FCC asked for comments on an AT&T petition asking the Commission to extend the requirement for at least 3 more years. Tex. will be the 2nd state where the local Bell company has completed 3 years in the long distance market -- Verizon in N.Y. was the first, in Dec.

FCC Comrs. Adelstein and Copps submitted a formal request to Chmn. Powell Tues. that he bow to a long-standing custom at the agency -- that commissioners who want to delay a particular vote by a month generally are given that deference. The request came one day after the FCC Media Bureau submitted a more than 200-page document to the 5 commissioners that would loosen many of the regulations that keep large media companies from growing larger.

In a somewhat unusual case, the FCC tried to convince a U.S. Appeals Court, D.C., panel Mon. that it had properly interpreted a pair of interconnection contracts that dated back to 1996 while acting on behalf of the Va. State Corp. Commission (VSCC). The oral argument before Chief Judge Douglas Ginsburg and Judges Judith Rogers and David Tatel focused on the complex issue of how to determine whether calls were local, and thus subject to reciprocal compensation. The case stemmed from an appeal by Starpower Communications of an FCC decision that those contracts didn’t require Verizon to pay reciprocal compensation to Starpower for Internet-bound calls. The FCC had preempted an VSCC in ruling on the dispute because the state regulators chose not to act. To add to the complexity, Starpower wasn’t one of the original parties in negotiating the contracts. The company had opted into existing contracts between Verizon and 2 other companies, MCI and MFS, that required the FCC to try to interpret the intent of those parties when they negotiated the original contracts. Starpower opted into the MFS contract in 1998 and, when that contract was terminated, in late 1999 entered into an MCI contract. The basic question was whether the contract language, as well as Va. law and precedent, supported the FCC’s decision to bar the payment of reciprocal compensation for those calls. The FCC had ruled that Internet-bound calls were interstate in nature and the contracts called for reciprocal compensation payments only for local calls. FCC attorney Richard Welch argued that the contract language used Commission terms such as “end-to-end” in describing the test for whether a call was local or interstate, making it clear the contract deferred to the FCC’s view of the jurisdiction of an Internet call. The agency has used these terms for a long time and their meaning is clear to many in the industry, the agency contended. However, the judges asked whether the FCC action had been true to earlier rulings by the VSCC and other states, some of which were in favor of reciprocal compensation payments for local calls. One of the issues raised by parties was whether the FCC, because it was filling in for the state commission, had to follow state law, Ginsburg said.

In a ruling cheered by public TV stations, many of which had sought digital transition waivers citing paucity of funds, the U.S. Appeals Court, D.C., upheld the FCC’s 2001 order that permitted PTV stations to offer subscription services, including ad-supported ones, on their excess nonbroadcast digital spectrum. The court denied a petition for review of the FCC order filed jointly by the United Church of Christ, the Alliance for Community Media and the Center for Digital Democracy. The decision clears the legal uncertainty that kept many PTV stations from developing a business model for their proposed ancillary and supplementary services, revenue from which was expected to at least partly offset the steep cuts in state budgets and private funding. The petitioners contended the FCC’s order was contrary to both the plain language of Sec. 399b of the Communications Act and to Commission precedent. They said the FCC “inadequately explained” its departure from its precedent that prohibited broadcasting of ads by PTV stations and restricted the transmission of subscription services by those stations. Agreeing with the FCC that the only provision of Sec. 399b that prohibits advertising by public broadcasters refers simply to “the broadcasting of any advertisement,” the court said the distinction the agency made between broadcast and nonbroadcast was “grounded in the terms of the statute.” The statute, which defines advertising as material that is “broadcast or otherwise transmitted,” and then prohibits only advertising that is “broadcast,” supports the FCC’s distinction, the court said. As for the petitioners’ argument that the Commission hadn’t adequately explained its reversing its policy of 50 years to prohibit ad-supported programming on PTV or allowing PTV to offer subscription services, the court said the FCC had explained in its order that since digital technology allowed multiple channels, a flat ban on ads no longer was appropriate. It also said the Commission had justified its blanket approval of subscription services by PTV by its argument of technology change. “The Commission adequately articulated the ‘multiple channel’ argument in the 2001 order,” the court said, and to the extent that the petitioners’ position was that ad-supported services would completely supplant noncommercial services of PTV stations, “the Commission’s reasoning is sufficient.” The court also raised the issue of whether advertising on subscription TV was so “pernicious to public broadcasting” that it should be totally banned, as the agency’s position had been in the 1950s. The Commission did consider the tradeoff between allowing PTV stations to raise additional revenue to pay for the digital transition and the risk that ad-supported services would denigrate the noncommercial nature of PTV, the court said. It said the FCC had required that PTV stations maintain free over-the-air service with no ads and that they use their digital spectrum primarily for noncommercial uses, as well as restrictions as nonprofits, tax requirements and oversight by other bodies. Those conditions and restrictions reduced the risk that limited ads would fundamentally undermine the noncommercial nature of public broadcasters, it said. The Commission had reserved the right to act in case it found those constraints were inadequate, the court said. The FCC’s requirements on PTV stations would prevent the “wholesale conversion of public broadcasting to subscription TV,” it said. Expressing disappointment over the court decision, the Media Access Project said it would allow PTV stations to show commercials on their digital channels if they provided 1 commercial-free broadcast channel and offered the advertiser-supported channel on a subscription basis. “The public television station may also lease its additional channels to commercial broadcasters, like ABC, NBC, CBS or Fox, who may offer commercial broadcasts on public television spectrum on a subscription basis,” MAP Assoc. Dir. Harold Feld said.

FCC Comr. Copps didn’t rule out the idea of releasing the FCC’s ownership proposals to the public as a response to the perceived secrecy surrounding the agency’s media ownership biennial review. He also said he could consider asking for a one-month delay in the vote on the issue, but said he would make no decisions until he saw the proposed rules, which are expected by today (Mon.). At a New America Foundation event on Capitol Hill Fri., Copps and Comr. Adelstein, along with several senators, expressed their concern about media consolidation and the way the FCC was handling the biennial review, which is scheduled to be voted on June 2.