FCC legal advisers said Wed. they were aware of concerns by rural ILECs that universal service money was shrinking while requests for it were growing with the arrival of competitive carriers in rural areas. But they also told members of the National Telecom Co-op Assn. (NTCA) that those were very difficult problems to solve because the Telecom Act encouraged competition as well as universal service. The advisers told NTCA that numerous universal service issues were teed up at the Commission, including what services should be funded and how the support money should be raised, and they wouldn’t be easy to solve. NTCA members were in town for their annual Legislative & Policy Conference.

State regulators are eyeing wireless best practices as a potential way to avert the need for service quality regulation, at the same time as industry is drafting voluntary guidelines, officials said. Neb. PSC Comr. Anne Boyle told us she had circulated proposed best practices at last month’s National Assn. of Regulatory Utility Comrs. (NARUC) winter meeting for review. Boyle said the issue was teed up for an upcoming NARUC meeting in Denver, with hopes that industry, FCC and the National Assn. of State Utility Consumer Advocates (NASUCA) would participate, she said. Meanwhile, the Mo. attorney general is in negotiations with Sprint PCS and Nextel on a lawsuit filed in Dec. over billing practices.

With a group of senators asking the FCC to seek public comment on any proposals it formulates for media ownership rules, some sources inside and outside the Commission are beginning to think those rules, which had been expected in late spring, could be delayed. Other FCC sources are adamant that the rules will not be put off.

Verizon Internet Services used occasion of 2nd RIAA subpoena Mon. seeking subscriber information under Sec. 512(h) of Digital Millennium Copyright Act (DMCA) to shore up its argument that controversial provision was unconstitutional.

Verizon Internet Services used the occasion of a 2nd RIAA subpoena Mon. seeking subscriber information under Sec. 512(h) of the Digital Millennium Copyright Act (DMCA) to shore up its argument that the controversial provision was unconstitutional. The subpoena, issued Feb. 4, seeks the identity of another Verizon customer alleged to have committed massive copyright infringement. The matter, which has been combined with the current battle over an earlier RIAA subpoena upheld by the U.S. Dist. Court, D.C. (CD Jan 22 p2), is set for argument April 1. In a Feb. 13 argument seeking a stay of U.S. Dist. Judge John Bates’s order directing Verizon to comply with RIAA’s first DMCA subpoena, the court expressed reluctance to deal with the ISP’s constitutional claims, saying it hadn’t devoted much time to them in its briefs. In a March 17 brief in support of its motion to quash RIAA’s 2nd subpoena, Verizon said that while the court acknowledged that the ISP had raised First Amendment and Article III issues in the earlier proceeding, it “declined to resolve those issues ‘[a]bsent a clear challenge by Verizon, and full briefing and development by the parties.'” That clear challenge now is before the court, Verizon said. Article III requires that there be a “case or controversy” before federal courts are authorized to issue judicial process, the ISP said. Moreover, it said, Sec. 512(h) violates the First Amendment by failing to “provide adequate procedures for the protection of the expressive and associational interest of Internet users” and it’s overly broad. If Sec. 512(h) isn’t struck down entirely, the ISP said, it should be read to apply only to cases where a subscriber stored allegedly infringing material on a service provider’s system or network. If the court disagrees, Verizon said, it should stay any order pending appeal of the case to the U.S. Appeals Court, D.C. (Bates currently is considering whether to stay his order on the first subpoena). A broad array of ISPs and industry trade associations sought permission to submit an amicus brief, a request to which RIAA hasn’t agreed. In addition to endorsing Verizon’s constitutional arguments, industry groups said they would urge the court to consider how RIAA’s reading of Sec. 512(h) would affect customers’ rights. The recording industry’s opposition brief is due March 27. Verizon then has until March 31 to reply.

Access to cable systems by minority-owned networks was one of the primary concerns raised by members of the Congressional Black Caucus (CBC) in a meeting last week with cable industry executives, Rep. Scott (D-Va.) said (CD March 14 p12). “There are several stations that have a good product, but can’t get on the air,” he said of the difficultly some minority-owned networks have getting carriage on cable systems. Scott said the meeting generally discussed overall diversity problems and didn’t dwell on specific solutions.

The FCC is set to open a broad inquiry at today’s (Thurs.’s) agenda meeting on receiver performance requirements, ranging from TV receivers to more traditional wireless handsets. Among the key questions expected is the Commission’s statutory authority in that area and incentive- based ways to make such specifications work, a source said. The agency’s Spectrum Policy Task Force included in its wide range of policy recommendations last fall minimum receiver performance requirements. Today’s agenda item has drawn particular attention because it specifically cites DTV receivers as part of a broader inquiry.

The U.S. Supreme Court agreed Mon. to hear Verizon’s appeal of Verizon v. Law Offices of Curtis Trinko (02-682), one of the few antitrust cases in which the courts have upheld CLEC efforts to file antitrust actions against the Bells for Telecom Act-related disputes. The high court said it was limiting its review of the case to one question: “Did the Court of Appeals err in reversing the District Court’s dismissal of respondent’s antitrust claims?”

The appropriateness of public TV (PTV) stations’ using federal, state and local govt. allocations to fund their proposed ad-supported ancillary and supplementary services was raised by judges of a U.S. Appeals Court, D.C., panel hearing a challenge to the FCC order that permitted PTV stations to solicit ads on their excess nonbroadcast digital capacity. While the arguments of petitioners the United Church of Christ and Media Access Project (MAP) and the FCC focused on whether the statutory prohibition on carrying ads covered PTV’s subscription services and the definition of broadcasting, Judges Raymond Randolph and Judith Rogers showed more interest in issues such as tax dollars’ being used for such services and the tax status of PTV. Randolph asked Kevin Newsom, counsel for the Assn. of Public TV Stations (APTS), the intervenor, whether: (1) There was no prohibition on the use of federal, state and local funds for funding subscription services. (2) PTV stations proposed to use taxpayer dollars for these services to turn a profit. PTV stations weren’t planning on turning a profit from those services, Newsom said, but would plough all revenue generated from them back into the system to broaden their noncommercial educational service offerings. Rogers asked what problems would be created under tax laws if public broadcasters put their spectrum to commercial use and why it would be a good thing for them to do so. Newsom clarified that ad-supported revenue wouldn’t supplant govt. and membership funding. In fact, he said, Sec. 399(B) of the Communications Act, gives broad authority to public broadcasters to use their facilities for remunerative purposes, he said. Referring to FCC counsel Daniel Armstrong’s statement that PTV stations would use excess digital capacity to provide Internet service to rural areas, stock quotes and information on homeland security, Randolph wondered whether the stock quote service by PTV stations would be in competition with cable and other offerings. “You are subsidized and they are not,” he said. Newsom said the Commission had made it clear in its order that it would address such issues. Harold Feld, counsel for petitioners, said it was clear that Congress intended the meaning of “broadcasting” to include subscription services and Congress had no reason to think it had to explicitly prohibit ads on subscription services. Even if the meaning of broadcasting were ambiguous in the statute, the FCC’s order was “arbitrary and capricious” and contrary to past precedent, he said. The Commission in 1951 had rejected the public broadcasters’ plea for limited commercial operations, Feld said, saying it was imperative to insulate noncommercial educational stations (NCEs) from commercial pressures. Armstrong sought to assure the court that the Commission’s order would ensure that the ad-free nature of PTV’s over-the- air broadcasts would continue. The FCC’s order allows ad- support only on PTV’s ancillary and supplementary services, while stipulating that public broadcasters should use a substantial majority of their digital capacity for noncommercial educational services. The same court 15 years ago in National Assn. for Better Broadcasting v. FCC had upheld the Commission’s authority to interpret the term “broadcasting” to not include subscription services. Referring to tax breaks enjoyed by NCEs, Randolph asked whether if there were anything to prevent them from putting all kinds of editorials on their subscription services. Armstrong said that as long as public broadcasters’ tax- exempt status was in jeopardy, there were limitations on their ability to do that.

Despite a conflict-of-interest cloud raised by consumer advocates, the Cal. Senate is scheduled to vote next week on whether to confirm Cal. PUC Pres. Michael Peevey’s March 2002 appointment to the agency. Meanwhile, legislatures in Tex. and Alaska confirmed state commission appointments. Peevey’s nomination cleared a key hurdle Wed. when the Senate Rules Committee voted unanimously to support his confirmation. The Senate must act within a year of an appointment, which means the chamber would vote on Peevey Mon. The conflict allegations were raised by the Cal. Foundation for Taxpayer & Consumer Rights, which said Peevey Mon. filed a conflict-of- interest statement reporting that he had received $2,100 worth of free parking at San Francisco International Airport in 2002. The PUC regulates certain aspects of airport operation as part of its transportation jurisdiction. Cal. law limits gifts to state officials to $340 per year. Peevey said at the time he wasn’t familiar with the state’s gift rules and said he had sought the parking pass at the airport because he was undergoing chemotherapy for lung cancer and was making regular flights from San Francisco, where the PUC is headquartered, to a southern Cal. cancer treatment center. Peevey said he disqualified himself from participation in any PUC proceeding involving the airport and had surrendered his airport parking pass. But Foundation spokesman Doug Heller said Peevey, as a state official, should have been familiar with the state’s conflict-of-interest rules and criticized him for showing “utter disdain” for state law. Meanwhile, the Tex. Senate unanimously confirmed the appointments of Tex. PUC Chmn. Rebecca Klein and Comr. Julie Parsley. Klein will be on the PUC until Sept. 2007 and Pasley until Sept. 2005. The Alaska legislature confirmed the nominations of Dave Harbor and Mark Johnson to the Alaska Regulatory Commission. Harbor took office in Jan., succeeding Comr. Patricia DeMarco. Johnson will succeed Comr. Bernie Smith July 1.