FCC Comr. Martin told reporters Tues. he wasn’t sure FCC should abandon use of revenue-based contributions system for universal service. However, if agency did want to change current system, one based on telephone numbers might be better than one based on connections, he said. Asked whether contributions proceeding was moving forward, he said agency hoped to act on proposal at last agenda meeting but wasn’t ready on time and there still was no draft proposal circulating among commissioners’ offices. FCC is trying to develop new method of determining how much carriers pay to support universal service program because current revenue- based program has developed problems. For example, many say current system doesn’t accurately take into account growth of wireless services and penalizes carriers whose revenue is declining. Martin said at press breakfast that he thought current system could be tweaked easily to solve those problems. For example, contribution from wireless carriers could be increased by raising current wireless cap, which wireless industry has said it would accept, he said. Best course, he said, is to address wireless cap and declining revenue problem now and continue to seek comment on broader issues. Although several carriers have suggested using system that would base contributions on how many connections carrier made to telephone network, Martin said he thought telephone number-based system would make more sense. Among other things, it would offer way to migrate assessment of universal service contributions to Internet telephony, he said. Number-based system would work well when carriers moved to IP telephony because telephone numbers still would be needed to make calls, he said. Martin said one of his objections to connections-based system was that it might be used to assess broadband connections. “I'm opposed to extending universal service contributions to broadband,” he said. “It acts as an Internet access tax.” On another topic, Martin demurred when asked whether he had position on whether agency should take geographically-based “granular” approach to making unbundled network elements (UNEs) available or whether all UNEs should continue to be available nationally. Martin said he still was developing his position but it seemed to him that U.S. Appeals Court, D.C., remand required agency to consider market-by-market approach. If that’s case, state regulators would be well positioned to make such decisions, he said. On broadcast issues, he said proposal on cable ownership cap hadn’t reached 8th floor yet, although agency had hoped to complete it by end of year. Asked whether year-end still was feasible, he said it was possible. On whether FCC can meet spring target for media ownership proceeding, he said if there were delay, agency should at least act on newspaper-broadcast rule. That issue was teed up before broader proceeding started and record is complete, he said.

Dynamics of the FCC are likely to change now that Jonathan Adelstein was confirmed by the Senate late Thurs. for the open Democratic seat on the Commission, sources tell us. Those who know Adelstein were reluctant to predict direction the FCC would take now that it once again had full complement of 5 members. Many expect Adelstein usually to vote with Comr. Copps, Commission’s other Democrat. But others said he would think independently and wouldn’t necessarily follow form on every issue. Even rural advocates said Adelstein, touted for his concerns of rural issues, could break from rural lobby on some issues.

Advocates for minority and low-income groups are researching ways to challenge alleged electronic redlining by cable and telecom operators when they roll out new advanced services such as high-speed Internet in low-income and minority neighborhoods, sources said. Minority Media & Telecom Council (MMTC) will take up issue at March board meeting and will decide whether to mount FCC or court challenge, Exec. Dir. David Honig told us. Civil Rights Forum on Communications Policy (CRFCP) said it was actively seeking ways to raise $25,000-$35,000 to conduct study of electronic redlining in Boston, D.C., N.Y.

AT&T Chmn. David Dorman told UBS Warburg’s Annual Global Telecom Conference in N.Y.C. Mon. that by end of next year company expected to offer local services based on unbundled network element-platform (UNE-P) in as many as 14-17 states because of recent state regulatory changes. AT&T now offers local service via UNE-P in 8 states, with states such as Mich. and Cal. weighing in on pricing issue in way that allows company to compete economically. Dorman’s pitch about need for UNE-P on at least interim basis came within hours of Verizon CEO Ivan Seidenberg saying that in long-term, competitors who rely on UNE-P instead of facilities-based competition would be destroyed by it.

SBC Chmn. Edward Whitacre expressed optimism Tues. that regulatory debates on unbundled network element platform (UNE-P) and broadband policies would have “positive” outcome. “The outlook is improved,” he said at UBS Warburg Annual Global Telecom Conference in N.Y.C., citing recent comments by FCC Chmn. Powell. “And it’s improved on both fronts.”

U.S. Appeals Court, D.C., peppered attorneys for PCS bidder 21st Century Telesis and FCC Tues. on timing and notice requirements of automatic cancellation of carrier’s 19 licenses. 21st Century lost 19 PCS licenses after missing Jan. 27, 2000, late payment deadline, resulting in automatic cancellation under FCC rules. Carrier argued it should have had hearing before its licenses were cancelled and that condition stipulating automatic cancellation for nonpayment exceeded Commission’s statutory authority. But FCC attorney Stanley Scheiner argued that agency had to have such regulatory discretion on what happened in cases where bidders “abrogate” auction victories by not paying: “What they are saying is quite remarkable, because they are saying we can’t have a rule at all.”

Before FCC rules on proposed merger of AT&T Broadband and Comcast, it will decide whether pending motion by Media Access Project (MAP) to force Commission to examine Internet access agreement with AOL Time Warner has merit, Comr. Abernathy told reporters Mon. She said Commission was unlikely to release both orders together and that MAP’s motion would be dealt with first, probably in next few days. Tues. will mark Day 180 of merger review, which was Commission’s self-imposed target for deciding on deal. It appeared from her comments that Commission probably would miss that target, but Abernathy said she expected ruling on merger “soon… I would hope it could come out this week, but stay tuned.” She declined to discuss whether she or other commissioners already had voted or merger’s status. Sources have told us that staff of Media Bureau had recommended that commissioners approve merger (CD Oct 30 p2).

Optical disc with 250 GB storage is being developed by consortium of 7 companies and Japan’s National Institute of Advanced Industrial Science & Technology, Nikkei reported. Capacity is 10x greater than blue-laser-based high-definition DVDs now being readied for marketing. Developers of new disc are JVC, Pioneer, Pulstec Industrial, Samsung Japan, Sharp, TDK and Toshiba and it uses Super-RENS (Super-Resolution Near-Field Structure) technology. Surface of disc is covered with 4- nanometer layer of platinum oxide, which dissolves into particles when exposed to heat of laser reading disc. Light generated by reflection of laser from particles is used to read data, and platinum oxide layer acts like lens to focus laser. Group has developed write-once recordable disc; with short-wavelength blue laser, capacity is 80 GB, and with longer wavelength red laser it’s 60-70 GB. Group said capacity would be raised to 250 GB in one year by improving technology -- enough capacity for 20 hours of digital HD video. New optical discs will be comparable with existing ones in cost and other factors, report said.

FCC Comrs. Martin and Copps issued statements saying they couldn’t give full approval to Commission’s decision approving Verizon’s Sec. 271 petition for Va. (CD Oct 30 p6) because they disagreed with way agency weighed carrier’s pricing of unbundled network elements (UNEs). Both issued statements “concurring in part” and questioning FCC’s decision to consider price compliance for UNE combinations rather than looking at price of each element separately. Copps said agency took similar course in its recent approval of Verizon’s Sec. 271 petitions for N.H. and Del. “As in that order, the majority concludes that the statute permits Bell companies in all instances to demonstrate compliance with the checklist by aggregating the rates for non-loop elements,” Copps said: “I believe the better reading of the statute is that the rate for each network element must comport with Congress’s pricing directive.” Martin raised similar concerns, saying he disagreed with Commission finding “that the statute does not require it to evaluate individually the checklist compliance of UNE TELRIC rates on an element-by-element basis.” Martin said he disagreed with Commission argument “that because the general statutory provisions refer to the term network elements in the plural, the Commission is not required ’to perform a separate evaluation of the rate for each network element in isolation.'” Martin said “decision attempts to find support for its statutory interpretation by noting that the only party that raised this legal issue on the record also takes the position that some degree of aggregation is appropriate in conducting a benchmark analysis… I am not sure that an outside party’s inconsistency could absolve the Commission of its obligation under the Act, in this case, to evaluate individually the checklist compliance of UNE TELRIC rates on an element-by-element basis.” Martin also indicated discomfort with FCC’s considering information in interconnection agreements that Verizon added to record after it filed Sec. 271 petition in violation of “complete-as- filed” requirement. He said he understood that was unusual circumstance because Verizon’s interconnection agreements were delayed by FCC itself, which had been overseeing arbitration dispute in Va. in lieu of Va. State Corp. Commission. However, he said agency had been accepting late- filed information in other petitions and, “absent the kind of extremely unique circumstances at issue here, the Commission should avoid relying on late-filed information.” He said late-filed information could burden commenters, particularly those opposing Sec. 271 petition.

SBC/Southwestern Bell said it opposed motion by Tex. PUC staff to treat its petition for $142.7 million retroactive rate surcharge as new contested rate increase that would require full hearings before administrative law judge. SBC seeks retroactive surcharge to recover rate reclassification increases in Austin, Dallas, Ft. Worth and 29 other cities and towns for period from Jan. 1999 to Nov. this year that were unlawfully denied by PUC. SBC said state Supreme Court held that PUC had acted unlawfully in denying rate reclassification boosts in 1999, so carrier was entitled to recover increases retroactively. SBC said it would raise rates in those localities, effective Nov. 15. Staff said size of amount at issue and long time period being contemplated for recovery made this major rate increase that needed to be fully litigated as contested case. SBC said staff’s recommendation lacks legal basis. It said court decision required that PUC put company in position it would have been in had agency acted in lawful fashion in 1999. SBC said it had no objection to parties from 1999 case participating in proceeding to develop appropriate surcharge remedy for recovery of money it was owed, but would object most strongly to any proceeding that would allow parties to retry issues already decided or to raise new issues.