SAN FRANCISCO -- Internet not only is undercutting rural telcos’ regulatory-based revenue sources, but also is shifting their policy focus away from states, industry conference heard here Mon. As e-mail, instant messaging and Web-based services, along with cell calls, increasingly supplant wireline voice and fax communications, local incumbents’ access revenues plunge correspondingly, compounding regulatory reductions in access rates, Chmn. Robert Riordan told convention of OPASTCO.

Members of Congress have raised questions about FCC responsibilities in wake of WorldCom scandal in flurry of letters late Thurs. and Fri. House Financial Services Chmn. Oxley (R-O.) sent letter Thurs. to FCC Chmn. Powell asking about Communications Act requirement that FCC “inquire into the management” of communication common carriers. Senate Commerce Committee Chmn. Hollings (D-S.C.) wrote letter Fri. similar to one sent by Rep. Markey (D-Mass.) last week questioning whether FCC is prepared to handle potential WorldCom bankruptcy. And Ranking House Telecom Subcommittee Democrat Markey (Mass.) was critical of Powell’s response to his questions about continuity of service, particularly broadband, should WorldCom file for bankruptcy. Markey said in statement late Thurs. that Powell and other FCC commissioners should “rethink the wisdom” of FCC policies.

When granting additional flexibility for spectrum use, several wireless carriers and equipment makers urged FCC this week not to change rules in “midstream” for incumbent licensees that already had paid billions for licenses. Wireless and satellite companies, new technology developers, broadcasters and public interest groups filed close to 200 comments on questions from agency’s Spectrum Policy Task Force. Relatively high number of comments poured into Commission despite Office of Engineering & Technology’s refusal of several requests to provide extension of July 8 deadline. Public notice last month raised policy questions ranging from potential need to redefine harmful interference to whether rural spectrum should be covered under policy different from urban areas (CD June 7 p1). Some developers of emerging technologies stressed need for FCC to provide clarity in its Part 15 rules for unlicensed devices and to furnish more spectrum as demands increased. Several large carriers, including Sprint and Cingular, urged FCC to keep intact auctions of exclusive allocations and said market- based tools such as auctions worked only if license-holders had clearly defined rights.

FCC admonished Daystar Public Radio, licensee of WKSG(FM) Cedar Creek, Fla., for broadcasting ads and conducting “impermissible” fund-raising in violation of Communications Act. Agency said Daystar admitted that station had broadcast 5 announcements sponsored by for-profit entities and that it had received consideration for airing messages. Station also acknowledged that it had solicited investment funds during interview with owner of for-profit company. Daystar said it assumed station management “better understood” parameters of on-air acknowledgments but was disappointed that management’s “grasp of this issue is faulty,” FCC said. Although it believed that no monetary sanction was warranted, agency said admonishment was necessary to “redress statutory and rule violations.”

Accounting practices, analyst ratings and even declaration of 5th Amendment protection came under skeptical questioning from members of House Financial Services Committee during much anticipated hearing Mon. on WorldCom’s financial scandal. Several members expressed frustration with answers by Arthur Andersen auditor Melvin Dick and Salomon Smith Barney telecom analyst Jack Grubman about their involvement in company’s problems. Those members suggested telecom analysts were being “modest” about their roles in WorldCom meltdown and were dodging questions about accounting problems that would have suggested culpability in scandal.

Congress returns from week-long recess today (Mon.), immediately focusing on WorldCom scandal. House Financial Services Committee will hear former WorldCom CEO Bernard Ebbers and current CEO John Sidgmore. Hearing, titled “Wrong Numbers: The Accounting Problems at WorldCom,” 1 p.m. , Rm. 2128, Rayburn Bldg., also will feature: (1) Scott Sullivan, former CFO who was fired after scandal broke. (2) David Myers, former senior vp-controller, who resigned under similar circumstances. (3) Melvin Dick, former Arthur Andersen auditor. (4) Jack Grubman, Salomon Smith Barney telecom analyst. (5) Bert Roberts, WorldCom board chmn.

Despite concerns expressed by homeland security officials and others in the U.S. govt. about the future of the company’s massive Internet infrastructure, WorldCom CEO John Sidgmore said Tues.: “I don’t think there’s much chance, if any, of any blip in the service.” At a Washington news briefing held an hour after he met with FCC Chmn. Michael Powell, Sidgmore said his company was by far the largest Internet carrier in the world, with 50% of the Internet’s total traffic, 70% of e-mail in the U.S. and 50% of e-mail in the world. “There is no significant chance of the UUNet infrastructure going dark,” he said.

THX Ltd., newly spun off as independent company from Lucasfilm, plans announcement possibly by Aug. on new certification initiative in audio for videogaming, Mike Hewitt, acting gen. mgr., said in interview. He declined to offer specifics, including possible hardware or software partners, except to say program ultimately would be “platform-agnostic.”

Legislation introduced Thurs. by Sen. Feingold (D-Wis.) would expand FCC authority to review proposed radio mergers and curb alleged anticompetitive practices of radio and concert promoters. Feingold said his proposed Competition in Radio and Concert Industries Act was effort to halt damage he said was done by Telecom Act of 1996, which he said was heavily influenced by “soft money.” (CD June 14 p7) Telecom Act eliminated national radio ownership cap and softened local ownership caps, which has “opened the floodgates of media concentration,” he said. As result 4 companies -- Chancellor, Clear Channel, Infinity and Capstar -- control most popular music formats, including 63% of top 40 format and 56% of country format, he said. Feingold said he realized there was not enough time for bill to pass Senate this term, but he hoped to get it through committee, or at least get hearing, before 107th Congress adjourns.

Both Dennis Johnson, pres. of ground-penetrating radar (GPR) developer Geophysical Survey Systems, and FCC official defended that ultra-wideband technology as not having caused interference problems in past. At Precursor Group panel discussion here late Wed., Michael Marcus, assoc. chief of FCC’s Office of Engineering & Technology, said that during UWB rulemaking, “virtually nobody was worried about GPR except for the FAA… GPRs have been around forever and haven’t caused problems to anybody forever.” Marcus said many GPR devices had GPS systems mounted on same box but hadn’t caused reported interference to GPS operations. “I'm not convinced FAA has done the technical analysis correctly,” he said. Johnson said: “We've been in business for 32 years and the FCC has never recorded a single incident of GPR interfering with another receiver. Our equipment is operated at virtually every airport in the country and on most military bases.” GPR manufacturers and service providers filed petitions at FCC recently seeking reconsideration of portions of UWB rules they contended were too restrictive to allow their systems to continue operating for most applications. Ground Penetrating Radar Industry Coalition (GPRIC) filed petition for limited stay of enforcement of UWB rules, contending that changes were adopted in contravention of Administrative Procedure Act. Earlier this week, U.S. GPS Industry Council filed opposition to petition at FCC, saying stay request should be rejected even if Commission was procedurally obligated to issue further notice before adopting some provisions of final rules. “Because no FCC rules authorizing ground penetrating radars are currently in effect, a stay in the effectiveness of the new rules about which GPRIC complains would have the consequence of removing any basis for lawful operation of GPRs, leaving GPRIC’s members in a worse position than they would have be with the new rules in effect,” opposition filing said. Marcus also countered some descriptions of UWB as potential last-mile, broadband solution and technology for similar longer range advanced wireless services. Because FCC order earlier this year on UWB used very conservative power limits, “ultra- wideband isn’t going to be used for any of these things,” he said. Manufacturers instead are talking about short-range transmission ranges of 10 m and initial data ranges of 100 Mbps, he said. Marcus also addressed concerns raised by some licensees that FCC had no right to authorize technologies such as UWB in bands for which they have paid at auction. “People who have that point of view might want to read” Part 15 rule that Commission issued in 1989, he said. “Up until that point, every class of unlicensed device had very specific bands in which they were allowed to operate,” Marcus said. Decision in 1989 said that besides those rules, “in most parts of the spectrum but not all,” unlicensed devices would have freedom to operate as they wished as long as they met certain power and interference requirements, he said. Officials of UWB developers XtremeSpectrum and Time Domain said first commercial markets for that technology would involve high bandwidth, personal area networks. Those operations will connect consumer electronic devices in the home and office “at very high data rates,” said Jeff Ross, vp-corporate development & strategy for Time Domain. He and Veronica Haggart of XtremeSpectrum emphasized that UWB was likely to complement rather than compete with Bluetooth and 802.11 systems. “We believe that ultra-wideband fills in the gaps,” Ross said. Bluetooth offers low data rates at ranges of 10 m and 802.11 offers higher data rates. “What’s unserved today is the market for multimedia,” he said. At very low power levels, UWB will offer 100 Mbps at 10 m with ability to scale up to 400 Mbps, he said.