Hollywood finds itself on defensive in 2 new suits related to digital copy protection and fair use of TV content. On Thurs., 5 users of ReplayTV sued 28 studios to defend what they described as fair-use rights of digital content received on their personal video recorders (PVRs), and Electronic Frontier Foundation, which facilitated suit, said case could be consolidated with existing one against ReplayTV owner SonicBlue. EFF Senior Intellectual Property Attorney Fred von Lohmann said case was “linked” with digital rights management (DRM) debate in Congress and suits by RIAA over peer-to-peer (P2P) Web sites in that all involve fair use differently interpreted. Two EFF attorneys said Thurs. suit was brought in part because broadcasters were holding on to business model based on TV ads that they said was long due for change. Separately, a Web site operator has sued MPAA, charging commercial interference, libel and defamation because it was forced to take down its site over what it termed false piracy charges by MPAA.

FBI Dir. Robert Mueller urged Senate Judiciary Committee Thurs. to support proposed changes in agency’s electronic surveillance powers, receiving mixed response from panel. He said federal agents currently were restricted from surfing Internet for publicly available information about terrorist group activities. Although 12-year-old could go to Web sites that advocate violence against U.S. or attempt to find recruits for such terrorist activity, current restrictions preclude federal investigators from engaging in such information gathering, he said: “It’s critically important for us to keep abreast of how terrorists are using modern means” of distributing their messages and coordinating activities. Separately, President Bush proposed creating cabinet-level Dept. of Homeland Security that would include an Information Analysis & Infrastructure Protection Div. That proposal received immediate support from several congressional leaders.

More bad news hit Microsoft Thurs. as Britain’s Independent TV Commission banned TV ad for Xbox videogame console after it received 136 complaints from viewers who found it offensive, shocking and in bad taste. Action came as Microsoft was mounting uphill battle to compete against Sony’s PlayStation 2 (PS2) in Europe, where it reduced Xbox price before SRP cut in U.S., and less than week after MIT student said he hacked Xbox security system and posted his findings at school’s Web site (CED June 5 p3).

FCC’s Enforcement Bureau set up program to monitor Bell companies’ compliance with Telecom Act requirement that they continue to provide open local markets once they gain Sec. 271 approval. Although bureau has been providing oversight, CLECs have urged FCC to establish more formal program. Bureau said in announcement Thurs. that it had established Sec. 271 Compliance Review Team with responsibility for monitoring Bells “on a more structured and systematic basis.” Team will be staffed by attorneys, auditors and other members of bureau’s Investigations & Hearings Div. (IHD). After Bell company receives Sec. 271 approval, team will scrutinize its performance data and other information to determine whether it still is providing adequate access to local competitors. Process will include compliance reviews 6 and 12 months after approval, focusing on any concerns raised by Commission when it granted Sec. 271 approval. If team determines possible lack of compliance it will initiate investigation. Team’s oversight responsibilities will be divided along Bell company regions, with separate group for each region. Bureau said concerns about possible lack of compliance should be directed to Maureen Del Duca, deputy IHD chief. Team also will serve as point of contact for state regulatory commissions. Formal complaints still may be filed as well. FCC Chmn. Powell said team approach represented “a new phase of Sec. 271 enforcement.” ALTS Gen. Counsel Jonathan Askin said he was “optimistic that this could be a worthwhile process.” He said he particularly liked “date certain” reviews every 6 and 12 months and “clearer points of contact” for raising concerns about Bell compliance.

FCC late Wed. issued order permitting ILECs to raise subscriber line charge (SLC) for residential and small business consumers to as high as $6 July 1 and $6.50 year later. Action comes after conclusion of cost study that was required under May 2000 CALLS access charge reform order before SLC cap could be raised above $5. SLC is flat-rate charge imposed by LECs on end users to recover interstate- allocated portion of local loop costs. CALLS order reduced implicit subsidies in access rates while gradually increasing SLC cap in return but, in answer to concerns of consumer groups, called for cost study before SLC cap rose this year. Telecom Act requires FCC to convert explicit subsidies, such as those in access charges, to implicit charges such as SLC. CALLS order had raised SLC cap to $4.35 from $3.50 on July 1, 2000, and to $5 on July 1, 2001. FCC said cost study “verified” that latest increase to $6 was “appropriate.”

Group of companies that develop devices for Part 15 spectrum, including ultra-wideband developer XtremeSpectrum, opposed petition to FCC for reconsideration by amateur radio group that they said “seems to call into question the lawfulness of unlicensed devices in general.” National Assn. for Amateur Radio (ARRL) filed petition for reconsideration in April concerning order that would allow operation of unlicensed fixed, point-to-point transmitters in 24.0-24.25 GHz band using narrow-beamwidth antennas. ARRL petition raised broad Part 15 issues, asking that Commission reverse part of order that addressed its jurisdiction to authorized unlicensed operation of radio frequency devices “which have significant potential for interference to unlicensed radio services.” ARRL argued that FCC had no jurisdiction under Communications Act to authorize through rulemaking operations unlicensed devices that had “significant potential” to interfere with licensed radio services. ARRL contended: “The Commission has expanded the concept of unlicensed devices far beyond what its original concept allowed and far beyond what is permissible pursuant to Section 301” of Communications Act. ARRL also said certain statutory provisions barred unlicensed operations, with limited exceptions. In opposition filed late Fri. at FCC, group of technology companies said ARRL’s arguments were tantamount to asking FCC to remove computers, cordless phones and “all other radio-based consumer devices” from market. Besides XtremeSpectrum, opposition was filed by Intersil, Symbol Technologies and Wireless Ethernet Compatibility Alliance. “On its face, ARRL’s objection reaches much farther than the 24 GHz rule adopted in this proceeding,” filing said. “Given that nearly all unlicensed operation in non-government spectrum uses the same frequencies as do licensed radio services, ARRL’s petition seems to call into question the lawfulness of unlicensed devices in general.” Companies said FCC had backing to implement Part 15 rules as result of: (1) “Great deference” to which Commission’s statutory interpretation is entitled. (2) Deference given to agency when it acts in line of its technical expertise. (3) Independent authority of FCC to fill in gaps in Communications Act, “particularly in a fast-moving technological environment.” (4) Repeated ratification by Congress of unlicensed operations as evidenced by lawmakers’ leaving rules intact for 60 years “while routinely amending other parts of the statute.” Opposition filing also said Congress included language in 1997 Balanced Budget Act that excluded from auction bands allocated for unlicensed use under Part 15. “ARRL thus has the difficult task of arguing that Part 15 exceeds the Commission’s statutory authority, in the face of a statute that specifically protects Part 15 operations,” filing said.

Colo. PUC denied AT&T petition asking agency to reopen record in Qwest’s Sec. 271 long distance entry case to allow testimony from CLECs that AT&T alleged were bribed to silence by Qwest with secret preferential local access deals. PUC said AT&T had raised issue of allegedly secret preferential deals in recent workshops on Qwest’s 271 bid and there was sufficient opportunity for AT&T to get issue on record. AT&T also lost bid in Iowa to challenge Qwest’s compliance with Telecom Act long distance requirements. Iowa Utilities Board dismissed AT&T allegations that Qwest had failed to meet Sec. 272’s requirement that it prove it had established separate long distance unit and wouldn’t discriminate in favor of that unit. Board said AT&T lacked substantive support for its claims of Qwest noncompliance with 272. It also rejected claim by CLEC trade group ASCENT that Qwest hadn’t complied with Sec. 271 checklist Point 14 (resale). In related Iowa matter, Qwest proposed tariff change to reduce its wholesale DS-3 rate by 94%, to range of $205-$223 from flat $5,328. New rates would take effect June 7. Qwest said tariff change would bring Iowa DS-3 rates in line with those in other states.

Leap Wireless said Wed. it didn’t plan to participate in FCC’s lower 700 MHz band auction June 19. Commission late Fri. decided to allow lower band auction to be held on time but delayed upper band bidding 7 months. Leap had said earlier this month it was filing short-form applications for both upper and lower bands to preserve its options to take part in bidding. It said it decided not to join Ch. 52-59 bidding because Commission had delayed only Ch. 60-69 auction to Jan. 14, 2003. When Leap filed to bid in what then was pair of June auctions, Chmn. Harvey White said he believed those dates would be “significantly delayed by either the FCC or Congress. Since this did not occur and because we believe a bifurcated 700 MHz auction is not favorable for the company, we will not participate in Auction 44.” Today (Thurs.) is deadline for prospective bidders in lower band auction to make upfront payments at FCC. Short-form applications, which provide FCC with financial information and details on which licenses entity plans to bid, have attracted wide array of broadcasters and telcos (CD May 29 p1). Among applicants are Cybergate, which is run by George Schmitt, chmn. and acting CEO of CLEC e.spire. He’s former pres. of GSM wireless carrier Omnipoint, which was bought by VoiceStream, and past chmn. of PCIA. Cybergate applied to bid on all cellular metropolitan area licenses and all economic area groupings in lower band. Also among prospective bidders Sweetwater Wireless, owned by PCS Constructors, which in turn is backed by Stephen Roberts and William Yandell. Yandell, who owns 49.9% of PCS Constructors, is CEO of Eldorado Communications and Roberts is managing dir. Eldorado had vied with NextWave for PCS licenses in 1996 C-block auction. Eldorado, which ultimately returned its licenses to FCC and filed for bankruptcy, recently raised concerns at FCC over NextWave proceeding, including lack of publicly available information on last year’s proposed settlement agreement. Other prospective bidders include Lynch 3G Communications, owned by Lynch Interactive. Mario Gabelli, chmn. of Gabelli Asset Management, is chmn. of Lynch and owns 23% of company. His media holdings have included stake in Black Entertainment TV and he was backer of Theta Communications, which bid in NextWave re-auction.

CTIA told Office of Management & Budget (OMB) Tues. that FCC never conducted cost-benefit analysis of pending wireless local number portability (LNP) requirements. CTIA responded to OMB public notice that sought comment on draft report to Congress on costs and benefits of federal rules. OMB has been examining possible reform measures under fiscal 2001 Treasury and General Govt. Appropriations Act -- so-called Regulatory Right-to-Know Act. CTIA said that in general it supported institutionalizing formal regulatory impact analysis that would include assessment of costs and benefits of regulation and examination of regulatory alternatives. Verizon Wireless petitioned FCC in July 2001 for forbearance on requirement that commercial mobile radio service providers support wireless LNP in top 100 metropolitan statistical areas by Nov. 24, 2002. State PUCs have urged Commission to reject forbearance request, citing negative impact on consumers. CTIA told OMB that wireless LNP requirement carriers estimated price tag of $900 million for installation and $500 million in annual recurring costs for maintenance. “But the Commission has never conducted a cost-benefit analysis or considered the competitive alternatives that this investment could support.” CTIA also said wireline LNP requirement had created $3 billion in end-user costs “while consumers have not received commensurate benefits.” Association itemized regulations it had asked FCC to consider modifying or changing in its 2002 biennial review. Wireless group petitioned FCC recently to eliminate “unnecessary regulations” in policy areas such as wireless LNP. Group cited recent U.S. Appeals Court, D.C., decision that involved biennial review of broadcast ownership rules. FCC Chmn. Powell raised concerns that biennial review standard could evolve under Fox ruling from agency’s having to prove why it eliminated regulation to also include why rules should be kept (CD Feb 21 p1). CTIA reiterated to OMB what it already had told FCC in biennial review, that “the public interest requires that the Federal Communications Commission review, on an expedited basis, all regulations affecting CMRS carriers.”

Protecting First Amendment “doesn’t require laws that can be so easily debated that they can’t be taken seriously,” said attorney Roger Witten in panel discussion on recently enacted Bipartisan Campaign Reform Act (BCRA) at Media Institute’s first Cornerstone Luncheon May 28. Law’s restrictions on issue advertising and political speech have raised serious constitutional questions, Media Institute said.