House Commerce Committee Chmn. Tauzin (R-La.) and Judiciary Committee Chmn. Sensenbrenner (R-Wis.) were meeting Tues. afternoon with House leadership to present compromise version of data deregulation legislation (HR-1542), House Majority Leader Armey (R-Tex.) said in press briefing. He credited Tauzin for hard work on moving version of bill referred to full House that would loosen regulations on Bell company provision of Internet backbone and high-speed Internet services.

House Telecom Subcommittee Chmn. Upton (R-Mich.) blasted negotiators of proposed NextWave settlement for asking Congress “to clean up a judicial train wreck.” Proposed deal would require bankrupt NextWave to return wireless C- and F- block licenses in exchange for nearly $6 billion after taxes, while govt. would gain $10 billion (CD Nov 19 p1) from spectrum that was re-auctioned earlier this year. Although Upton agreed with supporters of settlement that “taxpayers have been starved of proceeds” from auctions, he said he was “not happy that NextWave gets $6 billion from this.” He said he planned to introduce legislation to prevent future conflicts between spectrum policy and bankruptcy laws, although he didn’t disclose details. In meantime, he said, he not only hopes Supreme Court will review the case but will overturn D.C. Circuit decision that ruled for NextWave.

Several upcoming proceedings at FCC could “clarify the regulatory scheme that applies to broadband,” FCC Comr. Abernathy said at press breakfast Mon. She noted that Commission had issued notice of inquiry last year that covered issues such as how cable modem service should be classified, particularly whether it was cable service, information service or something else (CD Sept 29 p4). “We hope to move on this issue or issues sometime in the early part of next year,” she said.

FCC Wed. turned back petition for rulemaking filed by Public Employees for Environmental Responsibility (PEER) that had sparked strong opposition from wireless, wireline and undersea cable operators. Commission unanimously adopted order, although Comr. Copps issued separate statement saying PEER had raised “important questions” about how FCC carried out environmental duties mandated by Congress. PEER had asked FCC to change how environmental rules were applied to undersea cables, fiber lines, wireless towers. Group of govt. employees concerned about environment wanted agency to conduct rulemaking to ascertain whether it needed to create Office of Environmental Compliance and separate joint rulemaking with other agencies. Companies ranging from Verizon to Global Crossing had balked at PEER petition, telling FCC such action wasn’t needed and unjustifiably would add to regulatory burdens. Commission rejected PEER arguments that due to explosive growth in wireless and wireline infrastructure since Telecom Act, agency should take fresh look at cumulative impacts of spectrum auctions, tower registrations, undersea cable landing licenses, Sec. 214 authorizations. PEER doesn’t offer “rationale for treating all actions as actually or potentially damaging to the environment,” FCC said. “We do not believe that the evidence of environmental harm proffered by PEER reflects any environmental processing failings by the Commission.” Even if PEER successfully pointed to such shortfalls, “a few examples in no way justify the complete overhaul of the Commission’s long-standing environmental rules across all service areas,” it said. PEER had challenged FCC environmental rules that implemented National Environmental Policy Act (NEPA), which required federal agencies to account for environmental impact of projects they oversaw. PEER had urged FCC to require applications for all Commission actions involving submarine cables, fiber lines and spectrum requiring communications towers to file environmental assessment for public utility facility. Private utility would have to file environmental impact statement. PEER defined public utilities as supplying last-mile connections while private utilities would be parts of network needed to transmit over long distances. FCC said its regulations implementing NEPA already identified 9 types of actions that could have significant environmental impact and evaluate through environmental assessment all actions that involved projects that fit into those categories. In its May 2000 petition, PEER had cited growing number of cases in which laying of fiber cable had damaged coral beds and harmed habitat of endangered marine species. PEER said that in other cases, buildings and towers could have significant effect on environment and historic areas. Copps said that “while this proceeding did not provide adequate record evidence for a restructuring of our policies at this time, the Commission should undertake a thorough review of our obligations under the National Environmental Policy Act and the National Historic Preservation Act.” He said that as part of Chmn. Powell’s recently launched review of FCC procedures, assessment of agency’s responsibilities under NEPA and National Historic Preservation Act should be included. Copps said FCC should: (1) Determine whether it had devoted enough resources to meet its environmental responsibilities under those laws. (2) Examine how accessible such proceedings were to “nontraditional stakeholders” such as small businesses. PEER Gen. Counsel Daniel Meyer told us group planned to file petition for reconsideration at FCC by early Jan. “I do take Commissioner Copps’s separate statement as an indication the Commission knows it’s not addressing environmental concerns from environmentalists in an appropriate manner,” Meyer said. He said one example of types of cumulative environmental impacts that FCC must consider involved wireless towers that hadn’t complied with Sec. 106 review under National Historic Preservation Act. Assessing cumulative impacts of towers, Copps said, “the danger is the actual spectrum auction will have to be environmentally reviewed. That would be a nightmare for industry.” Lack of uniformity in compliance and enforcement means that most of industry has been erecting towers without environmental review, he said.

House Judiciary Committee and House Telecom Subcommittee took turns Tues. grilling DBS executives on why govt. should approve EchoStar-DirecTV merger. In Judiciary Committee hearing, EchoStar Chmn. Charles Ergen said merged DBS provider would offer significant benefits, saying it would create viable nationwide competitive alternative to cable while freeing up spectrum that could be used for rural broadband deployment: “Without this merger we won’t see broadband development in rural America in our lifetime.” Ergen played down criticism that merger would create DBS monopoly. Considering high rates of cable penetration across nation, even merged entity “hardly makes us a monopoly” in multichannel video programming distribution market, he said. Ergen said new company still would face competition from C-band satellite service providers, contention that Chmn. Sensenbrenner (R-Wis.) said was inconsistent with statements Ergen made last year in federal court.

House Judiciary Committee and House Telecom Subcommittee took turns Tues. grilling DBS executives on why govt. should approve EchoStar-DirecTV merger. In Judiciary Committee hearing, EchoStar Chmn. Charles Ergen said merged DBS provider entity would provide significant benefits, saying it would create viable nationwide competitive alternative to cable while freeing up spectrum that could be used for rural broadband deployment: “Without this merger we won’t see broadband development in rural America in our lifetime.” He played down criticism that merger would create DBS monopoly. Considering high rates of cable penetration across nation, even merged entity “hardly makes us a monopoly” in multichannel video programming distribution market, he said. Ergen also said new company still would face competition from C-band satellite service providers, contention that Chmn. Sensenbrenner (R-Wis.) said was inconsistent with statements Ergen made last year in federal court.

FCC Comr. Martin said Tues. he was wary of instituting new regulations on Internet but indicated willingness to lift rules to achieve regulatory parity between cable and other kinds of companies that provided Internet or information services. He told reporters Commission should act soon on Notice of Inquiry pending more than year on how to define Internet delivered over cable. Question whether it’s telecom service, cable service, information service or some other kind of service has regulatory implications no matter which way it is decided, he said. Bankruptcy judge allowed Excite@Home to turn off its Internet network, leaving thousands of AT&T Broadband customers without service (CD Dec 4 p1, Dec 3 p4). Because Internet provided via cable has yet to be defined, FCC has no regulatory role now, raising criticisms from consumer advocates. Internet service provided by telcos over phone lines is regulated, which angers telco executives. Martin pointed to DSL provider Rhythms, which went out of business earlier this year and had to ask FCC for permission to discontinue service. In such case, Commission could provide transition period for consumers.

Patriot Act has left unchanged FTC’s mission on overseeing privacy disclosure policies, which ISPs may want to take another look at to reflect new voluntary disclosure provisions, Comr. Orson Swindle said Thurs. He stressed in audio conference sponsored by Warren Communications News that act dealt mostly with federal agencies that had criminal enforcement authority. But he said that Sec. 212 of the Patriot Act says that if ISPs discover alarming information involving potential threats to safety, they voluntarily can provide that information to law enforcers. “Service providers who have privacy policies stating that customer communications or records may be disclosed where required by law may now wish to think about how they will deal with the Patriot Act,” Swindle said.

European Commission (EC) issued report Wed. on progress of telecom deregulation in European Union (EU) member states, raising concerns about regulatory bottlenecks such as local loop unbundling. In news conference in Brussels, Comr. for Enterprise & Technology Erkki Liikanen said EC might take legal steps by year-end against countries in cases where incumbents weren’t unbundling local loop under EC regulations. Liikanen said he and Competition Comr. Mario Monti would make decisions about legal actions by Dec. 20. “Our concern is still that incumbents are continuing to develop their own ADSL services at the expense of competition,” he said. Report said telecom customers in 12 member states could choose among more than 5 operators for long distance and international calls. EC said average level of Internet penetration in EU households hit 36% in June 2001. Competition among operators is reducing overall prices, with incumbents’ long distance rates down 11% since last year and down 45% since 1998 for 3-min. call in Europe, report said. But concerns raised by report include: (1) Wide variation in unbundling requirements across member states. (2) “Relatively small” number of unbundled lines in member states -- 640,000. (3) Availability of shared access to local loop in only 4 member states. To address issue of incumbents developing their own broadband offerings at expense of competition, report said that national regulators need to “set binding deadlines with credible penalties” to increase competition in this area. “Regulators also need to act to ensure that wholesale DSL is offered to new entrants on nondiscriminatory terms,” EC said. Other regulatory “bottlenecks” singled out by report included: (1) Interconnection, including cost of terminating calls in mobile networks and provision of flat rate interconnection for calls to Internet. (2) Continuation of high prices, “lengthy delivery times and absence of cost orientation for leased lines, particularly at speeds required for broadband and e-commerce rollout.” (3) Persistence of distortions of tariffs and “price squeezes” in certain cases. (4) Disparate rollout of rights of way, which report said is particularly important issue for 3G wireless networks. “We have recently heard the argument that in the present financial climate, implementation of local loop unbundling is no longer a priority,” Liikanen said. “The Commission strongly disagrees.” Liikanen also cited open letter sent to EC last week by WorldCom, KPNQwest, Energis and others that raised concerns about level of prices of leased lines in EU and length of supply times. EC is preparing response, Liikanen said. He said report didn’t show “glaring anomalies” for EU prices compared with similar leased line prices on East Coast or West Coast of U.S. “The spread of tariffs between member states is hard to justify on the basis of costs,” he said. Liikanen also said report showed that cost of terminating calls in mobile networks in EU was 10 times as expensive as terminating calls in fixed networks. “We know that the cost drivers in mobile networks are not identical to those in fixed networks, but this difference is too wide to be credible in terms of the actual costs incurred,” he said.

Bill promoting broadband tax credits could be included with Bell-friendly HR-1542 by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.), House Telecom Subcommittee Chmn. Upton (R-Mich.) said Tues. Referring to HR-267 by Rep. English, which has 189 bipartisan co-sponsors, Upton said English “has not given up” on the bill and he had spoken with English about it several times in recent weeks. Upton said Tauzin-Dingell could come up for House floor vote in next 2 weeks, and one possible compromise that might allow that to happen would be to include HR-267. “There may be a way to make that [HR-267] part of the package,” Upton said. Spokesman for Tauzin didn’t address possibility directly, saying only that HR-267 was under jurisdiction of House Ways & Means Committee, not Commerce.