Sen. Brownback (R-Kan.) reintroduced bill that would lift FCC cap on amount of spectrum companies could be licensed to use in any one market. Wall St. analyst predicted FCC would lift or modify cap long before bill could be signed into law, in light of FCC Chmn. Powell’s free-market position and likelihood Commission would act by September on NPRM that raised question whether there was need to maintain caps. “This is Brownback’s] way of saying: ‘This is what I want you to do,'” analyst said. CTIA spokesman said bill showed support on Hill for removal of spectrum caps, which limit ownership total to 45 MHz in major markets and 55 MHz in smaller markets. National Telecom Co-op Assn. said that if caps were modified, whether by FCC or Congress, it was important to keep in mind needs of small carriers. “What has happened in auctions of the past is that small companies have been shut out,” spokeswoman said.

Senate Antitrust Subcommittee members criticized cable operators for raising prices faster than general inflation rate and withholding local sports and other popular programming from DBS and cable overbuilders. In hearing on cable competition Wed., they also questioned why retail market for competitive digital cable set-top boxes hadn’t developed, more than 5 years after passage of 1996 Telecom Act. In addition, senators lashed out at 3 largest MSOs -- AT&T, AOL Time Warner and Comcast -- for declining invitations to testify, focusing most of their heat on Comcast.

U.S. Trade Representative (USTR) has set June deadlines for deciding whether to take next steps at World Trade Organization (WTO) on concerns about lapses in telecom market-opening commitments in Mexico and Colombia. Annual report released Mon. by U.S. Trade Representative Robert Zoellick set June 1 as date by which U.S. would decide whether to take concerns over Mexico to WTO, with June 25 target for Colombia. While Mexico has made some progress on domestic local and long distance front, USTR officials said in background briefing that concerns remained over lack of enforcement of new dominant carrier regulations against Telefonos de Mexico (Telmex) and inaction on international long distance interconnection. USTR also urged: (1) S. Africa to complete regulatory process that addresses refusal by state-owned, dominant carrier Telkom to allow value-added service providers, including ISPs, to increase capacity on its network. (2) Taiwan to take steps to deregulate its telecom market consistent with bilateral agreement with U.S. concerning its yet-to-be granted WTO entry.

NTIA and FCC released final reports Fri. providing details on challenges to sharing, segmenting or clearing Dept. of Defense- occupied bands and MMDS and ITFS spectrum, setting stage for what some see as need for high-level 3-way talks on possible compromise among FCC, Pentagon and Commerce Dept. DoD evaluation, appendix to NTIA report, said terrestrial military systems couldn’t vacate 1.7 GHz until 2010 and legacy space systems would need access until 2017, dates much later than timelines in federal 3G studies. Still, several industry sources said they were heartened by what they called realistic relocation cost estimates that NTIA provided for 3 options, which range from $2.2 billion to $4.5 billion. NTIA report laid out 3 options for band sharing or segmentation, including recently emerged alternative that involves out-of-band pairing and phased-in migration of incumbents. Despite alternatives, “this does not necessarily mean that the government band is the right choice for 3G,” Naval Rear Adm. Robert Nutwell said at NTIA briefing. He called on wireless industry to make “better case” for 3G spectrum needs.

Commerce Secy. Donald Evans met with wireless industry Thurs. on 3rd generation wireless issues, sending signal that all spectrum bands still were on table, sources said. Evans held hastily-called 30-min. meeting with wireless carriers and equipment manufacturers in advance of final reports that are set for release today (Fri.) from FCC and NTIA on options for additional spectrum for advanced wireless services. “The report that is coming out tomorrow is a first step in the process,” Evans spokesman said. Several sources indicated meeting appeared to be proactive step by Administration to allay industry concerns over serious questions raised by Dept. of Defense on challenge of sharing spectrum with commercial wireless systems in short term.

Broad group of wireless, GPS, satellite radio and air transport interests urged FCC not to take final action on operation of ultra wideband (UWB) equipment under Part 15 rules without issuing further notice of proposed rulemaking (NPRM). In letter sent late Tues. to Chmn. Powell, 26 companies and trade groups stressed it would be “premature and inappropriate for the Commission to adopt any final rules at this time.” Agency issued NPRM on UWB operations last May (CD May 11 p1), but it didn’t contain specific regulatory language, group said. Since then, FCC has received large volume of test results on potential interference of UWB operations in both GPS and non-GPS bands. “However, the interested parties cannot logically extrapolate from the various test submissions any comprehensive picture of the direction of the Commission’s final thinking with respect to a potential regulatory framework,” group said in letter obtained by Communications Daily. Companies signing letter include AT&T Wireless, Lockheed Martin, Nortel, Qualcomm, Satellite Industry Assn., U.S. GPS Industry Council, WorldCom.

FCC is seeking comments on request last month by WorldNet Telecommunications that agency reopen Bell Atlantic-GTE merger conditions to examine certain questions. In Feb. 12 letter, WorldNet asked Commission to reopen merger docket to: (1) Determine, in response to recent U.S. Appeals Court, D.C., ruling in Assn. of Communications Enterprises (ASCENT) v. FCC that separate advanced services affiliates of Verizon were subject to all obligations of Sec. 251(c) of Communications Act. (2) Expand applicability of merger conditions “so that they are applicable to Puerto Rico Telephone Co.,” which is controlled by Verizon and ILEC in P.R. Comments are due April 25, replies May 10. In Jan. decision (CD Jan 10 p1), D.C. Circuit rejected SBC’s advanced services subsidiary, essentially overturning trade-off FCC had made with SBC in which agency had allowed company to provide advanced services free of interconnection requirements if it formed separate affiliate to provide those services. In SBC case, court held that FCC didn’t have authority to forgo interconnection requirements of Sec. 251(c) just because SBC was offering advanced, not basic, services and using separate subsidiary. Questions raised by ruling at that time included potential impact on Verizon (CD Jan 11 p1).

Qwest turned to General Accounting Office (GAO) for relief last week after losing agency-level protest at General Services Administration (GSA) over bridge contract for FTS 2001 program. Qwest filed protest with procurement law control group of GAO over most recent extension contracts awarded to AT&T and Sprint, incumbent bidders for original FTS 2000. Qwest had filed challenge at GSA in Dec. (CD Dec 18 p2), contending sole-source interim contracts carried rates that on average were 25% higher than those for original FTS 2000 contract and that GSA should have bid work competitively. Interim contracts were awarded in Dec. after GSA missed target for shifting federal agency telecom traffic to FTS 2001 awarded to Sprint and WorldCom from old FTS 2000. Qwest raised same concerns with GAO last week as it did in GSA agency protest. Agency protest official Donald Suda said GSA decision not to seek competitive bids for interim contract was business judgment, upholding GSA decision. Qwest told GAO its protest was based on contentions that: (1) GSA violated procedural mandates of Competition in Contract Act (CICA) and Federal Acquisition Regulation. Qwest argued GSA didn’t prepare justification document for deciding not to seek competitive bids until after contracts were awarded. (2) Agency couldn’t justify sole-source awards on basis of “unusual and compelling urgency” because it knew for at least 4 months beforehand that more service coverage under FTS 2000 would need to be awarded. “Yet it failed to conduct any planning for such a procurement,” Qwest said. (3) GSA failed to demonstrate prices in bridge contract extensions were fair and reasonable. Because CICA requires this demonstration, GSA’s action “renders the bridge contracts voidable.” In particular, Qwest took aim at GSA arguments that company couldn’t provide national long distance service under federal telecom contract because it didn’t yet have FCC approval to provide interLATA services in former U S West region. “GSA’s position misses the central point: Qwest is permitted to team with a long distance provider capable of providing service in Qwest’s ‘in-region’ territory and thus submit a proposal fully responsive to GSA’s requirements,” Qwest told GAO. Qwest Govt. Systems Div. Senior Vp James Payne said Fri. company disputed GSA’s characterization of company’s compliance with Sec. 271. Teaming arrangement could have been made with contract partner for states in which long distance approval hadn’t been received yet, he said. “To say that ‘you are not allowed to provide services in all 50 states,’ that is going way beyond the rules of the FCC,” Payne said. “It’s bad policy.” GSA wasn’t available for comment.

Wireless industry is watching closely final reports due Fri. from FCC and NTIA on potential spectrum that can be tapped for advanced wireless services, including 3G. Several sources have indicated they didn’t expect significant changes in FCC draft report issued last fall, which said segmenting and sharing in MMDS and ITFS bands to allow operations of advanced mobile services would pose technical challenges. One widely expected change is that final NTIA report will be much more inclusive than draft on interference concerns raised by Defense Dept. NTIA interim report last year had outlined potential spectrum sharing and segmentation opportunities in some cases between new wireless users and govt. incumbents. Serious challenge draft cited was sharing with uplink satellite control systems. But Pentagon sent letter to Commerce Secy. Donald Evans last month raising concerns that loss of access to spectrum beyond that relinquished by military in Omnibus Budget Reconciliation Act of 1993 and 1997 Balanced Budget Act “would jeopardize the DoD’s ability to execute its mission.” DoD is submitting report to NTIA for inclusion in final report. Letter to Evans says DoD report concludes that sharing 1755-1850 MHz isn’t possible “due to predictable, mutual interference over large geographic areas and major metropolitan centers.” Mitigating expected interference “would require unacceptable restrictions on military operations, training and readiness,” former Deputy Defense Secy. Rudy De Leon said. He told Evans that DoD report concluded that “regardless of financial investment,” Pentagon couldn’t vacate or segment band until at least 2010 for nonspace systems and at least 2017 for space systems. Those dates could stretch out to 2030 for some satellites, he wrote. DoD said that such conclusions were based on principle that DoD couldn’t accept any degradation of its mission capability as result of spectrum reallocation. “The 1755-1850 MHz band is indispensable to the defense of the United States and its allies,” DoD wrote. “Our nation’s armed forces would be at a substantial strategic and tactical disadvantage in combat and the execution of military operations could be jeopardized if the Department lost its use of the band.” “I think that they are viewing the DoD report as the basis of their report and they are going to follow it,” said one industry source of upcoming NTIA report. Industry, on other hand, has outlined scenarios in which segmentation and sharing are possible in band at least in short-term to mitigate interference issues. With both FCC and NTIA reports expected to focus on challenges to sharing in respective bands, attention in industry is turning to who in Bush administration will take most active role as FCC and NTIA negotiate, sources said. “As a matter of practical negotiation, FCC doesn’t hold many strong cards,” said Precursor Group analyst Rudy Baca. “FCC is asking NTIA/the government for some of their spectrum ‘please.’ The response is usually, ‘No, it’s ours and we need all of it.'” As result, it becomes more difficult to carry out simple negotiations between FCC and NTIA, when former lacks full complement of commissioners and latter doesn’t yet have permanent director, Baca said. “It is going to take someone higher up in the Administration -- maybe Secy. of Commerce Don Evans or somebody in the White House.” MG

European Commission (EC) wants to step up lobbying efforts in Congress to raise awareness of foreign policy, regulatory, trade issues of concern to European Union (EU) member nations, particularly “digital economy” issues affecting EU businesses and consumers. EC in March 20 letter to European Council said “six- monthly cycle of EU/US Summits has not developed its full potential,” thus requiring “more action-oriented” transatlantic dialogue. “Appropriate conditions need to be set up, including in the field of jurisdiction, online dispute settlement procedures and the fight against cybercrime,” it said. “Common issues in relation to the restructuring of the information and communications industry, including a review of regulatory frameworks, also remain high on the agenda.” It said European Parliament (EP) and member nations could more effectively “promote the European agenda” by coordinating Hill lobbying efforts. “Indeed, this will be particularly important in dealing with the new Administration and Congress, not least to ensure that wherever possible the member states and the [EC] act together in Washington and speak with one voice,” it said. Letter acknowledged existing parliamentary links via EP/US Interparliamentary Assembly and Transatlantic Legislators Dialog activities, but said “deepening of contacts” between EP and both houses of U.S. Congress could “help overcome the regulatory differences and misunderstandings which often lie at the heart of bilateral problems.”