Congressional telecom leaders heavily criticized spectrum policy changes contemplated by President Bush’s budget blueprint (CD March 1 p1), with some saying they seemed motivated more by attempts to free up money for tax cuts than sound telecom policy. They predicted quick defeat in debacle that probably would teach Administration lesson about talking with them before assuming such far-reaching proposal would gain quick acceptance. “Once Congress kills it, they'll remember to call us next time,” said Ken Johnson, spokesman for House Commerce Committee Chmn. Tauzin (R- La.). “They're just looking for extra money to pay for their excessive tax cuts,” said aide to House Telecom Subcommittee ranking Democrat Markey (Mass.): “The job for Telecom Subcommittee members is to make sure these plans make sense for telecom.” Another staffer said chances of plan’s passing Congress were “infinitesimal” and predicted that it would be greatly scaled back when full budget book is released in April.

House Commerce Committee will introduce new bill “in next month or so” to replace last session’s HR-2420 that would give Bells more regulatory freedom for data transmission and expects easy passage in House but harder job in Senate, Ken Johnson, spokesman for Committee Chmn. Tauzin (R-La.), said Thurs. Johnson, who participated in panel discussion at Precursor Group conference in Washington, urged audience not to “mistake inaction with indecision” on part of Committee because it still was committed to basic HR-2420 concept. Bill probably will be same as last year’s version although it could change during legislative process, Johnson said. Tauzin looks at current version of bill as setting tone for discussion, he said.

Consumer Federation of America (CFA) and Mass. Consumers Coalition urged FCC Wed. to deny Verizon’s application for Sec. 271 entry in Mass. because rates carrier charged competitors weren’t cost-based and its operations support systems (OSS) were inadequate. In conference call with reporters, CFA Research Dir. Mark Cooper said group was concerned about pricing issue because Verizon was using same rates as were adopted in N.Y. state, rather than undergoing separate cost review by state regulators in Mass. He said OSS concern was similar to that raised by Dept. of Justice -- lack of adequate support for competitors seeking access to DSL lines. Cooper said Mass. application was particularly important because it was first one to be acted upon by new FCC under Chmn. Powell and because it set stage for large number of new applications expected this year. If FCC approves questionable pricing strategy on Mass. application, it could set precedent, Cooper warned. He said CFA supported Verizon’s N.Y. application but plugging N.Y. rates into Mass. application was “legally flawed.” “We would like to reestablish discipline on the part of the Commission,” he said. Wed. was deadline for reply comments on Verizon’s Mass. application. Company urged FCC to approve it, based on fact that competitors had captured more than 16% of phone lines and were gaining 1% every 6 weeks. Verizon has to prove its local network is open to competition before getting long distance authority under Sec. 271. It said level of competition in Mass. was highest yet seen by FCC in any state where Bell company had sought entry. “These numbers clearly demonstrate that the Massachusetts telecommunications market is irreversibly open,” Verizon Senior Vp Thomas Tauke said. Because of concerns about DSL access, Verizon refiled its application Jan. 16 to offer more proof of nondiscriminatory access. Company said there now was more proof because in last 2 months it had met more than 97% of its installation appointments for DSL-capable loops and 96% of them had operated without problems.

For 2nd time, Dept. of Justice concluded Wed. that Verizon’s Sec. 271 filing in Mass. hadn’t demonstrated carrier was providing nondiscriminatory DSL access to competitors. When Verizon filed first application for long distance authority in Mass. in Sept., DoJ also raised questions about its provision of unbundled DSL loops. In 2nd run, after Verizon withdrew application in Dec. and resubmitted new one last month, DoJ said new filing contained additions that made it stronger. But in formal comments filed with FCC as part of Sec. 271 process, Justice said “the record still fails to provide a clear demonstration of nondiscriminatory performance.” Its detailed evaluation referred to factual disputes about Verizon’s performance raised by competitors in comments and said that in some cases “significant questions” remained.

ORLANDO -- Panel of Washington insiders told CEOs of competitive telecom companies here Mon. that they must become more involved in lobbying against Bell-sponsored data LATA relief because there was better chance than ever that such legislation could pass. Speaking at CompTel’s annual convention, panelists came close to pleading with competitive entrepreneurs, who traditionally are less likely than Bell CEOs to get involved in policy issues. They warned that their businesses could be at stake; that House, at least, was likely to pass data deregulation legislation this session and that Bells were very good lobbyists. “You need to make clear why this legislation could be a danger to this industry,” said Gary Slaiman, Washington attorney and former aide to Senate Judiciary Committee. Earl Comstock, Washington lawyer and former legislative counsel to Sen. Stevens (R-Alaska), told group, “Bell CEOs are engaged, they come to Washington. Your industry CEOs don’t often come to Washington and you have a complicated message.”

ORLANDO -- In highly animated panel discussion at CompTel annual conference Tues., representatives of CLECs, long distance companies, Bell companies and FCC debated whether CLECs had right to charge higher than average access rates and whether long distance companies could refuse to pay those rates. FCC Common Carrier Bureau Chief Dorothy Attwood said Commission had teed up issue by asking for comments but hadn’t decided whether it should step in or let industries settle it themselves. She said there seemed to be industry agreement that Commission should require long distance providers to serve CLEC customers if CLEC access charges fell below certain amount. Dispute is over what upper limit should be.

Verizon Wireless was among telecom carriers filing petitions for reconsideration last week on FCC’s building access order that lets building owners require relocation of network demarcation without getting approval of subscribers. Verizon Wireless contended order shouldn’t apply to commercial mobile radio service (CMRS) operators because their location of transmitters in multitenant environments didn’t raise same type of anticompetitive concerns that order addressed. “Because CMRS providers cannot affect competition by entering into exclusive access arrangements with building owners,” it said, there’s no credible reason to extend provisions of order to CMRS operators. CMRS providers generally don’t require access to building space or wiring to provide wireless service to tenants in building, Verizon said. Real Access Alliance contended FCC decision was mistaken on: (1) Role of building owners in development of facilities-based competition. (2) Scope of FCC’s authority to expand Over-the-Air- Reception Devices (OTARD) rule to include antennas used to receive and transmit data and voice communications. (3) Agency’s authority to interpret Sec. 224 of Communications Act to apply to facilities and rights inside buildings. “Building owners fall outside the Commission’s jurisdiction,” Alliance said. “The Commission concedes as much in the further notice of proposed rulemaking released with the orders, which seeks to achieve the CLECs’ goals by regulating carriers rather than property owners.” On narrower grounds, Wireless Communications Assn. (WCA) filed petition for partial reconsideration, asking FCC to clarify that safety exception of rule applied “to any professional installation requirements adopted by nonfederal authorities for subscriber premises fixed wireless transceivers that are protected by the rule.” WCA said exception prohibited “safety-related” antenna restrictions that would impair installation of subscriber premises fixed wireless antennas unless they met certain caveats, such as being nondiscriminatory. Triton Network Systems said that although it believed FCC properly expanded OTARD rule, it appeared “to have unintentionally excluded certain fixed wireless devices that should be appropriately covered.” Triton asked agency to clarify that restrictions weren’t designed to exclude certain fixed wireless devices deployed in consecutive point networks. Smart Buildings Policy Project also asked limited reconsideration.

Dept. of Defense (DoD) and wireless industry remain apart on some technical issues regarding how bands occupied by military users could be altered for 3rd-generation uses. Govt. and industry officials, at meeting hosted by NTIA Thurs., emphasized that analyses of bands that could be used for additional 3G spectrum were continuing, with final FCC and NTIA reports due late next month. “We still have a lot of work to do,” Motorola’s Steve Sharkey said. “We have at least an idea of where the paths to move forward are.” Meanwhile, Congressional Budget Office (CBO) raised budget projections for proceeds from FCC spectrum auctions through 2007, with rosier outlook attributed to interest in 3G.

Original C-block bidder Airadigm is awaiting answer to petition for reinstatement of its PCS licenses, which FCC cancelled after carrier missed payment after entering bankruptcy in July 1999. Petition still is pending before agency nearly one month from oral argument before U.S. Appeals Court, D.C., March 15 in litigation involving NextWave, bankrupt C-block bidder that also had its licenses cancelled for nonpayment. Airadigm has pointed out that only similarity between it and NextWave is that both are C-block bidders that entered Chapter 11 protection and missed installment payment for licenses. Because of disparities such as fact that Airadigm is offering service and NextWave isn’t, question is whether 2 carriers potentially could be treated differently by Commission. Proceeding raises complex web of legal issues for FCC, making outcome uncertain, industry observers said. At press time, item on Airadigm petition wasn’t yet circulating on 8th floor. Meanwhile, group of large carriers asked Commission to put off Airadigm decision longer, citing how circumstances had changed since NextWave litigation began.

Cox’s action in continuing to collect franchise fees on cable modem service in jurisdictions outside 9th U.S. Appeals Court, San Francisco, has been challenged in suit by 2 Va. customers in U.S. Dist. Court, Roanoke. MSO has notified communities in 9th Circuit jurisdiction that it will stop collecting franchise fees on high- speed Internet service, citing court ruling classifying cable modem service as telecom offering. Forcing only customers in states outside 9th Circuit to pay franchise fee is “unjust” and “unreasonable,” said plaintiffs Kimberly and William Bova, who are seeking class action status. By exempting subscribers in Ariz., Cal., Ida. and Nev. from franchise fees, Cox gave those customers “unreasonable preference or advantage,” plaintiffs said, and all franchise fees levied by company were unlawful charges, “entitling customers to a refund.” They alleged that Cox previously took position that its service was cable to avoid FCC regulation under Title 2, but reversed its position after 9th Circuit decision. “Cox appears to adopt contradictory positions regarding the classification of cable modem service as part of a relentless effort to avoid any government regulation for its own financial benefit at the expense of its customers,” they said. Although Cox acknowledges that cable modem service is telecom service in certain areas, it refuses to comply with laws protecting customers such as rate filing laws. Question of law and facts raised by plaintiffs include: (1) Whether Cox violated Title 2 of Communications Act. (2) Whether Cox could continue to impose franchise fee on cable modem service in other states after discontinuing it in 9th Circuit jurisdiction. (3) Whether Cox’s monthly subscription rates, which included franchise fee on cable modem service, were just and reasonable.