As expected, FCC has embarked on reexamination of whether there is continued need for spectrum cap and cellular cross- interest rule for commercial mobile radio service providers. Notice of proposed rulemaking (NPRM) issued late Wed. (CD Jan 23 p1), but approved by FCC last Fri., seeks comment on whether wireless market has changed significantly since last time agency examined issue in 1999, when it decided to keep spectrum limits intact to safeguard competition. Point is to examine whether competition has grown to extent that spectrum restrictions can be lifted or relaxed, NPRM said. Questions in notice included role FCC plays in examining market impact of wireless deals vs. purview of Dept. of Justice.

PanAmSat began 6-month beta test of high-speed Net/36 network designed to deliver IP audio, video and data to ISPs with goal of starting commercial service by midyear. Beta test is using 1-2 transponders aboard PanAmSat Galaxy satellite, Qwest Communications DSL service in western U.S. and Excite@Home cable modem network on both coasts, CEO Douglas Kahn said Mon. at C.E. Unterberg, Towbin satellite conference in N.Y.C. Agreements with BellSouth and Hughes Network Systems’ DirecPC in addition to Qwest and Excite@Home give Net36 access to 3.5 million homes in U.S., although goal is to pass 16 million worldwide as service expands to 24 transponders by 2004, he said. PanAmSat will spend $250 million in developing service and draw heavily on fleet of 21 satellites to deliver it worldwide, Kahn said. Of 16 million homes, half will be in U.S., others in Europe and Asia, he said. Plan is to have Net/36 act as middleman in delivering programming content to edge of DSL and cable modem networks. PanAmSat has agreements with dozen programmers including ABC-TV, Walt Disney Co., Bloomberg TV and Hollywood.com, Kahn said. Despite start of beta test, PanAmSat still has several hurdles to clear, including digital rights management issues raised by content providers. “This concern has taken on a tremendous amount of significance for them and we'll have to address that,” Kahn said. Adoption of Net/36 platform among broadband service providers also has been slower than expected, he conceded. Number of homes that had access to Net/36 stood at “several hundred thousand” in late Nov. before additions were made in following month, he said. “We're going to invest a little bit less [in Net/36] this year because we expect the revenues are going to be a little bit slower,” Kahn said. Executive conceded that PanAmSat had been “frustrated” at pace of DSL deals, noting that even after reaching agreements, RBOCs “are not fast movers” in deploying technology. PanAmSat also is aggressively pursuing Ka-band spot beam satellite business and is likely to enter market with 2 birds, Kahn said. PanAmSat has received authorization for 7 Ka-band slots, with 5 others pending, he said. While PanAmSat had aimed to have some Ka-band agreements secured by late last year, Kahn said it was likely no deals would be signed by midyear. “Our objective is to be comfortable with what the spot beams are going to be used for,” he said. “It’s better to take a little bit more time to get it right.”

U.S. Supreme Court agreed Mon. to hear appeal of decision by 8th U.S. Appeals Court, St. Louis, that vacated FCC’s Total Element Long-Run Incremental Cost (TELRIC) pricing standard for competitive interconnection (CD July 19 p1). Court said it would hear case (Verizon Communications v. FCC) in 2001-2002 session that begins in Oct., meaning decision probably won’t be handed down until about year from now. Appeals were filed by Verizon, WorldCom, FCC, AT&T, General Communications. FCC Gen. Counsel Christopher Wright said agency was pleased court had granted its petition in this case as well as another involving rates that utilities can charge for pole attachments (see below). In both cases, “Congress decided that utilities owning bottleneck facilities must lease them to competitors at reasonable rates,” Wright said.

FCC didn’t meet regulatory flexibility requirements with rulemaking on DTV children’s TV obligations (MM 00-167), Small Business Administration (SBA) said in letter to FCC Chmn. Kennard. SBA said it didn’t question regulatory goal of improving children’s TV, but said Commission “did not describe a vast majority of the compliance requirements… and their impact on small firms. Nor did it discuss significant alternatives.” FCC should submit supplemental Regulatory Flexibility Analysis required by Regulatory Flexibility Act, SBA said. Although FCC listed rulemaking proposals, SBA said it didn’t provide adequate information about costs and alternatives of such proposals as requiring broadcasters to devote 3% of their air time to children’s programming. It said that proposal would require broadcasters to add programming whenever they added channels, and FCC didn’t provide information about cost of additional programming. SBA raised same questions about other proposals, including technical format rules, menu approach, daily core programming obligation, datacasting, providing content information to publishers and others, preemption rescheduling, commercial tie- in limits. FCC should consider alternatives such as delaying enforcement of rules because of cost to small broadcasters of DTV transition itself, SBA said, as well as setting reduced requirements for small broadcasters that have access to fewer resources. Meanwhile, in comments on rulemaking, state broadcast associations said it was too early to impose “burdensome” children’s TV rules on DTV because they “would hamper innovative uses of the digital spectrum.” State groups also said FCC didn’t have legal right to impose quantitative requirements for programming, and rules would raise First Amendment concerns. Center for Media Education immediately rejected constitutionality argument. “The public owns the airwaves, not the broadcasters,” CME Pres. Kathryn Montgomery said.

By 4-1 vote, FCC adopted notice of inquiry (NOI) on interactive TV (ITV) services Thurs., starting formal proceeding that it promised when it approved AOL’s takeover of Time Warner (TW) with additional regulatory conditions late last week. But Commission backed away from weightier, more urgent proposed rulemaking on ITV issue that its Cable Bureau staff had recommended, bowing to strong lobbying from cable, to disappointment of consumer advocates and other cable critics. Move follows regulatory conditions imposed on AOL-TW deal last month by FTC that prohibited merged company from interfering with content supplied by other ISPs and ITV providers or discriminating against such competitors (CD Dec 15 p1).

NTIA reported mixed results Thurs. in first round of ultra- wideband (UWB) tests in non-GPS band, pointing to “potential” to operate that wireless technology in 3-6 GHz range without interference. “The test results today show a great deal of promise between 3 and 6 GHz,” NTIA Dir. Gregory Rohde said at news briefing. But tests also found “difficulties” with interference in bands below 3 GHz, occupied by systems such as airport surveillance radar and federal govt. systems. Rohde said results set stage in coming weeks for negotiations between FCC and NTIA over final rule on UWB operation in GPS and non-GPS bands. Difficulties in bands below 3 GHz at certain distances between UWB devices and other systems could be mitigated through measures such as requiring devices in certain cases to operate indoors, Rohde said. “It’s not that a door has been closed here,” he said.

As FCC Chmn. Kennard departs today, he leaves legacy as extremely decent man who might have been more effective if he were more of a politician, industry officials told us. “He is a prince of a man, honorable, honest,” said one telecom lobbyist. “But I don’t believe he’s a politician at heart and it’s hard for that kind of person to survive the political cauldron in Washington.” No one we talked with disputed Kennard’s honorable nature. Even his ideological opposite, Comr. Furchtgott-Roth, said Thurs. that he viewed Kennard’s departure to make way for Republican as “somewhat bittersweet” because Kennard was “one of the finest, most decent individuals I've ever met.”

Telecom officials didn’t get answer from Bush Administration representatives Wed. to question who would be named FCC chmn., and when, we're told. Industry officials, primarily contributors to campaign, met with Bush transition office Wed. afternoon in what was described as “very generic and nonspecific” meeting. Most of attention focused on FCC reform, expediting agency decision-making and similar broad issues, we're told.

NTIA, in notice of proposed rulemaking (NPRM) Wed., outlined changes for how private sector would carry out mandates for reimbursing govt. agencies that relocate from spectrum after frequency reallocations are made. NTIA Dir. Gregory Rohde outlined details of NPRM at Commerce Dept. meeting with industry on upcoming 3rd-generation wireless decisions. Govt. officials stressed proposed framework for reimbursing federal entities that were relocated to other spectrum berths could play “critical” role in upcoming 3G decisions. FCC and NTIA are examining possibility of 2 bands for additional spectrum for 3G and other advanced services: 1755-1850 MHz now used by military systems and 2500- 2690 MHz used by Multichannel Multipoint Distribution Service and Instructional TV Fixed Service licensees. At meeting, some industry representatives also raised concerns that more information was needed from govt. on issues such as relocation cost estimates for private sector to complete its own analyses of different 3G spectrum scenarios.

CARLSBAD, Cal. -- NAB and MSTV decided there’s “insufficient evidence” to continue DTV transmission tests of 8-VSB and COFDM and said industry should stay with 8-VSB as standard. Action was taken here Mon. at joint meeting of NAB TV board, MSTV board and digital steering committees of both groups and following digital “summit” of TV broadcasters in Washington last week (CD Jan 12 p9). Straw vote of participants at Cal. meeting was 29-3 in favor of 8-VSB with dissents from Pax TV, Sinclair Bcstg., Pappas Telecasting. Only Dean Goodman of Pax TV dissented in following formal vote by NAB TV board.