Citing the alleged failure of private telecom providers to sufficiently deploy advanced broadband services to rural and less profitable markets, the Consumer Federation of America and High Tech Broadband Coalition filed briefs in the Supreme Court Fri. backing federal preemption of state laws that barred municipal entry into the telecom business. In June, the Supreme Court granted review of an 8th U.S. Appeals Court, St. Louis, decision vacating an FCC order. The Commission had denied preemption of a Mo. statute that barred localities and municipally owned utilities from providing telecom services or facilities. Petitions for writs of certiorari had been filed by the FCC, the state of Mo. and Southwestern Bell.

The Canadian govt. moved to crack down on satellite TV piracy Wed. with new legislation that would amend the country’s Radiocommunication Act. The bill would impose harsher fines for capturing signals free or decoding U.S. satellite signals coming into Canada: Penalties would be raised to $25,000 from $10,000 for an individual, and to $200,000 from Cdn$25,000 per company. Companies that sell decoder cards that steal signals would face fines of $500,000 instead of $200,000, and continuing offenders could face a fine of $5 million. The measure would enable Canadian broadcasters to take legal action against anyone selling illegal equipment and services, and only licensed satellite providers Bell ExpressVu (owned by BCE Inc.) and Star Choice (owned by Shaw Communications), with some exceptions, would be licensed to import satellite decoders. But Member of Parliament (MP) Dan McTeague, vice chmn. of the Industry Committee that introduced the bill, admitted that it probably wouldn’t become law until 2004, if at all, given that Parliament shuts down Nov. 7 and isn’t expected to resume until after the current Prime Minister resigns before the end of February. McTeague said “it’s a wonderful area for debate, but it'll never see the light of day.” He said the bill could be made a priority and pushed through before Parliament broke, but that was unlikely.

The FCC Thurs. rejected a request by the Society of Bcst. Engineers, MSTV and NAB to delay coordination procedures for fixed broadcast auxiliary service (BAS) radio stations above 944 MHz and BAS TV stations above 2110 MHz. The rules, therefore, took effect that day. SBE, MSTV and NAB had asked the FCC to delay the rules for at least 6 months, arguing that prior coordination notice (PCN) rules would be “almost meaningless,” given lingering inaccuracies in the FCC’s Universal Licensing System (ULS) legacy database. The groups said problems with the legacy database wouldn’t guarantee that coordination efforts would head off interference to existing licenses. MSTV and NAB asked for a 6-month stay; SBE asked for a year. The FCC had granted a 6 month stay in April, pushing back their effective date until Oct. On Thurs. the Commission said that while the database issues SBE raised remain a concern, there was no indication additional time would resolve them. The FCC also agreed with the National Spectrum Managers Assn., which objected to the stay request, that coordination efforts could be successful in spite of an incomplete or inaccurate database, as the coordination effort itself served as an opportunity for parties to correct inaccuracies or deficiencies. To encourage TV and radio stations to file applications for modifications, the FCC said it would allow stations to file modifications even if they weren’t involved in a coordination effort, provided the application dealt only with missing data. “We believe that when the coordination rules become effective, licensees will be motivated to provide this information because they will be acting in their own self- interest to avoid interference,” the FCC said.

The FCC issued rules Thurs. for the 1710-1755 MHz and 2110-2155 MHz spectrum bands, which it determined in Nov. 2002 could be used to offer an array of 3G services, including wireless broadband Internet access. The new rules include provisions for application procedures, licensing, technical operations and competitive bidding. “What we have done in the order is build a creative framework, so we will try to maximize the flexibility available to licensees in these bands,” FCC Wireless Bureau Chief John Muleta said. The FCC said the spectrum would be licensed by geographic areas under the Commission’s flexible, market-oriented Part 27 rules, and would be assigned by competitive bidding.

The German Federal Cabinet approved a draft Telecom Act Wed., raising concerns among competitive carriers there. The draft now moves to the Second Chamber of the German Federal Parliament (Bundesrat), which is expected to vote on it before the end of the year, after which it goes to the First Chamber (Bundestag) for final approval. The Cabinet decision follows a warning Germany received from the European Commission (EC) last week that it would impose legal sanctions on the country for failing to implement the rules on time. The goal of the draft is to overhaul market regulation, in particular of the incumbent carrier Deutsche Telekom (DT), and to implement 5 European Union (EU) directives into national law.

Attorneys for Verizon and a N.Y.C. law firm underwent almost continuous questioning by the U. S. Supreme Court Tues. as justices tackled the complex legal question of whether the Telecom Act’s network-sharing requirements could be enforced through antitrust law. It was hard to determine from the questioning where the justices stood but many of the questions focused on 2 issues: (1) Whether the Law Offices of Curtis Trinko had standing to sue Verizon in the first place. (2) Whether it was appropriate for “judges and juries” to settle Telecom Act disputes instead of the regulators designated by the Telecom Act’s interconnection regime.

Some Western state political entities are trying to drum up support for legislation they say would more fairly distribute a portion of the Universal Service Fund (USF). But neutral observers said the USF fight was turning into one of regions -- mainly Qwest states vs. the BellSouth region -- with few others anxious to join the fight. One industry source described it as a USF “civil war” between Qwest and BellSouth.

Toyota weighed in at the FCC on Enhanced 911 rules, saying the regulations shouldn’t be extended to embedded telematics services and devices. OnStar has made similar arguments to the Commission, saying telematics units embedded in cars shouldn’t be treated the same under FCC E911 rules as a conventional wireless handset. Last year, OnStar asked the agency for a declaratory ruling on the extent to which telematics units embedded in vehicles were covered under Enhanced 911 rules. In a filing last week, Toyota said making embedded telematics devices and services meet E911 “would likely require equipment manufacturers to engage in a complete redesign of their respective telematics systems, requiring an investment of thousands of engineer hours, and pointed out that manufacturers are already facing a heavy burden in the transition to digital technology for telematics units.” Toyota said it offered an embedded telematics service in certain Lexus models, based on OnStar design specifications. OnStar, in turn, provides the underlying telematics call center service. Toyota raised concerns that the cost of complying with E911 rules would require such expensive new equipment design that some equipment-makers might exit the sector altogether. Toyota also said the FCC had “questionable jurisdiction” in that area because telematics systems weren’t a “commercial mobile service” under the Communications Act: “Telematics is an information service that makes use of telecommunications services.”

The FCC released a notice of proposed rulemaking it adopted at an open meeting last month to examine how to speed the deployment of wireless services in rural areas. The proposal asked how to make unused spectrum available to new users and provide access to capital and equipment. The proposal seeks feedback on an appropriate definition of a “rural” area, including whether there should be a uniform definition or whether it should vary depending on which regulatory initiative was at issue. The Communications Act doesn’t define rural areas and the FCC hasn’t adopted a specific definition for addressing the wireless licensing portions of the Act. The FCC also seeks feedback on what constitutes “use” of spectrum in rural areas, including the applicability of leasing through secondary markets to utilize spectrum more efficiently. The proposal asks for comment on the potential expansion of recent Wireless Bureau spectrum audits to help identify unused spectrum in rural areas. It asks whether a spectrum inventory is feasible and whether it should be limited to the most rural or underserved areas. The Commission cited markets in Alaska, Appalachia and the Mississippi Delta as “particularly appropriate” for such an inventory. It said its Spectrum Policy Task Force had recommended that the FCC focus on secondary markets as the “primary means” to increase spectrum access and, in time, consider alternatives, such as govt.-defined easements. “We seek comment on whether now is an appropriate time to consider the use of spectrum easements for new licenses,” the Commission said. Using such easement, software-defined radios and other frequency-agile devices could allow 3rd parties to take advantage of unused portions of licensed spectrum, it said. It also addressed how providers of rural wireless services could have better access to capital for building out systems. The FCC asked whether the Rural Utilities Service (RUS) should be able to obtain security interests in the spectrum licenses of carriers that borrowed from the agency. Comment is sought on “whether, and to what extent, licensees in rural areas would benefit from the opportunity to pledge their licenses to RUS as collateral as a means of overcoming their difficulty in raising capital.”

The FCC should dismiss petitions from EchoStar and SES Americom concerning the proposed transaction between Intelsat and Loral, and instead grant the assignment applications, said Loral and Intelsat. SES didn’t ask the Commission to deny the application, but to condition it so Intelsat won’t be able to offer bundled services to include international and domestic capacity (CD Sept 16 p9). EchoStar said the lack of an Intelsat IPO raises issues that should result in the denial of the application (CD Sept 19 p8). In separate filings, Intelsat and Loral said neither petition provided any evidence of their claims. SES’s proposals “would serve SES’s self-interest in protecting its ‘preeminent’ position in the provision of service to the Federal [Govt.] by hamstringing a potential new, stronger competitor -- they would not serve the public interest… SES mischaracterizes market realities, misrepresents the availability of international market access opportunities, and underestimates the ability of the Federal [Govt.] to procure services on competitive terms and conditions,” Intelsat said. The company said SES mischaracterizes certain routes as dominated by Intelsat, when in reality, those are “routes where SES and other competitors have made a commercial decision not to provide service.” Loral said EchoStar wants the application denied so its potential bid for the assets can be considered by the Commission, but the Commission is expressly restricted from doing that: “To consider the assignment at issue, not on its own merits, but in comparison with an alternative, hypothetical transaction that is not before the Commission for approval would be contrary to the [Communications] Act and to the Commission’s precedent.” As far as EchoStar’s concerns about Intelsat’s IPO, the latter said those concerns should be a part of a different proceeding: “Moreover, contrary to EchoStar’s claims, Intelsat is in full compliance with the ORBIT Act.”