ANAHEIM -- Proliferation of online services offered by cable companies has resulted in MSOs’ grappling with unprecedented, and unforeseen, privacy and legal issues. At law and policy roundtable Thurs. at Western Show here, Charter Vp Linda Reisner cited unexpected consequences of being Internet broadband supplier and having ISP customers: “We have school districts calling us up telling us a student had just posted a message on a Web site that they were coming to school to shoot someone. Then we have to call the police immediately to provide that information, but that creates privacy issues.”

Congress eventually will have to “weigh in” on universal service, NTCA CEO Michael Bunner said Wed. in letter to incoming Senate Commerce Committee Chmn. John McCain (R- Ariz.) that urged continuing universal service fund (USF) support. “We continue to advocate these concepts before the Federal Communications Commission in a plethora of open proceedings,” letter said. “Yet, it is our belief that it will be crucial for Congress to weigh in on these matters as well, to ensure congressional intent is being met in terms of ensuring the future of this indispensable national policy.” Bunner said “string of adverse regulatory and judicial decisions” in name of “competitive neutrality” have eroded congressional mandate on universal service. “The Senate has long played a leading role in advocating and monitoring the many aspects of this critical national policy,” he said. NTCA outlined its leading USF principles: (1) Universal service support must be sufficient and sustainable and all providers of telecom should contribute as public interest mandates. (2) Eligible telecom carriers (ETCs) receiving universal service support should receive such support based on their own costs rather than on costs of incumbent. (3) Competing ETCs should receive support only when they actually had captured customer lines, begun service to new lines or modified their rates or services. (4) States must take their public interest duties more seriously when authorizing additional ETC’s in given market.

ALTS filed letters with FCC from 4 small facilities- based CLEC members that emphasized importance of their getting access to unbundled loops and transport to serve their small business customers. Letters -- from Cbeyond, DSL.net, Eschelon and Network Telephone -- urged Commission not to eliminate access to TELRIC-priced loops and transport when it acted on Triennial UNE [unbundled network element] Review. CLECs told agency they could offer small businesses large price, customer service and technological benefits because of their ability to purchase unbundled loops and transport from ILECs. “Without an ability to buy loops, transport, tandem switching and interconnection trucking at TELRIC rates, Eschelon would be forced out of business,” Eschelon said in letter. DSL.net said it was founded in 1998 to meet data communications needs of “underserved small and medium-sized business market” and depended on several types of UNEs to do it -- 2-wire copper loops, interoffice transport and high-capacity copper loops such as DS1. Network Telephone said it served small communities such as Hattiesburg and Vicksburg, Miss., and its success relied on continued availability of UNEs such as last-mile digital loops and interoffice transport. Federal policy requires FCC to keep needs of small business in mind when it takes action, ALTS Gen. Counsel Jonathan Askin said.

FCC told 9th U.S. Appeals Court, San Francisco, that it had “reasonably” concluded that cable modem service was interstate information service. “The Commission’s reading of the statute makes good sense,” agency wrote court last week. Court is reviewing FCC’s classification of cable modem service, which is being challenged by Earthlink, Verizon, WorldCom, consumer groups and several others. In March, FCC said that cable modem service was interstate information service and that Internet delivered over cable wasn’t subject to common carrier regulations (CD March 15 p1). Ruling went to heart of questions about rights of local franchising authorities, their ability to levy taxes on such services, whether cable modem ever would be subject to universal service requirements and whether cable operators would have to offer “open access” to Internet service providers (ISPs). In its filing, FCC said court’s ruling 2 years ago in AT&T v. Portland, Ore., didn’t require agency to classify cable modem as telecom service, just that law classified telecom component of cable modem service as such. Because Telecom Act doesn’t define clearly how it should be classified, “this court must defer to the FCC’s reasonable interpretation of ambiguous statutory terms,” Commission said. Agency said it believed cable operators were using telecom to provide end users with information service. Therefore, it said, it concluded that cable operators’ offering of telecom to ISPs constituted private carrier service, not common carrier telecom service. FCC said it asserted federal jurisdiction properly because Internet communications frequently crossed state and national boundaries. Court should reject any suggestion that agency’s order “somehow impairs the ability of local governments to manage their rights of way,” agency said: “The Commission has not yet decided how (if at all) its classification of cable modem service will affect local regulation of rights-of-way.” That question is subject of separate proceeding. FCC in March opened rulemaking to examine which govt. agencies, if any, had power to regulate cable modem service and invited comment on whether, “in light of marketplace developments, it is necessary or appropriate at this time” to require multiple ISP access. FCC asked court to dismiss challenge by Verizon, which said Commission should adopt same classification for wireline broadband services. Again, FCC said that question was part of separate proceeding and shouldn’t be considered by court.

Advanced Communications said opposition by FCC Enforcement Bureau, EchoStar, GM and Hughes to Advanced’s petition to intervene in DBS case was based incorrectly on legal proceeding that didn’t address its concerns. Advanced said its petition to intervene and seek continuance of 1995 order, which denied Advanced application for extension to construct, launch and operate DBS system, involved new evidence that Commission had based previous decision on “expectation of future auction revenues” and whether consideration of such expectations violated Communications Act. Opponents said decision U.S. Appeals Court, D.C., in 1996 dealt with issue, but Advanced quoted unpublished decision that said “we express no opinions as to whether the Commission was in fact barred from taking into account the expected impact on federal revenues.” Advanced also said new evidence on Commission decision was “tainted,” making 1995 order and court decisions “not controlling.”

Parents TV Council applauded call by FCC Comr. Copps for review of Commission’s indecency standards for radio and TV broadcasters (CD Nov 22 p1). “It has become clear that the Federal Communications Commission needs to transform itself from a lethargic, passive body into one that can address the needs of families and seriously engage in the effort to clean up public broadcasting,” PTC Pres. Brent Bozell said.

FCC International Bureau Chief Donald Abelson expressed concerns about Chinese govt.’s raising settlement rates for international calls. “This is just another vain attempt at stopping what will be inevitable -- that is, the cost of connectivity should go down,” Abelson said at news conference Fri. Noting progressive stance that China had taken in past on IP telephony, he said that was “exactly the kind of policy I thought that we were going to see from China going on in the future. This particular action… I am surprised by it.”

Verizon asked federal court to block new Wash. state telecom consumer privacy rules on ground they unconstitutionally interfered with its commercial free speech rights to communicate with its own customers. Verizon, state’s 2nd largest incumbent telco, asked U.S. Dist. Court, Seattle, for injunction to stay Jan. 1 effective date of rules adopted Nov. 7 by Wash. Utilities & Transportation Commission (WUTC) pending outcome of its lawsuit. Verizon said state’s rules also conflicted with FCC privacy policy adopted in July because state adopted opt-in policy, which holds that customer proprietary network information (CPNI) such as call detail data can’t be used for internal marketing purposes without customer’s prior consent. FCC adopted opt- out approach under which telecom carriers can use CPNI for internal marketing unless customer explicitly forbids such use. WUTC in its ruling said stricter opt-in standard was needed to prevent privacy invasions from data mining and consumer profiling that was based on very sensitive records of who customer had called. Agency said its opt-in rule represented fair balance between privacy interests of customers and business needs of carriers. Verizon told Judge Barbara Rothstein that opt-in approach to call detail data would make it unduly difficult to market new products and services to its 950,000 customers in Wash. Verizon said many customers were interested in information about services compatible with their calling patterns but few would bother to spend time and effort needed to opt in to CPNI access. Carrier said opt-out approach allowed those with privacy concerns to protect themselves. When FCC adopted its opt-out privacy policy in July on a federal court remand, it allowed states to adopt rules that might be more restrictive, reserving right of review. Verizon has asked FCC to reconsider that provision; request is pending.

Broadcasters and cable operators appear to have most to fear from tentative agenda announced by Sen. McCain (R- Ariz.), who will become Senate Commerce Committee Chmn. in next term of Congress (CD Nov 22 p1). He said committee would “assess whether broadcasters are meeting their public interest obligations.” Commerce Committee also will also examine cable rates.

European and other foreign-owned mobile companies seeking access to U.S. market “still face important barriers,” European Commission (EC) said in “Report on United States Barriers to Trade and Investment” released Wed. It said in spite of commitments U.S. made in World Trade Organization (WTO) pursuant to GATS Basic Telecom negotiations, mobile service sector still faced investment restrictions, lengthy and burdensome proceedings, “protectionist attitudes” in certain congressional circles and lack of access to frequencies for 3G services.