I. Legislative Branch Activity
A. EchoStar Pleas for Congressional Help.
Earlier this year, the U.S. Court of Appeals for the 11th Circuit found EchoStar in violation of the Satellite Home Viewer Act by regularly and unlawfully delivering out-of-market stations in competition to local stations that carry the same network programming. The Court set a deadline of December 1 for EchoStar to shutdown all distant networks, those deemed illegal and legal. An effort to reach a settlement with broadcasters failed when Fox and its affiliates refused to sign on. In late November, the Court of Appeals rejected EchoStar’s final plea to delay the December 1 cutoff.
Facing the prospect of having to turn off distant broadcast networks for approximately 850,000 subscribers, EchoStar turned to Congress. A bill was introduced on November 16 by Senators Leahy and Allard, which would allow Dish subscribers who are legally entitled to the signals to continue to receive them. It also requires EchoStar to deposit $20 million to cover any future violations. Specifically, the bill would permit access to distant channels in only areas in which there existed no local-into-local service, and to show those distant networks, EchoStar would be required to pay two royalty fees instead of one. The Senate recessed, however, without taking any action on the bill. The House may take up the matter when it returns in early December.
B. New House and Senate Commerce Committee Leaders.
With the Democratic takeover of the Senate in January, Senator Inouye (D-HI) has been appointed as Commerce Committee Chairman. Democrats will now be represented by 12 members, including 3 new faces: Senators Tom Carper (D-DE), Amy Klobuchar (D-MN), and Claire McCaskill (D-MO). Senator George Allen and Senator Conrad Burns lost their re-election campaigns.
After 12 years in the minority, Rep. John Dingell will resume his position as Chairman of the House Committee on Energy and Commerce in January. Rep. Edward Markey (D-MA) will head the House Commerce Telecom Subcommittee in the 110th Congress.
C. Legislative Calendar.
The House and Senate adjourned on November 16 and will resume the lame duck session on December 5.
II. Federal Communications Commission (FCC) Activity
A. FCC Meeting.
The Commission held an open meeting on November 3, 2006 and adopted three items: a Report and Order regarding changes to the process for community of license changes and the process for amendments to the FM Table of Allotments; a Notice of Proposed Rulemaking on whether it should adopt certain measures to mitigate migratory bird collisions with communications towers; and a Memorandum Opinion and Order concerning the classification of broadband over power line Internet access service.
1. FCC Adopts Order to Streamline FM Table of Allotments and AM Community of License Procedures.
The Report and Order adopts the following rule changes:
- Permits Community of License Minor Change Applications – Allows AM and FM licensees and permittees to change their community of license by first-come/first-served minor modification applications, streamlining the current two-step procedures.
- Requires Simultaneous Filing of Form 301 with Petitions to Add New FM Allotments – Requires filing Form 301, and paying the required filing fee, with all petitions to add new FM allotments to the Table. This will help ensure that parties who value new allotments most – those who participate in broadcast auctions – will be the ones seeking to add new FM allotments.
- Eliminates the Prohibition on Electronic Filing of Rulemaking Petitions to Amend FM Table of Allotments – Eliminates the current prohibition on electronic filing of petitions and other documents in proceedings to amend the FM Table of Allotments.
2. FCC Seeks Comment on Possible Measures to Reduce Migratory Bird Collisions with Communications Towers.
The FCC adopted a Notice of Proposed Rule Making that seeks comment on whether it should take measures to reduce the number of migratory bird collisions with communications towers.
3. FCC Classifies Broadband Over Power Line-Enabled Internet Access as "Information Service."
Specifically, the Order finds that the transmission component underlying BPL-enabled Internet access service is “telecommunications,” and that the provision of this telecommunications transmission component as part of a functionally integrated, finished BPL-enabled Internet access service offering is an information service. The order places BPL-enabled Internet access service on an equal regulatory footing with other broadband services, such as cable modem service and DSL Internet access service.
B. Other FCC Activity.
1. FCC Issues Order on Remand Addressing Earlier Broadcast Television Indecency Decisions.
The FCC released an Order addressing several television indecency decisions that were remanded to the Commission by the United States Court of Appeals for the Second Circuit. As part of its March 15, 2006 Omnibus Indecency Order, the FCC originally found that the broadcasts of “The 2003 Billboard Music Awards,” “The Early Show,” “The 2002 Billboard Music Awards,” and several episodes of “NYPD Blue” were apparently indecent and profane. Penalties were not proposed, however, because of specific circumstances associated with the broadcasts.
In this Order, the Commission replaced its prior decisions about the above programs with new findings based on its review of affected licensee responses and public comments, and a fresh look at the issues raised by the broadcasts. Nonetheless, the FCC continues to believe that the use of the words "shit" and "fuck" by participants in “The 2003 Billboard Music Awards” and “The 2002 Billboard Music Awards” was indecent and profane. The FCC also found that the broadcast of "shit" during “The Early Show” was neither indecent nor profane in this instance due to the fact that it occurred during news programming. Finally, the Commission dismissed the indecency complaint regarding the “NYPD Blue” episodes as inadequate to trigger enforcement action.
2. FCC Seeks Comment Regarding Possible Revision or Elimination of Rules Under the Regulatory Flexibility Act, 5 U.S.C. 610 (CB Docket No. 06-208).
On November 22, the FCC released a Public Notice in order to review rules adopted by the agency in calendar year 1996 which have, or might have, a significant economic impact on a substantial number of small entities. The purpose of the review is to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of section 610 of the RFA, to minimize any significant economic impact of such rules upon a substantial number of small entities. Comments are due within 60 days of being published in the Federal Register (November 29).
3. FCC Names Economic Studies to be Conducted as Part of Media Ownership Rules Review.
On November 22, the FCC announced it would commission 10 new studies on media ownership in television, radio, newspaper, and the Internet. The studies are as follows:
Study 1: How People Get News and Information
Description: This study will survey consumers about their use of media. It will identify consumers’ primary, secondary, and tertiary sources of news and information; whether these sources change depending upon the time of day or day of the week; and the frequency with which consumers access these sources.
Study 2: Ownership Structure and Robustness of Media
Description: This study will describe the ownership structure and robustness of current media, including broadcast television, cable television, satellite television, broadcast radio, satellite radio, newspapers, and the Internet. The information gathered concerning the current media marketplace will be compared to the state of the media marketplace when the Commission last reviewed its ownership rules in the years 2002-2003.
Authors: C. Anthony Bush, Kiran Duwadi, Scott Roberts, and Andrew Wise, FCC
Study 3: Effect of Ownership Structure and Robustness on the Quantity and Quality of TV Programming
Description: This study will analyze the effect of ownership structure and robustness (as described in Study 2) on various measures of the quantity and quality of different types of TV programming, including local news and public affairs, minority programming, children’s programming, family programming, religious programming, and violent and indecent content.
Author: Gregory Crawford, University of Arizona
Study 4: News Operations
Description: This study will collect data on the size and scope of the news operations of radio and television stations and newspapers. It will also analyze the relationship between the nature of the news operations and market characteristics, including ownership structure and robustness.
Authors: Kenneth Lynch, Daniel Shiman, and Craig Stroup, FCC
Study 5: Station Ownership and Programming in Radio
Description: This study will use station-level data to examine how ownership structure affects the programming and audience of radio stations.
Author: Tasneem Chipty, CRAI
Study 6: News Coverage of Cross-Owned Newspapers and Television Stations
Description: This study will examine the effect of newspaper cross-ownership on television news coverage using matched pairs of cross-owned and non-cross-owned television stations.
Author: Jeffrey Milyo, University of Missouri
Studies 7 & 8: Minority Ownership
Description: These two studies will examine levels of minority ownership of media companies and barriers to entry.
Study 7 Authors: Arie Bersteanu and Paul Ellickson, Duke University
Study 8 Authors: Allen Hammond, Santa Clara University and Barbara O’Connor, California State University, Sacramento
Study 9: Vertical Integration
Description: This study will examine levels of vertical integration in the media industry.
Author: Austan Goolsbee, University of Chicago
Study 10: Radio Industry Review: Trends in Ownership, Format, and Finance
Description: This study will update a study done during our last review of the media ownership rules. That study was titled “Radio Industry Review 2002: Trends in Ownership, Format, and Finance.
Each study will undergo peer review before being submitted. Democratic Commissioners Adelstein and Copps immediately criticized the studies.
C. Chairman Martin Confirmed for Second Term as Commissioner.
On November 16, the Senate voted unanimously to reconfirm Kevin Martin as Chairman of the FCC for a second five-year term.
D. Next Commission Meeting.
The next Commission meeting is currently scheduled for 9:30 AM on Wednesday, December 20, 2006. The agenda is not yet available.
E. Pending Proceedings. There are several pending proceedings that may be acted upon in the near term, including the following:
- Broadcast Ownership FNPRM: The Further Notice opens the broadcast quadrennial review of all of the media ownership rules, as required by statute. Comment Date: Oct. 23, 2006. Reply Date: Dec. 21, 2006.
- Local Franchising NPRM: Rules would facilitate the franchise approval process for telcos seeking to enter the video market. Action expected 4Q 2006
- Digital Television Distributed Transmission System (DTS) Technologies: Rules allow broadcasters to use transmitters to fill in service gaps caused by geographic barriers. FCC is considering rules for permanent DTS operation. Action expected 4Q 2006.
- DTV Second Periodic Review: Outstanding issue concerning upgrades to open v-chip. Action expected 4Q 2006.
- Plug & Play: One-Way: FCC action on reconsideration pending; Court of Appeals held in abeyance; Two-Way: Ongoing negotiations and reporting to FCC throughout 2006; potential NPRM. Action expected 4Q 2006.
- Cable Horizontal and Vertical Ownership Limits: May 2005 further notice seeks to update stale record. An earlier notice sought comment on how to address D.C. Circuit remand of cable ownership regulations. Action expected 4Q 2006.
- IP-Enabled Services: Will address the regulatory treatment of IP-enabled services, including video services. Action expected 4Q 2006.
- Program Access Rules: Rules governing MVPD access to certain programming owned by cable operators will sunset in October 2007. FCC to evaluate whether sunset date should be extended. Action expected 4Q 2006.
- White Spaces" Proceeding: FCC proposes to allow unlicensed radio transmitters to operate in the broadcast television spectrum at locations where that spectrum is not being used; seeks comment. Action expected 4Q 2006.
- Set-Top Box Waiver Proceeding: Action expected in 4Q 2006 or 1Q 2007.
- AT&T-Bellsouth Merger: Comments were due June 5; replies were due June 20. Action expected in 4Q 2006 or 1Q 2007
- Digital Must-Carry: Outstanding issues include: material degradation, program-related material, DBS carriage of DTV signals. Action expected 2007 or 2008.
III. Antitrust Agency Activity/Deal Announcements
No Date Yet for FCC Vote on AT&T/BellSouth Merger.
A date for a vote on the merger between AT&T and BellSouth has not been set. Parties involved hope for a resolution on the matter before the Democratically controlled Congress takes office in January. There is speculation that Chairman Martin may try to convince recused Commissioner McDowell to become active in the proceeding.
Judge Not Ready to Act on Mergers.
U.S. District Judge Emmet Sullivan stated on November 30 that he has not completed his review of the Verizon/MCI and SBC/AT&T mergers under the Tunney Act. Judge Sullivan implied a decision was not likely anytime soon and mentioned the possibility of holding evidentiary hearings into the way the Department of Justice handled the two mergers.