WASHINGTON-The Federal Communications Commission expects to continue to set the regulatory agenda for 2000, believing a philosophy of anticipating problems and setting regulation is better than letting the market monitor itself.
The FCC is “very quick to point to wireless as an example of competition, but we haven’t seen the dilution of regulation,” lamented Brian Fontes, senior vice president for policy and administration for the Cellular Telecommunications Industry Association. “We have seen the FCC make statements that competition alone will not address all of the market concerns. That it is the role of government-to be there when there are market failures. What we have seen emerge is a government second-guessing … anticipating failures-which translates into a competitive market being homogenized by government regulations anticipating market failures … When there is a proven market failure, then come in and address the issue. This is fundamentally a regulatory philosophy based on what the FCC led the market to believe when they structured the rules for competition,” Fontes commented.
The FCC likely will choose which wireless issues grab headlines in the coming year.
“In some ways the [FCC’s Wireless Telecommunications Bureau] and the FCC set the agenda of the important issues … Everybody flocks to the issue that is hot,” said Mary McDermott, senior vice president and chief of staff for government relations for the Personal Communications Industry Association.
In a recent speech before the Practicing Law Institute’s Telecommunications Conference, the wireless industry’s principal regulator, WTB Chief Thomas Sugrue, laid out the FCC’s wireless agenda for 2000.
The first quarter
The first quarter will find the industry focusing on calling party pays and numbering. The wireless bureau plans to concentrate on getting rid of the dreaded backlog of wireless issues that have yet to be addressed.
When Sugrue started his new job last January, the most politically sensitive issue was the Senate Commerce Committee’s focus on a 64,000-item wireless bureau backlog. Sugrue told Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, that-with the exception of complicated matters-the backlog would be eliminated within one year. That deadline is March 1. By September, the bureau had eliminated the “low-hanging fruit” and was beginning to address the more difficult matters.
Auction rules for narrowband paging, which have been languishing since 1997, are expected to be released as part of this effort.
Rules allowing calling party pays are expected to be released in the first quarter. The FCC ruled in June that if CPP is authorized, it would be a nationwide optional service.
CPP is similar to long-distance toll calling, where the person placing the call to a wireless subscriber pays for the call rather than the wireless subscriber. CPP is the norm in some countries, while U.S. carriers traditionally have required the subscriber to pay all charges related to mobile-phone use.
The current CPP debate over what should be contained in a message notifying callers they will be charged for making calls is a perfect example of the regulatory philosophy to which Fontes objects. “They are anticipating that carriers will not provide their consumers with cost information and are considering regulations that would require price in the notification message. In reality, Bell Atlantic Mobile does include price [in its trial in Delaware]. In reality, the market will decide.
“The FCC is imposing a regulation that would treat all carriers the same. This takes the competition out of the competitive market when the regulation is second-guessing a market failure,” Fontes said.
The numbering issue is becoming more complicated by the day as new competitive local exchange carriers apply and receive 10,000-number blocks, which quickly deplete the amount of numbers available in an area code. This requires that an area code either be split or a new area code be given to the same area as an existing one. Overlays could mean a household with a second phone line could have two different area codes. Splits could mean customers have to reprogram phones and print new stationary.
State regulators-which have no authority over wireless carriers-are often left holding the bag. To relieve some of the pressure on state regulators, the FCC gave a number of states interim numbering authority until national numbering resource rules are out in March. The interim numbering authority has not been popular with the wireless industry.
“The short-term `fixes’ of delegating state-by-state authority is not the answer, as [FCC Chairman William Kennard] recognizes. For the long-term, the only sensible solution is to have a uniform, national numbering framework,” said PCIA President Jay Kitchen.
The first issue to dominate the wireless agenda will actually be the last issue of 1999. The FCC told Congress it expects to release auction and service rules for spectrum being made available with the transition to digital TV before the end of December.
The government is transitioning TV channels 60-69 (746-806 MHz) from TV use to other areas. Twenty-four megahertz was allocated for public-safety uses and 36 megahertz was set aside for commercial purposes.
The FCC plans to start auctioning this spectrum by April 25.
Since the 60-69 spectrum is considered prime real estate by the wireless industry, every sector has tried to convince the FCC to give it a piece of the pie. Proposals have included everything from using all of the spectrum for third-generation wireless to setting aside some spectrum for private wireless uses.
At RCR press time, the FCC had yet to release the rules. But if-as expected-the FCC allocates six megahertz of the available 36 megahertz for private wireless use, CTIA said it will sue.
“This constitutes a de facto re-allocation and is subject to legal challenge. We are authorized to go to court,” Fontes said.
Litigation
Litigation is likely to dominate the regulatory landscape for 2000, with C-block personal communications service bankruptcies, rules for implementing the telecom act disability provisions and the digital wiretap act either already in court or are expected to be there shortly.
The FCC is fighting 19 C-block companies that have filed for bankruptcy instead of paying either the amount they bid at auction or a restructured amount they agreed to during a 1998 restructuring process. Most eyes have been on three of the bankruptcies.
The debtors in possession lenders for DCR PCS Inc., which later became Pocket Communications Inc., are suing the FCC trying to nullify a restructuring election they made and the judge approved in the summer of 1998. Litigation in this case is continuing.
One of the parties in the Pocket bankruptcy, Gloria Borland, has a Jan. 20 date with the appeals court. Borland is challenging an FCC decision that it could re-auction two Hawaii C-block licenses in which she says she owns a 5-percent interest.
The most contentious of the C-block bankruptcies has involved NextWave Telecom Inc. (See related story in this issue.)
The FCC will not only continue to fight bankrupt C-block companies, it will also be required to defend in court its implementation of two laws impacting the entire telecommunications industry.
The telecom act contains provisions to make telecommunications more readily accessible to those with disabilities. In July, the FCC said that companies are legally obligated to make all telecom products accessible. In doing so, it rejected an industry proposal to use a product-line approach to make products accessible. The product-line approach would not have required every product to be accessible.
Although the rules were adopted in July, the complete text was not released until late fall. Hence, telecom companies are reviewing whether to ask the FCC to reconsider its decision or to take the issue straight to the U
.S. Court of Appeals for the D.C. Circuit.
Technical standards for implementing the Communications Assistance for Law Enforcement Act of 1994 also are expected to impact industry.
Despite lawsuits already under way, the telecom industry will be expected to be in compliance with the industry interim standard in June and the permanent standard 15 months later.
While Congress has been involved in CALEA implementation in the past, USTA President Roy Neel recently told reporters that he doesn’t think Congress will become involved until a carrier is found by law enforcement to be non-compliant.
Rules implementing provisions of the telecom act to protect customer proprietary network information also have found their way to court.
CPNI rules, written into the 1996 telecom act, govern how telecom carriers use data about customers. Such information includes names, addresses and subscriber calling patterns.
Wireless carriers argue they should be exempt from CPNI rules because they operate in a competitive environment.
This summer, an appeals court panel sided with industry, saying FCC rules were unconstitutional. The commission has asked for the entire court to review the case.
The FCC will also could rule soon as to whether wireless carriers can be sued for false advertising, which would impact a lawsuit filed in California.
