Headline Highlights -- Media and Telecommunications Policy Developments September 2007

After Congress returned to Washington in September, front page headlines focused on the status of the war in Iraq. But there's been a great deal of action in telecommunications policy as well. Here's a look at some of the major developments since Labor Day concerning the transition to digital broadcasting, universal broadband, Network Neutrality, and spectrum policy.

1. DTV Transition High on Priority Lists

From early September, it became clear that the digital television was a high priority for both Congress and the Federal Communications Commission. For the National Telecommunications and Information Administration, there was no rest for the weary this August. The NTIA is making sure consumers can begin requesting and receiving $40 coupons for digital-to-analog converter boxes by January 1.

The main item on the FCC's September 11 agenda where rules governing how cable TV subscribers will receive broadcast TV signals over pay-TV systems after February 17, 2009. After the issue delayed the start of the FCC's meeting for 11 hours, the Commission approved rules requiring cable operators to guarantee analog cable customers will receive broadcast channels until February 2012. Cable operators must either convert the digital signal to analog at the point where the cable signal originates or supply customers with a "down converter" device that will change digital signals to analog at the TV set. Broadcasters praised the ruling while cable operators -- especially smaller system operators -- criticized the controversial ruling. Some even questioned whether or not the ruling would jeopardize public television's agreement with the cable industry to carry all of the digital channels public TV stations are providing in local communities.

Within a week, the FCC was also receiving public comments on how to educate consumers about the DTV transition. Although broadcasters had just praised the mandates just imposed on cable operators, they asked the FCC to reject suggestions from Members of Congress to require broadcasters to promote the digital transition with a specific number of public service ads or messages. The Benton Foundation and, later, the FCC's own Consumer Advisory Committee suggested that broadcasters be required to broadcast PSAs so that no viewer was left behind in the transition. FCC Chairman Martin later said that he felt that primetime PSAs where "crucial" to education efforts, but that he is unsure whether the FCC had to force stations to air DTV educational messages.

That same week, the Senate Aging Committee, chaired by Sen Herb Kohl (D-WI), held a hearing on the transition with a focus on older Americans. Sen Kohl, concerned that the federal effort to education consumers about the end to current analog TV signals is not well coordinated, said he is considering introducing a bill to establish a new public-private digital-TV-education partnership among the Federal Communications Commission, the National Telecommunications & Information Administration, the Administration on Aging and "industry stakeholders.” At that hearing, the Government Accountability Office said there was a definite lack of coordination between the FCC and NTIA, adding, "It is pretty clear to us that there is no one in charge." Saying that he thought the coordination ought probably to fall to the FCC, he added that there "seems to be some confusion between Chairman Kevin Martin and some other commissioners regarding what their responsibilities are."

With just about 500 days left before the transition ends, Congress is planning more hearings in October.

2. Broadband and Universal Service Reform

On September 6, the Federal-State Joint Board on Universal Service made a little-noticed announcement that it had "tentatively agreed" that universal service mechanisms in the future focus, in part, on broadband. The announcement is a small step towards applying to high-speed Internet connections some of the billions of dollars in subsidies dispersed annually to make telecommunications services affordable.

Universal, ubiquitous broadband again gained headlines late in September when Sen John Kerry (D-MA), at a hearing of the Senate Committee on Small Business and Entrepreneurship, called on the Bush administration to make a commitment to making high-speed Internet access more widely available to small businesses and all Americans. This involves, he said, changes in regulations to ensure universal broadband access and adequate competition in the marketplace. At the same hearing, chaired by Sen Kerry, FCC Commissioners Michael Copps and Jonathan Adelstein testified. Commissioner Adelstein said, "Only rational competition policies can ensure that the U.S. broadband market does not devolve into a stagnant duopoly, which is a serious concern given that cable and DSL providers now control approximately 96 percent of the residential broadband market." FCC Commissioner Michael Copps was critical of the FCC still calling 200 kilobits per second 'broadband' and assuming that if one person in a ZIP code has broadband access, everyone else does as well. "This is 2007, not 1997," Copps said.

3. Network Neutrality Issue Resurfaces

Also on September 6, gaining more headlines, was US Department of Justice filing at the FCC cautioning against imposing regulations that could hamper the development of the Internet. Justice said some Network Neutrality proposals "could deter broadband Internet providers from upgrading and expanding their networks to reach more Americans." Soon afterwards, Free Press filed a Freedom of Information Act request to uncover the underlying factors that led to the filing which came months after the FCC’s formal comment period had closed. “We want to know what motivated the Department of Justice to oppose Net Neutrality this late in the process,” said Free Press' Marvin Ammori. “The filing lacks any evidence of serious investigation into this critical issue and fits into a pattern of politically motivated decisions coming out of the Justice Department. We want to know if the Bush administration’s lawyers reached out to any of the thousands of groups, businesses or individuals who support Net Neutrality — or if they only talked to industry lobbyists at AT&T and Verizon.”

Net Neutrality also rose as an issue in Congress again. Senate Interstate Commerce, Trade and Tourism Subcommittee Chairman Byron Dorgan (D-ND) raised concerns about the Federal Trade Commission's hands-off approach to Internet regulation. "We're concerned that regulating prematurely and perhaps on such a broad basis … really could serve to squelch this market in a way that's harmful to consumers," said FTC Chairman Deborah Platt Majoras at the hearing. Regulating the Internet "will prevent business models from developing," she said. Sen Dorgan disagreed. Later in the month, at the Future of Music Policy Summit, Sen Dorgan defended a Net Neutrality bill he introduced as necessary to prevent Internet "gatekeepers" and "toll booths." He said he's well aware there are plenty of naysayers out there but hasn't heard any good arguments against imposing such regulations.

The issue gained more attention when Verizon Wireless decided it had the right to block “controversial or unsavory” text messages. The company rejected a request from Naral Pro-Choice America, the abortion rights group, to make Verizon’s mobile network available for a text-message program. After public outcry, Verizon quickly reversed its decision, but did not disclaim the power to block messages it deemed inappropriate.

4. Media Ownership Debate Comes to Chicago

On September 20, the FCC held its fifth of six planned public hearing on media ownership rules. Some 800 people gathered at the Chicago headquarters of Rainbow PUSH to speak about media ownership consolidation, media outlet ownership for people of color and women, and the possible sale of the Chicago-based Tribune Company to local billionaire Sam Zell.

The vast majority of commenters -- from representatives from Sen Barak Obama's (D-IL) and IL State Attorney General Lisa Madigan's office to host Rev Jesse Jackson and hundreds of members of the public -- expressed concern that the Chicago media market is already owned by too few, non-local companies, that minority media ownership needs to be increased and that local TV station newscasts are not serving the community well. Benton Foundation Chairman and CEO testified and delivered a report on Chicago's media market.

FCC Commissioner Jonathan Adelstein called on the FCC to create an independent panel of experts to review dozens of recommendations on improving ownership diversity -- some filed with the agency as early as 1992.

Perhaps no company had more at stake that evening that the Tribune, owner of the Chicago Tribune, WGN-AM 720, WGN-Ch. 9, and the local 24 hr all-news cable channel among other media properties across the region and nation. The company, well-represented by management on an panel and by celebrity commenters from the floor, needs temporary FCC waivers on its ownership of newspapers and broadcast outlets in Chicago and four other markets in order to move ahead with its plan to go private, and it is looking for long-term relief when rules are redrawn.

In a meeting with the Chicago Tribune's editorial board before the hearing, FCC Chairman Kevin Martin acknowledged that newspapers are increasingly under financial strain because of the Internet and said "they provide a very unique and important service" that he wants taken into account in the Commission's new rules.

Martin said: "The Tribune transaction raises many of the issues that are teed up in relation to newspaper cross-ownership rules. Many of the properties that Tribune owns date back to that original cross-ownership here in Chicago, [and] there have been many positive aspects of that cross-ownership, as demonstrated by the ability to try to have other outlets for the news, which has been very important in trying to sustain the investment in news-gathering that's occurred."

Chairman Martin also pointed to how, since 1996, the FCC has changed all its ownership rules, except one. "And that's the rule on newspapers being able to own a broadcast property," he said, noting that when the FCC's last overhaul of media ownership rules was overturned in 2003, the only thing upheld by the court "was a determination the commission's decision that the absolute ban on" cross-ownership were no longer justified.