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[SOURCE: Benton Foundation]
The Federal Communications Commission held an open meeting this morning on two issues. The Commission launched new proceedings concerning 1) broadcast ownership rules and 2) assessing contributions to the federal universal service fund. Before the meeting began, two items were dropped from the agenda. They concerned A) the mandatory carriage of digital broadcast television signals by cable operators ("multicast must-carry") and B) service rules for the 17/24 GHz Broadcasting Satellite Service (BSS).

1) Media Ownership Rule Review Launched
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
On Wednesday, the FCC officially launched its review of media ownership rules with some of the same fireworks and contentious talk that characterized its first attempt to deregulate media ownership in 2003. The vote was unanimous to launch the proceeding, part of which is actually required by Congress to begin in 2006, the other part on orders from a federal court over two years ago. While they agreed it was time to get on with it, Commissioner Michael Copps and Jonathan Adelstein dissented in part, arguing passionately that the proceeding was not sufficiently attuned to issues of localism and diversity. Adelstein called it an inadequate start, saying it was akin to turning in a high school term paper for a PhD thesis. If we don't change course, he said, the rules would be rejected once again. FCC Chairman Kevin Martin pledged an open and neutral process, saying the FCC would hold at least a half-dozen public hearings, fund studies of the effects of consolidation on family-friendly programming, kids programming, news, localism, independent programming and more, budget willing. The FCC will also hold an extended comment period of 120 days to provide the public ample opportunity to weigh in, said Martin. But Adelstein and Copps argued that the review was deficient in failing to incorporate a completed localism review launched in 2003, that it failed to assure that the public would be able to comment on individual proposed rule changes before they were voted on, and that the rules were not being treated as an organic whole, with studies of the changes in one rule, say lifting the ban on newspaper/TV station cross-ownership, on other changes, like allowing companies to own more stations in a single market. Chairman Martin said the FCC would incorporate an interim status report on the localism proceeding in the rule review, calling it an important element. While he saluted the passion of his colleagues on the left, he also said his "dissenting colleagues may be rushing to judgment," likening it--to pick up on Adelstein's school theme--to giving him an F grade on the first day of school. He said Copps and Adelstein were focusing on past processes, and that he was confident that they would "be able to work together through all this very contentious process."
http://www.broadcastingcable.com/article/CA6345862.html

* FCC News Release: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A1.doc
and Fact Sheet on the proceeding: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266034A1.doc

Additional coverage:

* FCC kicks off review of media
http://today.reuters.com/news/newsArticle.aspx?type=industryNews&storyID...

* FCC Begins Review of Corporate Media Ownership
http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=10027...

* FCC Votes to Re-examine Media Ownership Rules
http://www.tvweek.com/news.cms?newsId=10234

Reaction:

* FCC Chairman Martin
"We begin this dialog in a neutral and even-handed fashion.... Public input is integral to this process. The Commission has adopted an extended comment period of 120 days. Over the next several months, the Commission will hold half a dozen public hearings around the country on the topic of media ownership to more fully involve the American people. I look forward to hearing from the American people on a variety of subjects at these hearings such as the impact of the Commission's rules on localism, campaigns and community event coverage, minority ownership, and various types of programming like children's and family-friendly programming and independent and religious programming. The Commission also is creating a new webpage on this topic that will further contribute to making this an open and transparent process. Finally, the Commission will initiate studies to address unanswered questions about the impact of media ownership. We will seek the resources necessary for comprehensive studies. They will be on a variety of topics that will incorporate issues including how the public gets its news and information, competition across media platforms, marketplace changes since we last reviewed our ownership rules, localism, independent and diverse programming and the production of children's and family-friendly programming."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A2.doc

*Commissioner Copps
"[T]his innocuous-looking document initiates the single most important public policy debate that the FCC will tackle this year. Don't let its slimness fool you. It means that this Commission has begun to decide on behalf of the American people the future of our media. It means deciding whether or not to accelerate media concentration, step up the loss of local news and change forever the critical role independent newspapers perform for our Country.... Don't underestimate it. We have a choice to make. Will we repeat the mistakes of the past? Or will we work for a process and an outcome that respect the millions of Americans that care deeply about their communities' media and what their kids watch, hear and read? We'll soon know what choice the FCC makes. We'll undoubtedly have some hearings and some research this time-I think at least that part of the lesson has been learned. But Americans know the difference between a fig leaf and a real commitment. If you see hearings in your hometown, instead of a just a few preselected cities, you'll know. If you see FCC Commissioners come to listen to your point of view personally, instead of expecting you to hire a $500 an hour lobbyist to get heard, you'll know. If the FCC contracts for independent, well-funded studies and seeks public comment on those studies, instead of buying a few-half hearted, time-crunched papers that slide into the record without comment, you'll know. And, critically, if the FCC shows you the specific rules that will reshape the American media before forcing a vote, instead of rushing from this short document to a final vote, you'll know."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A3.doc

* Commissioner Adelstein
"Unfortunately, the manner in which the Commission is launching this critical proceeding is totally inadequate. It is like submitting a high-school term paper for a Ph.D. thesis. This Commission failed in 2003, and if we don't change course, we will fail again.... In particular, this item lacks commitment to three basic building blocks of a successful rulemaking on media ownership - an issue that affects the daily lives of every single American. First, the process does not commit to giving the public an opportunity to comment on specific proposals before any changes to the rules are finalized. Second, it does not commit to completing the localism proceeding and rulemaking before changing the ownership rules. Finally, it does not commit to making any final decision in a comprehensive manner. Given the history of this proceeding, these failings are astonishing."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A4.doc

* Commissioner Tate
"I hope that we can help consumers understand the importance of the issues we are discussing and give them an opportunity to make their voices heard."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266033A5.doc

* Commissioner McDowell
"As our experience with the 2002 biennial review revealed, the debate over broadcast ownership is a debate about the vitality of our democracy and the appropriate balance among competitive efficiencies, diversity of voices and local focus. The debate elicits the opinions and passions of people from all walks of life from all over the country. I am eager to learn more about the issues from the perspectives of all of the interested parties, be they broadcasters, consumers, academics, artists or others."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A6.doc

* Media Access Project's Andrew Schwartzman said that if the FCC actually does take a neutral look at the rules, rather than approaching them from a deregulatory presumption, it will leave them alone. "We are especially disappointed that Chairman Martin continues to ignore public and Congressional requests that he complete the FCC’s long delayed localism inquiry. Broadcasters can best serve the public by addressing local needs. We are certain that the results of a serious study of broadcasters’ performance will support our position that media consolidation is incompatible with effective public service."
http://www.broadcastingcable.com/article/CA6345862.html

* Seattle Times: "FCC: Try listening this time around"
http://seattletimes.nwsource.com/html/editorialsopinion/2003074364_fcced...

* Prometheus Radio Project
"Our hundreds of low power stations are mostly volunteer operations where hundreds of local people at each station, pouring their good intentions and their time into doing something good for their communities. As their representatives, it was terrifying for us to challenge the FCC on rules that the former Chairman wanted so badly: with one stroke of a pen, an angry FCC Chairman can make choices that destroy the hopes and dreams of the people that are making low power radio happen in their communities. In fact, there is a proceeding sitting before the FCC right now where even through mere inaction, the FCC can suffocate the future of LPFM. While those potential stations waited five years or more for the commission to give them access to their own airwaves, they watched their potential frequencies get given away to those who already dominate every market. Even though it puts the tiny 100 watt slice of the media pie that we have won in jeopardy, low power FMs feel that the fate of the American media is too important to leave it in the hands of a gaggle of corporations. When the rules are reworked this time, let's do it the right way"

* Public Interest Groups Respond to New FCC Ownership Rules
"The FCC needs to heed the lesson of its previous media ownership proceeding and this time adopt a more open, more inclusive process as it considers any changes to its rules," said Benton Foundation President Gloria Tristani, who served as an FCC Commissioner from 1997 to 2001. "The American public must have every opportunity to be engaged in and actively participate in the policy decisions that will determine the future of their media."
http://www.freepress.net/press/release.php?id=156

* Common Cause
"Today the Federal Communications Commission (FCC) voted to begin a process that is likely to allow our conglomerated media to grow even bigger. And the FCC is doing so without ensuring that the American people have adequate time and opportunities to weigh in. FCC Chairman Kevin Martin passed up a golden opportunity to make clear to the American public that this is no longer Michael Powell’s FCC. Instead, the public remains uncertain about whether the FCC intends to change its ways and truly commit to involving them in these crucial media ownership decisions. We've been down this road before. In 2003, the FCC proposed new rules that would have allowed a single company to own the local newspaper, up to three local TV stations, up to eight radio stations, and the local cable system in one media market. Ultimately, the rules and the closed-door process that created them were rounded rejected by Congress, by the courts and by the public. Today Chairman Martin did little to assure us that the public will be involved this time around. Six public hearings are insufficient when you recall that in 2003, more than two million Americans weighed in on the media ownership proceeding. Even more troubling, we have no assurance from the Commission that the rules will be considered in a comprehensive package that allows the public to understand the full impact of these changes. Common Cause and its 300,000 members and supporters will be watching the actions of the Commission carefully, and we call on Chairman Martin to listen closely to the voices of the American people before giving big media companies new special-interest benefits."
http://www.commoncause.org/

* AFTRA
"The comment period provided for is far too brief to allow for meaningful public discourse. When the FCC intends to commission a number of studies to support proposed rule changes, the methodology and conclusions of those studies should be discussed and debated. Furthermore, without any notice of the FCC's intentions and without specific proposed rule changes submitted to public scrutiny, a 120-day time frame is simply inadequate for responding to this notice of inquiry in any meaningful way. Although we are somewhat gratified to see that the commission is willing to entertain public comments at field hearings, we strongly believe that holding only six hearings is insufficient to gauge the public response to these important questions."

* From the Folks Who Are Giving Away Your Internet, More Media Concentration
Your Federal Communications Commission - which in the name of the "public interest" eliminated Net Neutrality and turned control of the Internet over to the big telecom and cable companies - announced today it is ready to do you yet another service. This time, FCC Chairman Kevin J. Martin, again in the name of the "public interest," is proposing to eliminate or weaken long-standing rules that prevent local newspapers, television and radio stations (and their websites) from all merging together to dominate and decimate local communities' media, a move likely to set off yet another feeding frenzy of media consolidation.
http://www.creativevoices.us/php-bin/news/showArticle.php?id=160

2) Internet phones must pay into subsidy fund
[SOURCE: Reuters]
Federal Communications Commission on Wednesday voted to require Internet telephone services like Vonage Holdings Corp. to contribute to the universal service subsidy program. The agency also decided to increase the amount wireless telephone providers would have to pay into the Universal Service Fund, which subsidizes phone service to rural and low-income households as well as communications services and Internet access for schools, hospitals and libraries. The move may lead to higher bills for wireless and Internet telephone customers because the companies typically pass the fees on to subscribers.
http://today.reuters.com/news/newsArticle.aspx?type=internetNews&storyID...

* FCC Press Release: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A1.doc

* FCC Chairman Martin:
Maintaining the stability of the universal service contribution system is one of the Commission's most important responsibilities. We take an interim step today to ensure the stability of the fund by raising the wireless safe harbor and broadening the contribution base to include interconnected VoIP providers. We take these actions because we recognize the changing telecommunications marketplace. First, for the first time in nearly four years, we raise the mobile wireless safe harbor from 28.5 to 37.1%. Second, we require interconnected VoIP providers to contribute to the fund. The preservation and advancement of universal service depend on the Commission's ability to respond effectively to the ever-evolving telecommunications marketplace. Today's order recognizes the increasing use of wireless and VoIP services by consumers and adjusts the Commission universal services rules accordingly. Thus, the actions we take today ensure that the contribution base reflects the current market realities. And, at the same time, our actions ensure that universal service contributions remain equitable and nondiscriminatory. Although today's item should ensure the stability and sufficiency of the universal service support system, it is just an interim step. I still believe that this system needs fundamental reform, and I remain committed to adopting and implementing a numbers-based contribution system. Accordingly, our work in this area is far from complete.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A2.doc

* Commissioner Copps
The Order before us today takes some important steps towards shoring up the financial stability of the universal service fund. It does so by raising the wireless safe harbor contribution, by requiring interconnected VoIP providers to contribute to the fund, and by increasing the FCC's ability to ensure that providers are accurately and completely reporting their universal service obligations. I support and approve these steps. But the outcome isn't all good. Today's actions need to be understood in a broader context, because universal service needs to be seen whole.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A3.doc

* Commissioner Adelstein
Despite the best efforts of our talented staff, it is difficult to forecast the precise impact of the measures we adopt today on overall contributions. Indeed, this Order makes no definitive findings about what level of contributions will be recovered through these changes. This Order also does not attempt to analyze the extent of the Commission's decision last August on the overall revenues available for universal service purposes. It is clear, however, that exempting broadband Internet access revenues would remove a sizable and rapidly-growing segment of the telecommunications sector from the contribution base. That Congress contemplated that our universal service mechanisms would evolve as technology evolves is certainly evidenced in the broad permissive authority it gave the Commission to expand the contribution base. As I said at the time of the reclassification, I would have preferred to exercise our permissive contribution authority to address this potential decline in the contribution base permanently. For these same reasons, I concur in part to this item, which preserves a status quo with respect to universal service that strikes me as inconsistent with the intent of Congress and an evolving level of universal service.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A4.doc

* Commissioner Tate
We must remember that we are taking these actions because all consumers should be able to access services at reasonable rates and I remain committed to encouraging the deployment of new services to Americans in underserved regions. That is important to all consumers because, from the bustling streets of our biggest cites to the most remote native villages in Alaska, hundreds of miles from the nearest paved road, we all rely on a common communications network to keep our families, friends, and businesses connected as a nation.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A5.doc

* Commissioner McDowell
The Universal Service system is in dire need of comprehensive reform. Today's action is simply an interim measure that will help bridge the gap between the deteriorating status quo and a fairer and more sustainable system for the future. Today, we adopt interim changes to the Universal Service contribution methodology that are fair and reasonable. By setting appropriate safe harbors and allowing wireless carriers and VoIP providers, in determining their USF contribution, the option of either using such safe harbor, utilizing traffic studies, or reporting actual interstate revenues, we provide the right balance of administrative ease and incentive to contribute based on actual interstate and international revenues. These interim measures also ensure that the fund remains solvent for the near term and serve as an important first step toward broadening the fund's contribution base to ensure equitable and nondiscriminatory support of the Fund in an increasingly digital world.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-266030A6.doc

BIG-MEDIA CRITICS NEEDN'T WORRY SO MUCH
[SOURCE: Wall Street Journal, AUTHOR: Alan Murray]
[Commentry] For those who worry about the pernicious effects of "big media," today is a big day. The Federal Communications Commission once again is launching an effort to ease rules that restrict media concentration, including one that prohibits newspapers and broadcast stations in the same city from owning each other. The rules were written back when "cable" was used to tow cars and "the net" went next to the fishing box. Opponents launched a pre-emptive attack against the FCC yesterday, unveiling a new Web site, StopBigMedia.com. Backed by groups ranging from the Consumer Federation of America to the National Council of Churches, the coalition urges visitors to "fight back" and help "save your local media from corporate control." Murray writes that he will not sign up. "On the list of things that keep me awake at night, "media concentration" ranks pretty low. "Media proliferation," on the other hand, ranks higher. I am perplexed by the amazing array of ways that purveyors of media have found to get inside my head and, even more so, the heads of my teenage daughters. The girls take it in over their iPods and cellphones and satellite radio, or via computer from sites such as MySpace and YouTube (where even folks my age can enjoy Connie Chung's bizarre farewell performance on cable channel MSNBC.)" There is far more competition in the media industry than in, say, the automobile industry or the soft-drink industry or a dozen other industries. The reality is this: Access to the media is more open and democratic today than it ever has been in the history of the world.
http://online.wsj.com/article/SB115085009329185821.html?mod=todays_us_pa...
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