It’s Not Quiet in July

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So far in July, there have been a variety of events affecting your business and more are to come:

USF Contributions

The FCC received extensive comments (more than 75) on altering the Universal Service Fund contribution mechanism.  While almost everyone agreed the current system is broken, there is no consensus on a long-term solution.  That means no action is likely any time soon.  In the meantime, the industry would like the Commission at least to adopt a series of short-term fixes to address a handful of specific problems with how the current regime is implemented.  But, even that may be beyond the Commission’s reach, and it is doubtful any action will occur this year.

CAF Phase II

The Commission received a dozen or so comments on the cost model that will be used to distribute up to $9 billion in Phase II of the Connect America Fund for price cap carriers.  These carriers rejected the FCC staff’s proposal that the model be based on a FTTH build, saying that a fiber to the DSLAM deployment would meet the performance obligations (4/1 Mbps) more efficiently.  The main issue appears to be whether the cost model should reflect agreenfieldor brownfield build.  The former will give the price cap carriers greater funding to bring broadband to fewer locations than would occur with a brownfield model.  The next round of comments are due shortly, and this proceeding will garner lots of attention for the rest of the year.

Retransmission Consent

The Federal District Court in New York refused to issue a preliminary injunction to shut down Aereo, the Barry Diller business venture which circumvents retransmission consent issues by providing individuals with remote antennas and DVRs.  While the court will now hear the entire case, this is good news for local telephone and cable companies who believe they are being overcharged to carry television broadcast signals.

Skyrocketing Programming Fees

The video programming battle between programmers and distributors also is heating up in other arenas.  Over the past couple of weeks alone, disputes between these two groups have caused distributors to drop (or not be permitted to carry) a variety of national cable networks.  Programmers claim their fees are justified; distributors claim consumers will not pay.  This showdown is certain to continue as all participants in this market wrestle with new business models. Demonstrating the importance of these issues, the House Telecom Subcommittee just held a hearing on “video futures,” and a Senate hearing is scheduled for July 24th. You also will hear more about these disputes in about ten days at the NCTC/ACA Independent Show in Florida.  

Reconsideration Issues

The Federal Appeals Court (10th Circuit) hearing all of the appeals of the FCC’s CAF Order refused the FCC’s request to hold the proceeding in abeyance while the Commission continues to deal with the many Reconsideration issues. This means that briefs will be filed, and at some point an oral argument will be scheduled. But, no decision is likely until the middle of next year. In the meantime, the Commission will continue to issue orders modifying and clarifying – and even waiving – rules adopted in the CAF Order.

And finally, in my last post, I discussed the resignation of the FCC’s Wireline Bureau Chief, Sharon Gillett. This week Gene Kimmelman, a key figure at the Department of Justice’s Antitrust Division announced he was leaving. Gene played a critical role in a variety of merger reviews, including AT&T/T-Mobile and Comcast/NBCU, and helped reinvigorate DOJ’s role. Given that we are near the end of this Administration’s term, more of these announcements should be expected – and the pace of issuing new decisions will definitely slow.