The FCC in the New AdministrationThe FCC in the New AdministrationBroadband Wireless ForumBroadband Wireless Forum

February 21, 2001February 21, 2001

San Francisco, CASan Francisco, CA

Stephen E. CoranStephen E. Coran

RINI, CORAN & LANCELLOTTA, P.C. RINI, CORAN & LANCELLOTTA, P.C.

© 2001 RINI, CORAN & LANCELLOTTA, P.C.

All Rights Reserved.

Meet the New BossesMeet the New Bosses

New PresidentNew President

Did not invent the Internet

Little track record on technology and spectrum issues

New Leadership in CongressNew Leadership in Congress

W.J. “Billy” Tauzin elevated to Chairman of House Commerce Committee – focus:

• Reform and restructure FCC to limit scope and timing of merger review – no voluntary conditions

• Expedite Section 271 approval (RBOC long distance) and allow RBOCs entry into inter LATA data

• Revisit DTV transition

Conrad Burns remains Chairman of Senate Communications Subcommittee – focus:

• Emphasis on wireless and Internet issues

• Tax incentives for broadband providers in underserved areas

• Look at LPTV Internet trial for expansion

New Leadership at FCCNew Leadership at FCC

Michael Powell elevated to Chairman

Two Republicans and two Democrats

• Harold Furchtgott-Roth has announced departure

• Susan Ness not likely to be reconfirmed

• Gloria Tristani rumored to be leaving

Not the Same as the Old BossesNot the Same as the Old Bosses The Kennard Years: Regulate the NewThe Kennard Years: Regulate the New

Expanded scope of merger review to promote competition

• AOL/Time Warner is best example

Expanded access to communications services

• E-rate

• Tribal lands

Expanded opportunities for start-ups

• LPFM

• EEO Rules

• Data CLECs line-sharing, colocation, local loop unbundling

Clashed with Congress on activist policies

The Powell Philosophy: Deregulate the OldThe Powell Philosophy: Deregulate the Old

Favors marketplace competition – will be mostly non-activist

Limit scope of FCC merger review

• AOL/Time Warner statement: opposed conditions mandating interoperability for future high speed advanced instant messaging services

Relax ownership concentration rules

• Wireless spectrum caps – NPRM adopted January 19, 2001

• Broadcast ownership?

• Cable ownership?

Has unqualified support of Rep. Tauzin

What’s Hot?What’s Hot? AccessAccess

Open Access Proceeding

Gulf Power Issues

““Third Generation” Third Generation”

Spectrum Identification and Allocation

700 MHz Auction

Unlicensed OperationsUnlicensed Operations

Internet TaxInternet Tax

AccessAccess Section 706 requires FCC to monitor development Section 706 requires FCC to monitor development

of broadband capability (defined as more than 200 of broadband capability (defined as more than 200 kbps in at least one direction) and take action, if kbps in at least one direction) and take action, if necessary, to accelerate deployment – FCC’s necessary, to accelerate deployment – FCC’s initial findings:initial findings:

Multiple broadband sources including DSL, cable modems, fiber to the home, satellite and terrestrial wireless will be available

No reason to take action, but will continue to monitor broadband deployment (e.g., merger review, other proceedings)

Notice of InquiryNotice of Inquiry (September 28, 2000) (September 28, 2000)Proponents of Open AccessProponents of Open Access::

Without access, cable companies will monopolize Without access, cable companies will monopolize the broadband Internet access marketthe broadband Internet access market

Without access, cable will thwart development of Without access, cable will thwart development of Internet-based competition to cable’s core video Internet-based competition to cable’s core video offeringsofferings

ISPs do not have the necessary leverage to ISPs do not have the necessary leverage to negotiate access arrangements with the few negotiate access arrangements with the few powerful MSOspowerful MSOs

Opponents of Open AccessOpponents of Open Access::

Cable took the risk of building the platforms and should be Cable took the risk of building the platforms and should be allowed to benefit from that riskallowed to benefit from that risk

Access requirements lead to disincentives to invest in Access requirements lead to disincentives to invest in upgrades in cable broadband plantupgrades in cable broadband plant

While open access is technically While open access is technically feasiblefeasible, it may not be , it may not be technically technically optimaloptimal

Even if the market is defined as broadband only, there are Even if the market is defined as broadband only, there are other options that would foreclose cable operators from other options that would foreclose cable operators from establishing monopoly pricesestablishing monopoly prices

AOL/Time Warner MergerAOL/Time Warner Merger

FTC required AOL Time Warner to FTC required AOL Time Warner to negotiate in good faith with any unaffiliated negotiate in good faith with any unaffiliated ISP that seeks accessISP that seeks access

FCC imposed additional conditions on AOL FCC imposed additional conditions on AOL Time Warner:Time Warner:

Where ISP has contract with AOL Time Warner, AOL Time Warner can’t prevent ISP from selecting service from the unaffiliated ISP

No exclusivity with AT&T

No discrimination regarding quality of service

Can’t compel AOL Time Warner “first screen”

Must open instant messaging to at least three rivals if it adds AIHS in the future, unless AOL Time Warner is non-dominant AIHS provider for at least four consecutive months

High-Speed Data Subscribers*High-Speed Data Subscribers*

CableCable

AT&T

AOL Time Warner

DSL (RBOCs)DSL (RBOCs)

SBC

Verizon

DSL (DLECs)DSL (DLECs)

Covad

*Communications Daily, February 6, 2001

4Q4Q TotalTotal

1.0 million1.0 million 3.9-4.2 million3.9-4.2 million

259,000259,000 1.1 million1.1 million

227,000227,000 946,000946,000

534,000534,000 2.3 million2.3 million

251,000251,000 767,000767,000

190,000190,000 540,000540,000

131,700131,700

69,000 69,000

Gulf Power IssuesGulf Power Issues

Section 224 of the Communications Act requires all Section 224 of the Communications Act requires all utilities, upon request, to attach equipment owned by the utilities, upon request, to attach equipment owned by the following:following:

Cable television systems

Telecommunications service providers

Section 224 requires FCC to establish rates for pole Section 224 requires FCC to establish rates for pole attachments when parties are unable to negotiate a rateattachments when parties are unable to negotiate a rate

Only categories of service listed for rate formulas are Only categories of service listed for rate formulas are “telecommunications service” and “cable service”“telecommunications service” and “cable service”

Gulf PowerGulf Power Decisions Decisions Eleventh Circuit Decision:Eleventh Circuit Decision:

Internet service is neither “telecommunications service” nor “cable service”

Utilities are not required to permit wireless providers to attach to their equipment

Ninth Circuit Decision:Ninth Circuit Decision:

Cable modem service is “telecommunications service”

Fourth Circuit Decision:Fourth Circuit Decision:

Cable modem service is “cable service”

Effect of Effect of Gulf PowerGulf Power

Utilities have increased pole attachment rates Utilities have increased pole attachment rates following following Gulf PowerGulf Power decision, restricting ability decision, restricting ability of competitors to construct networksof competitors to construct networks

In Ninth Circuit, Cox has stopped paying franchise In Ninth Circuit, Cox has stopped paying franchise fees on cable modem service to local authorities on fees on cable modem service to local authorities on basis that holding is “non-binding dicta”basis that holding is “non-binding dicta”

But, question in Portland, OR is whether cable modem service is permitted under existing franchise agreement

Eleventh Circuit issued stay of decision pending Eleventh Circuit issued stay of decision pending appealappeal

U.S. Supreme Court has granted writ of U.S. Supreme Court has granted writ of certioraricertiorari, , with decision expected in about a yearwith decision expected in about a year

Third GenerationThird Generation

Key features (per ITU):Key features (per ITU):

Support of multimedia services/capabilities

Interoperability and roaming

144 kbps or higher for vehicular traffic

384 kbps for pedestrian traffic

2 Mbps or higher for indoor traffic

Spectrum IdentificationSpectrum Identification ITU Resolution 223ITU Resolution 223

Demand for 160 MHz of additional spectrum by 2010

Identified five frequency bands for terrestrial 3G:

• 806-960 MHz

• 1710-1885 MHz

• 1885-2025 MHz

• 2110-2200 MHz

• 2500-2690-MHz

ITU Resolutions 223 and 224ITU Resolutions 223 and 224

Countries can use any of the identified bands

Bands may be used for other services

3G does not have priority over allocated services

Study of global roaming across different bands

Spectrum AllocationSpectrum Allocation Satellite Industry Association Petition for Rule Satellite Industry Association Petition for Rule

Making (April 2000)Making (April 2000)

Filed prior to WRC-2000

Sought allocation of 2500-2520 MHz and 2670-2690 MHz for 3G Mobile Satellite Services

No technical support or discussion on incumbent grandfathering or relocation

Cellular Telecommunications Industry Association Cellular Telecommunications Industry Association Petition for Rulemaking (July 2000)Petition for Rulemaking (July 2000)

Asked FCC to begin spectrum allocation process

Demand for additional services

Need for “harmonization” of spectrum worldwide to facilitate roaming

Fear that U.S. will be left behind

Acknowledged “significant challenges” presented by incumbency on 1755-1850 MHz a 2500-2690 MHz bands

Comments on Petitions (August and September, Comments on Petitions (August and September, 2000)2000)

Supporters: AT&T, Verizon, Motorola, Lucent, Qualcomm, Nokia

• Harmonization needed to avoid “unacceptable” consequences of multiple bands and to facilitate interoperability

• Harmonization would expedite standards development, lower equipment costs and increase value of spectrum

OpponentsOpponents: WorldCom, Sprint, Nucentrix, : WorldCom, Sprint, Nucentrix, educational communityeducational community

Questioned demand for additional mobile services spectrum

Suggested that spectrum other than 2500-2690 MHz band would be less disruptive to convert

Harmonization may not be necessary in light of software-defined radios

Harmonization may not be likely in light of global allocation

Recent adoption of two-way rules and investment in acquisition and technology designed to foster federal policy of broadband competition

No suitable alternative spectrum

Notice of Proposed Rule Making (January 5, 2001)Notice of Proposed Rule Making (January 5, 2001)

Allocation Proposals:

• 1710-1755 MHz Band paired with 2110-2150/2160-2165 MHz band for fixed and mobile services

• 1755-1850 MHz Band identified for advanced mobile and fixed services, if spectrum is transferred from federal government

• Comments sought on 2500-2690 MHz Band

Comments due February 22, 2001

Reply Comments due March 9, 2001

Final Reports on incumbent use by end of March, Final Reports on incumbent use by end of March, 20012001

Final Rules by end of June, 2001Final Rules by end of June, 2001

Spectrum Auctions by September, 2002Spectrum Auctions by September, 2002

700 MHz Auction700 MHz Auction

747-762 MHz and 777-792 MHz Bands747-762 MHz and 777-792 MHz Bands

Suitable for advanced wireless and video services

Occupied by incumbent TV stations that must be relocated

Auction recently delayed againAuction recently delayed again

Short forms due August 17, 2001

Auction begins September 12, 2001

Will auction really happen?Will auction really happen?

Will values suffer in light of incumbents and Will values suffer in light of incumbents and transition procedures?transition procedures?

Unlicensed OperationsUnlicensed Operations Growing concerns about interference Growing concerns about interference

Focus has been on Part 15 equipment and rules

IEEE 802.llb DSSS Wireless LANs vs. expected development of FHSS BluetoothTM Wireless Personal Area Network (WPAN) systems

Standards and testing groups for 2.4 GHz ISM Band

FCC may hold industry forumFCC may hold industry forum

With congestion at 2.4 GHz, will 5 GHz the answer?With congestion at 2.4 GHz, will 5 GHz the answer?

3Com, Apple, Cisco, Dell, Intel, Intersil, Lucent, 3Com, Apple, Cisco, Dell, Intel, Intersil, Lucent, Nokia and Texas Instruments Joint Petition Nokia and Texas Instruments Joint Petition (October 25, 2000):(October 25, 2000):

Asks FCC to clarify that Part 15 rules allow Frequency Hopping Spread Spectrum (FHSS) to use adaptive hopping techniques or to allow adaptive hopping techniques at 2.4 GHz to mitigate interference

Asks for adaptive frequency hopping on 15 non-overlapping frequencies in less than 75 MHz

Opposed by Proxim, Mobilian favors rule making

Wi-LAN Application for Review (September 20, Wi-LAN Application for Review (September 20, 20002000

Seeks permission to operate wideband OFDM transmitter at 2.4 GHz as a DSS device

FCC denied Wi-LAN certification because its technology didn’t meet “intent” of Part 15 rules, it minimizes occupied bandwidth to send signal and does not use high speed spreading code and information data stream to modulate a single RF signal

Canada approved transmitter under similar standard

Opposed by Proxim, supported by Cisco

Internet TaxesInternet Taxes Cox billCox bill

Would extend tax moratorium five years beyond October 31, 2001 sunset date

Would set standards and conditions for states to collect taxes

• Fast-track process

• States would need to simplify nexus requirements for assessing “business activity” taxes (income, franchise and sales taxes)

Sen. Dorgan expected to propose bill more favorable to states

Rockefeller bill (S-88)Rockefeller bill (S-88)

10% tax credit for current generation high-speed services (1.5 Mbps downstream, 200 kbps upstream) in underserved areas

20% tax credit for next generation services (22 Mbps downstream, 5 Mbps upstream) in underserved areas

10% penetration in order to be eligible

Does this create enough incentive for broadband Does this create enough incentive for broadband deployment in underserved areas?deployment in underserved areas?

??

Stephen E. CoranStephen E. Coran

scoran@rclpc.comscoran@rclpc.com

(202) 296-2007(202) 296-2007

RINI, CORAN & LANCELLOTTA, P.C.RINI, CORAN & LANCELLOTTA, P.C.

1350 Connecticut Avenue, N.W., Suite 9001350 Connecticut Avenue, N.W., Suite 900

Washington, D.C. 20036Washington, D.C. 20036

www.www.rclpcrclpc.com.com

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