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House panel OKs bill to thwart imaginary ‘Schnell’

House panel OKs bill to thwart imaginary ‘Schnell’ 

By Rod Perlmutter, News Editor, Media Central

KANSAS CITY, Mo., May 12, 2000 (Media Central) –This week, Congressman Schnell couldn’t find anyone on Capitol Hill who would back his proposal to impose a surcharge on every e-mail.

That’s because nobody could find Congressman Schnell.

On this, both Republicans and Democrats agree: there is no Congressman Schnell. He doesn’t exist, nor does his imaginary piece of legislation, “H.B. 602P.”

But rumors about the imaginary congressman and his proposal were enough to get the House Commerce Committee to approve a bill on Wednesday that specifically prohibits the Federal Communications Commission from placing access charges on Internet service providers.

Rep. Rick Boucher (D-Va.) said the bill was unnecessary. The FCC has said repeatedly that it has no plans to impose access charges on ISPs. Even Republicans agree that the FCC has not imposed an access charge, and nobody in Congress wants one, Boucher said.

“It’s an imaginary problem to address an imaginary bill by an imaginary congressman, and the process is ludicrous,” Boucher said Friday from Washington.

But Rep. Billy Tauzin (R-La.), in a statement posted this month on his website, said the bill was needed as a preemptive measure “to close this door and guarantee that such charges will not be imposed.”

      The deluge of e-mail

The House Commerce Committee passed an amended version of the bill, H.R. 1291, the Internet Access Charge Prohibition Act, on Wednesday. Both the original bill and the amended version were proposed by Rep. Fred Upton (R-Mich.)

For more than a year, the FCC had denied that it wanted to impose an Internet access charge. According a press release posted on the FCC website last year, the commission “has no intention of assessing per-minute charges on Internet traffic or changing the way consumers obtain and pay for access to the Internet.”

The FCC press release said false fears about ISP access charges resulted from a statement last year that the commission was considering public comments on carrier-to-carrier payments, or fees paid from one local telephone company to another for completing a local call that is placed by one of its competitor’s customers.

But that denial didn’t stop the rumors, which Boucher and others assumed were spread through the Internet.

“Every office on Capitol Hill has received e-mail about Congressman Schell,” Boucher said.

One variation of the rumor was denied by a press release posted by Rep. Billy Tauzin.

The rumor was that “Congressman Schnell has introduced Bill 602P to allow the federal government to impose a 5-cent surcharge on e-mail messages delivered over the Internet,” the Tauzin message stated. “It states that the money would be collected by Internet Service Providers and then turned over to the US Postal Service.

“The rumor, of course, is completely false,” Tauzin’s statement continued. “The fact of the matter is that there is no such Congressman and bills are not named in this fashion. Officials with the U.S. Postal Service have stated that they would never contemplate such legislation, nor would they support this legislation.”

Upton, in testimony submitted to the House Telecommunications Subcommittee on May 3, said he and other Congressmen had received thousands of e-mail messages about Schnell and his proposal. But the rumor mill continued to grind.

“Around the same time, another, similar e-mail campaign suggested that the FCC was going to impose a per-minute access fee on Internet use,” Upton said in his statement. “Again, our constituents flooded our offices with e-mails to express their outrage.

“Upon closer examination of this rumor, the FCC was asked if it was going to authorize a per-minute access fee on Internet use. In reply, the FCC stated that it had no plans at the present time to authorize such a fee.

“While I am glad that the FCC has no plans at the present time to assess such a fee, I am troubled … that there is nothing to prevent the FCC from doing so tomorrow, or the next day or the next.”

That’s why he introduced H.R. 1291, Upton said.

Boucher said the bill was both unnecessary and a political ploy by the Republicans.

“This is one piece in a series of bills that are being rushed to floor without benefit of hearings and subcommittee markups, simply for purpose of allowing the majority party to make a statement that they are committed to do something about information technology issues,” Boucher said. “This bill is designed to resolve an imaginary problem created by a lot of e-mail traffic.”

Boucher said that the only good that may have come out of the bill was its symbolic aspect.

“It puts Congress on the record as stating that it does not want to institute any per-minute Internet charges,” Boucher said. But no one has said they want per-minute Internet charges, he said. The bill is similar to a non-binding “sense of the Congress” resolution, he said.

Upton, Boucher differ on the digital divide

Over the past several months, members of both parties have made statements about their concern about the “digital divide,” the growing gap between those Americans with access to the latest in telecommunications and communications technology, and those without. Members of Congress have, at various times, described the divide as between rich and poor, or between urban and rural.

Upton and Boucher both said the Internet access charge debate is one part of the digital divide. But while Upton said his bill addresses the problem, Boucher said it ignores a looming problem for rural residents.

“A per-minute charge would fall disproportionately on lower income families,” Upton said in a press release issued when he introduced the bill in March. “I get thousands of emails from my constituents every month – many would be less able to afford to email me otherwise. Any measure that has the possibility of shutting out anyone out of the process disturbs me.

“But it goes way beyond that,” Upton said. “Keeping the Internet free from per-minute charges keeps communication between families who have loved ones overseas or in another state affordable. Forcing folks to watch the clock when communicating with their loved ones is just not fair.”

Boucher said on Friday that the debate about the imaginary Schnell ignored the issue of long-distance Internet telephony, and its possible effect on subsidies for rural phone service.

Since the 1930s, all telephone companies that provide telephone services between states pay a fee to the federal Universal Service Fund, which pays subsidies to make phone service affordable and available to all Americans, including: consumers with low incomes; consumers who live in areas where the costs of providing telephone service is high; schools and libraries; and rural health-care providers. The telephone companies pay a fee of less than four percent of the amount they billed in the previous year to residential and business customers. The exact percentage that companies contribute is adjusted quarterly based on projected universal service demands.

Local phone companies recover the costs of their universal service contributions through “access charges” levied on long distance companies.

“One reason we don’t hear anybody talking about an ‘analog divide’ is that, through the Universal Service Fund, about 96 percent of Americans can afford phone service,” Boucher said. This Universal Service Fund is crucial to Boucher’s constituents, many of whom would not be able to obtain phone service if the fund subsidies didn’t bring the price down to affordable levels, he said.

But what happens if millions of American change from traditional voice-based long distance service to Internet telephony long distance? Local phone companies, under the current system, will not be able to charge access fees, because the Internet connection will be local.

If the traditional voice-based long-distance services drop, that means so will charges paid to the Universal Service Fund. If that continues, that would endanger subsidies for rural phone service, and the price of service could rise so high as to be out of reach of most rural residents, Boucher said.

“At the proper time, as telephony migrates to Internet and replaces long distance voice traffic, some mechanism will have to be found to replace the funding for the Universal Service Fund,” Boucher said.

Upton’s amended bill made a nod in that direction, Boucher said, though it was not explicit.

The original bill made no mention of Internet telephony services. The amended bill stated that the FCC will be allowed to impose access charges on the providers of Internet telephone services.

“The result is that the commission is not prohibited by this bill from creating a mechanism to continue to sustain Universal service,” Boucher said. “I’m confident at no point in time will the FCC impose a per-minute charge on individual ISP users for sustaining Universal service. But the commission might consider some form of flat charge, probably imposed on the Internet Service Providers.”

While some of those charges may be passed down onto long-distance Internet telephony users, these consumers may still end up saving money because they are no longer paying bills for the traditional voice-based telephone service, Boucher said.

# # #

© 2000 Media Central, an IndustryClick community. All rights reserved.

Permission to repost article granted by IndustryClick. 

Rural TV loan bills get closer to reality

Rural TV loan bills get closer to reality

By Rod Perlmutter, News Editor, Media Central

KANSAS CITY, Mo., March 31, 2000 (Media Central) – Proponents of a $1.25 billion program to help bring local broadcast television signals into rural areas may soon go to President Clinton to sign into law.

The question is which version of that program will go to the White House?

This week, the Senate and House discussed their own versions of the bill, which are similar but not identical.

On Thursday, by a 97-0 vote, the Senate approved S. 2097, the Launching Our Communities Access to Local (LOCAL) Television Act. The bill provides a loan guarantee program that will encourage television providers to develop technology to send local content to rural areas.

On Wednesday, the House Commerce Committee approved a similar bill, H.R. 3615, the Rural Local Broadcast Signal Act, with some amendments. The bill, sponsored by Bob Goodlatte (R-Va.) and Rick Boucher (D-Va.), had already received unanimous approval of the House Agricultural Committee.

Both bills originated out of the need to help rural viewers. On Nov. 29, President Clinton signed into law the Satellite Home Viewer Act, permitting satellite providers to, for the first time, distribute local broadcast signals within their local TV market. But the law meant nothing to many rural households, who could still not get the TV service they wanted.

Critics of last year’s law said that the response of the satellite providers was to focus first on urban areas. Based on the economies of scale, and the low population density of rural areas, it is more profitable for a satellite provider to give service to urban areas over rural areas.

Rural areas lag behind urban areas in their ability to get local television news and weather information, Goodlatte said, and he fears that the gap will only get worse as more stations convert from the analog to digital systems. According to the National Rural Telecommunications Cooperative, more than half of the nation’s households will not have access to local digital service, and at least 20 states will be left out entirely.

Proponents of the bills said the only way to get television services providers to invest the millions of dollars needed to get modern service to rural areas is a government-backed loan guarantee program.

But last fall, Sen. Phil Gramm, (R-Texas) opposed a loan guarantee program that was in included in the Satellite Home Viewer Act because he feared it would be a giveaway to wealthy corporations. He insisted that the Senate Banking Committee, for which he is chairman, hold hearings on the proposal first. The Senate stripped the loan guarantee program out of last year’s bill, and hearings were held in February. Gramm is one of the cosponsors of the bill passed on Thursday, which is also sponsored by Sen. Conrad Burns (R-Mont.), and Sen. Richard Lugar (R-Ind.).

Both the House and Senate versions call for a $1.25 billion loan guarantee program. Both say that the U.S. Agriculture will have a say in how the loans are approved.

But the bills differ in several ways:

  • Maximum loan. The House bill states that the maximum loan allowed under the program would be $625 million. But there is no such limit is on the Senate bill.
  •  Supervision. The Senate version creates a three-member board consisting of the Treasury Secretary, the Agriculture Secretary and the Federal Reserve chairman to approve all loan guarantees. The House version says that the program will be supervised by the Agriculture Department’s Rural Utility Service.
  •  Extent of loan guarantee. The House bill states that the federal loan guarantee can extend to 100 percent of the applied loan, but the Senate bill limits it to 80 percent.

On Wednesday, the House Commerce Committee further amended its version. By voice votes, it approved amendments by Billy Tauzin (R-La.) and Michael Oxley (R-Ohio.) The Oxley amendment conditioned approval of any loan guarantees under the bill to the Federal Communication Commission conducting an independent test of harmful interference to satellite services that are eligible for loan guarantees. The Tauzin amendment limited the number of local broadcast signals that must be carried by a multichannel video programming distributor (MVPD) to no more than the largest number of local broadcast signals carried by the cable system serving the largest number of subscribers in that market.

The committee rejected:

  • By a 24-6 vote, a proposal by Ed Markey (D-Mass.) requiring that borrowers seek loans from commercial lenders on reasonable terms before obtaining guaranteed loans from the Rural Utilities Service (RUS).
  • By a 28-7 vote, a proposal by Christopher Cox (R-Calif.) to require that at least one of the officers or directors of an applicant for a loan guarantee under the bill personally guarantee the repayment of sums owed the United States as a result of default on the loan.
  • By a 20-16 vote, another Cox proposal to require the loan board to collect a “loan guarantee origination fee” to cover the administrative costs of the program.

Rep. Tom Bliley, (R-Va.) the committee chairman ruled that a proposal by Rep. Bart Stupak (D-Mich.) to make the bill address other concerns about the “rural digital divide” were not germane to the bill. Stupak’s proposal directed the FCC to initiate a proceeding to provide federal universal service support for the deployment of broadband service to eligible rural communities.

One amendment to the Senate bill came this week when agreed to allow financial institutions without federal deposit insurance to take part.

That satisfied the demands of Senator Tim Johnson, (D-S.D.) and the National Rural Telecommunications Cooperative, which said that some organizations that provide funding for improving rural infrastructure, such as the Cooperative Finance Corp., are not FDIC-insured. The CFC is the financial arm of the National Rural Electric Cooperative Association, a lobby representing about 1,000 electric co-ops in 46 states.

Gramm said he looked forward to the House passing its version of the bill, so that he could meet with their representatives to hammer out a final bill. In a press release posted on the Senate Banking Committee’s website, Gramm said.

“Number one, we want to try to enhance the chances that people who live in rural America, especially in isolated areas, can receive their local television signals,” Gramm said. “Second, we want to be good stewards of the taxpayers’ money. We want to guarantee to the best of our ability that not only will the loans be made, but that they’ll be paid back. It doesn’t do us any good to make bad loans. Bad loans don’t produce local TV signals. Bad loans simply cost the taxpayer hundreds of millions of dollars and do no good.”

© 2000 Media Central, an IndustryClick community. All rights reserved.

Permission to repost article granted by IndustryClick. 

FCC sets up new NCE license process

FCC sets up new NCE license process

By Rod Perlmutter, News Editor, Media Central

(Additional material from wire services)

KANSAS CITY, Mo., April 19, 2000 (Media Central) – The Federal Communications Commission announced an order last week that should help break up a five-year backlog of applications for licenses for noncommercial educational (NCE) radio and television stations.

Communications lawyers who represented public radio stations said this week that the rules were a step in the right direction.

“It’s an improvement over the current situation, but anything would have been,” said John Crigler, a Washington, D.C., attorney who represents the Station Resource Group, whose members operate 168 public radio stations in the United States. “On the whole, this will help local public radio stations.”

Sheryl Leanza, deputy director of the Media Access Project in Washington, said though her organization is glad that the FCC proposed an order, it is not sure whether it will petition to make further changes to help local community groups gain access to radio spectrum.

Crigler and Leanza said the new FCC order comes at a time when demand for broadcast spectrum is increasing, and some national groups are trying to chip away at the 20 percent of the bottom of the radio dial that was reserved for noncommercial use. Increasingly, they said, the battle to get on the air is between small sparsely-funded community groups versus well-heeled national groups.

Crigler, an attorney with Garvey, Schubert and Barer in Washington, said that for years, when there was more than one application for noncommercial educational frequencies, the applicants were declared mutually exclusive or “Mxed.” That meant before a license could be granted, the FCC would hold a comparative hearing before an administrative judges. These hearings were expensive and took months.

In 1995, the FCC froze comparative hearings for NCE facilities, and accepted public comments on the best way to decide who should get a license when several parties applied for the same thing. As a result, those applications that were declared “Mxed” were not being processed, and no one was getting the license.

But while the FCC was accepting comments on how to change the procedure, the number of applications for the NCE licenses increased. The FCC said in 1998 it received 750 applications, which was almost twice as many as were filed in 1997. As a result, the number of applications that were mutually exclusive increased as well, from 250 to 1997 to 500 in 1998.

Interest in NCE licenses was high, Crigler said, because NCE licenses were exempt from filing fees. Similarly, the number of applications grew for NCE licenses for smaller supplemental stations known as translators. A translator is a small station that receives a primary station’s signal, amplifies, shifts its frequency, and rebroadcasts it. It is used by FM and television broadcasters to expand their coverage area. For example, a translator might help a station with a weak signal get to listeners on both sides of a mountain.

Under FCC rules, a commercial translator could only be used to “fill in” dead zones of its current coverage area. But, Crigler said, an NCE translator could be fed by satellite transmission and could serve areas far removed from its primary station’s service area.

Crigler, in comments to the FCC, said the rise in NCE translator license applications increased because national groups were creating large satellite-fed translator networks in which the signal of a primary station was re-transmitted by dozens of translator stations thousands of miles away.

“The growth of far-flung translator networks has increased congestion in the reserved spectrum and reduced listenership to existing NCE stations,” he wrote.

Crigler, using the FCC database of applications for NCE licenses, documented that most of the applications were not coming from small local groups applying to serve their own community, but large national groups applying for licenses all over the country.

According to Crigler, the following is a list of the top five appliers for NCE licenses, including the number of those that were declared Mxed:

  • American Family Association, with 179 NCE applications, of which 115 were Mxed;
  • Calvary Chapel of Twin Falls, Inc., 111 and 11;
  • Broadcasting for the Challenged, Inc., 87 and 77;
  • Educational Media Foundation, 85 and 26;
  • Paulino Bernal Evangelism, 40 and 14.

Crigler said that when the FCC froze its comparative hearings, it eliminated the only means the commission had to test whether the applicants for NCE licenses intended to serve the needs of the community, or even if they were non-profit groups.

In comments to the FCC filed in 1998, Crigler said that Broadcasting for the Challenged exemplified why some form of application review was needed. Crigler alleged that Broadcasting for the Challenged was a “nonprofit corporation” made up of the members of a single family. One member, Crigler alleged, had about 40 pending applications for new commercial radio and six television stations. That member also had links to other commercial television operators.

“In the days when the commission conducted comparative hearings, these facts would have warranted an inquiry into ….whether Broadcast for the Challenged is a bona fide NCE applicant or merely a vehicle for speculating in reserved frequencies,” Crigler wrote.

In another case, Crigler said that a Station Resource Group member found itself competing for an NCE license with an applicant who allegedly “misrepresented its status as a nonprofit corporation, …that the application is the creation of a convicted felon with a history of violating FCC rules…and the applicant declined to answer damaging questions about its educational purposes (and) the ownership interests of parties to the application.”

In a press release published Friday, the FCC said it adopted new procedures to decide which is the best applicant when several apply for the same NCE license.

Instead of comparative hearings, the FCC will use a point system to determine which is the best applicant.

“It will be faster and less expensive than the former traditional hearing process, while continuing to foster the growth of public broadcasting as an expression of diversity,” the commission said in its release.

Points will be awarded as follows:

  • three points if the applicant is an established local entity (An applicant must be local for two years prior to application to be deemed “established.”);
  • two points if the applicant owns no other local broadcast stations;
  • two points if the applicant is part of a state wide network providing service to accredited schools (This credit will be awarded only if applicant does not also claim the local ownership points.);
  • one to two points based on the technical parameters of the proposed facility.

The commission even set up a series of “tie-breaker” clauses. The winner among several applicants will be:

  • the applicant with the fewest existing stations. If that results in a tie, the next criteria is:
  • the applicant with the fewest pending applications. After that, for FM stations:
  • the first applicant to file.

Leanza said the point system is a step in the right direction, because the FCC entertained proposals based on picking the winner by lottery.

“We are gratified that the FCC recognized that lotteries would have been an abdication of their responsibilities under federal communications law,” Leanza said. “Selecting a licensee based on randomness does not serve the public interest.”

Crigler said the point system was good because it explicitly put important goals in the decision-making process.

“The preferences support localism – it is better to have a local group than a national chain,” Crigler said. “The system also encourages state educational networks. It also supports diversification, since it is better to have more voices rather than fewer. And, in the case of a tie, the applicant with the fewest pending application wins, which favors a small local group over a big national applicant with more than a hundred applications.”

Leanza said the point system, however, failed to address the needs of noncommercial applicants who wanted to broadcast on the 80 percent of the spectrum that is not reserved for public use. Leanza said some public radio groups may apply for NCE licenses in the part of the spectrum currently dominated by commercial stations. Under the FCC order announced last Friday, if both a commercial and a noncommercial applicant apply for an NCE license in the non-reserved part of the spectrum, the point system will not apply. Instead, the license will be decided by auction.

“Noncommercial applicants have limited financial resources, and they will rarely succeed against a well-funded commercial applicant,” Leanza said. “This is a bias against noncommercial applicants.”

© 2000 Media Central, an IndustryClick community. All rights reserved.

Permission to repost article granted by IndustryClick. 

FCC Withdraws Noncommercial TV ‘Guidelines’

FCC Withdraws Noncommercial TV ‘Guidelines’

By Rod Perlmutter, News Editor, Media Central

KANSAS CITY, MO – Feb. 4, 2000 (Media Central) – In a contentious split decision this week, the Federal Communications Commission has withdrawn guidelines on television stations that critics said encroached on religious expression.

Now, a non-profit group says it is organizing groups, including religious and educational organizations, to reinstate the guidelines, or at least hold public hearings on them.

The guidelines were part of a December decision to allow Cornerstone Television Inc., a religious broadcaster, to swap a TV license for its Pittsburgh station for another, which was owned by a non-profit, PBS-affiliated station, and to sell the first to Paxson Communications Inc.

The guidelines, concerning how to determine whether a broadcaster qualifies for a reserved noncommercial educational (NCE) television channel license, prompted Rep. Tom Bliley, (R-Va.), the chairman of the House Commerce Committee, to propose legislation that would have removed the guidelines.

“The FCC is not just stifling religious expression but trampling on the First Amendment,” Bliley said.

When the guidelines were withdrawn, on a 4-1 vote by the FCC on Jan. 28, the dissenting commissioner, Gloria Tristani, blasted the vote as a “sad and shameful day (because)…this supposedly independent agency has capitulated to an organized campaign of distortion and demagoguery.”

Jerry Starr, executive director of Citizens Interested in Public Broadcasting and co-chairman of the Save Pittsburgh Public TV Campaign echoed those remarks.

“It was an unprecedented capitulation to a campaign of political pressure from the religious right,” Starr said when contacted in Washington. “If the commission had simply allowed the process to play itself out, they would have heard a great number of different voices, including religious and educational organizations, defending the new guidelines as appropriate.”

This week, Starr said, he contacted several organizations, including the National Council of Churches, National Educational Association, and the People for the American Way, who said they are contacting their members and asking them to petition the FCC to reconsider its decision to withdraw the guidelines. The goal, Starr said, is to hold public hearings that would eventually lead to adaptation of the guidelines or something similar.

The original December decision

On December 29, the FCC released a decision approving the application for assignment of license of WQEX (TV) Channel 16, Pittsburgh, PA, from WQED Pittsburgh to Cornerstone TeleVision, Inc., and the application for assignment of license of WPCB-TV, Channel 40, Greensburg, PA, from Cornerstone to Paxson Pittsburgh License, Inc. In short, Cornerstone sought and was granted authority to move from Channel 40 to Channel 16, and to sell Channel 40 to Paxson.

Channel 16 is one of two public television stations in the Pittsburgh area, Starr said. Cornerstone had been broadcasting religious programming on its commercial channel in Pittsburgh since 1978. Because of its financial problems, the public TV operator considered the swap deal. Once Channel 40 was sold, the proceeds of the sale were to be split between the public TV operator and Cornerstone, Starr said.

The deal would have meant that a religious broadcaster would have had the rights to a NCE license. That’s unusual, Starr said, since the vast majority of religious broadcasters hold commercial licenses.

In granting the application the FCC denied the petitions of those who opposed the deal, including the Save Pittsburgh Public TV Campaign, based on the religious nature of some of Cornerstone’s programming.

The FCC said that since 1952, the commission has reserved a limited number of television channels for educational broadcasters, including Channel 16 in Pittsburgh. Applicants seeking to use NCE-reserved television channels have always been required to demonstrate that their programming will be “primarily educational” in nature and thus serve the educational purpose for which the channel was reserved.

In a small number of cases, including the Cornerstone application, religious broadcasters have requested that they be certified as NCE TV broadcasters and thereby they become subject to the standards of an NCE TV station.

The commission said that in all license transactions, the FCC generally defers to the program judgments and decisions of the licensees, and does not review programming definitional issues on a factual basis unless it first determines that a substantial and material question of fact has arisen that the licensee’s judgments are arbitrary and unreasonable.

In granting Cornerstone’s application, the FCC said, it also sought to clarify standards that apply to any broadcaster, religious or otherwise, seeking commission certification as an educational television broadcaster eligible for a reserved NCE channel. The order in the case included two paragraphs of “Additional Guidance” to be used in the future to help resolve any factual issue raised about when programming is “primarily educational.”

“To comply with the requirement that a NCETV station ‘be used primarily to serve the educational needs of the community,’ we now clarify that this requirement is two-fold,” the FCC stated:

  • More than half of the hours of programming aired on a reserved channel “must primarily serve an educational, instructional or cultural purpose in the station’s community” of license.
  • To qualify as a program which is educational, instructional or cultural in character, and thus counted in determining compliance with the overall benchmark standard, “a program must have as its primary purpose service to the educational, instructional or cultural needs of the community.”

The FCC, citing previous decisions, said it would allow the broadcaster to assess whether its subject matter was “educational” unless the broadcaster’s “categorization appears to be arbitrary or unreasonable.”

“We do not believe that the discussion of religious matters during a program that has as its primary purpose service to the educational, instructional or cultural needs of the broader community disqualifies the program from being a ‘general educational’ program,” the FCC stated. On the other hand, the commission stated, not all programming qualifies as educational.

“For example, programming primarily devoted to religious exhortation, proselytizing, or statements of personally-held religious views and beliefs generally would not qualify as ‘general educational’ programming,” the FCC stated, and, in a footnote, gave another example: “Church services generally will not qualify as ‘general educational’ programming under our rules. However, a church service that is part of an historic event, such as the funeral of a national leader, would qualify if its primary purpose is serving the educational, instructional or cultural needs of the entire community.”

The FCC approved the decision, including the guidelines, by a 3-2 vote.

Paxson gives angry retort

On Jan. 10, Lowell “Bud” Paxson, Chairman of Paxson Communications, blasted the guidelines as “horrendous” and said they would have far-reaching and damaging consequences. The rules:

  • were adopted without any notice to, or comment from, the public.
  • “thrust the FCC into program content review that is unprecedented and now forces the agency to evaluate the content of all religious programming of all religious faiths.”
  • “will immediately affect all noncommercial television broadcasters and particularly those broadcasting a significant amount of religious programming,” as well as 400 noncommercial radio stations with religious formats.
  • “raise serious constitutional issues since the FCC will now be forced to favor certain types of religious programming and disfavor other types. Such content-based review of free speech represents unwarranted federal intrusion and is totally unconstitutional.”

Rep. Michael Oxley (R-Ohio) sent his complaints to the FCC Chairman William Kennard on Jan. 6, who responded on Jan. 12 that the commission was not out to suppress religious expression:

“The commission thus did not single out religious broadcasters, but rather clarified standards applicable to all NCE broadcasters. In fact, the large majority of broadcasters offering religious-oriented programming are exempt from the NCE eligibility requirements described in the Cornerstone decision because they use commercial channels that are not reserved for NCE stations, and thus are not subject to the NCE eligibility requirements.”

Also, he said, the FCC did not try to establish new rules, but “clarify long standing FCC policy applicable to any broadcaster seeking to use an NCE-reserved channel.”

Furthermore, Kennard said, the FCC was not attempt to ban or hinder religious programs.

“a complaint alleging simply that an NCE broadcaster is airing some religious programming would be summarily dismissed by the FCC since noncommercial programming of any nature is permissible on an NCE channel, as long as more than half of the overall weekly program schedule serves “an educational, instructional or cultural purpose in the station’s community of license.”

But that didn’t satisfy Bliley, who proposed legislation that urged the FCC to reconsider its WQED decision and withdraw the guidelines.

“While the constitution prohibits the government from taking actions that promote the establishment of religion, (it) likewise prohibits actions that stifle religious expression,” Bliley’s bill stated. “The commission has intruded the government into a kind of content review of religious broadcasting that is neither necessary nor constitutionally valid. By requiring that qualifying programming must appeal to the broader community, the commission also fails to recognize that the hallmark of non-commercial television has been service to the needs of smaller audiences and to provide diverse niche programming to serve underserved and underrepresented populations.”

On Jan. 28, the FCC voted 4-1 to uphold the transfer of license but to rescind the guidelines. “Regrettably, it has become clear that our actions have created less certainty rather than more, contrary to our intent,” the commission said.

Steve Schmidt, a staff member of the House Commerce Committee in Washington, said Bliley’s legislation was going to be withdrawn.

“Chairman Bliley is happy that common sense prevailed at the FCC,” said Schmidt, who was contacted this week.

The guidelines were ‘too clear’

Common sense didn’t prevail, wrote the commission’s one dissenter, Gloria Tristani. Instead, the FCC withdrew the guidelines because some riled broadcasters started a “witch hunt” against the commission.

“Not all religious-oriented programming will count toward the requirement that reserved television channels be devoted to ‘educational’ use – this is nothing new,” Tristani wrote. “What was new was that the commission attempted to give some clarity to its precedent to assists its licensees and the public, and…to ensure that the reserved channels are used for their intended purpose.”

Tristani said broadcasters covet non-commercial channels. “The government reserves a small number of TV channel in a community for educating the public. These channels are quite valuable – Cornerstone planned to move to the noncommercial channel free of charge while selling its commercial channel for $35 million.

Tristani denied that the commission was barring religious programming from the reserved channels. No, she wrote, the commission “simply held that not all religious programming would count toward the ‘primarily educational’ requirement.” No, she wrote, the FCC did not restrict religious speech. The decision, she wrote, “only dealt with the small number of television channels sets aside for noncommercial educational use.”

“Religious broadcasters are free to broadcast whatever they wish on commercial channels,” Tristani wrote. “In this case, Cornerstone was seeking a special privilege from the government – the right to broadcast on a channel reserved primarily for public education. The government may selectively promote certain speech, e.g., public educational speech, without thereby abridging other types of speech, e.g. religious speech.”

“Because of their scarcity, the reserved channels are expressly intended ‘to serve the entire community to which they are assigned,'” Tristani wrote, quoting earlier FCC decisions. “In a religiously diverse society, sectarian religious programming, by its very nature, does not serve the ‘entire community’ and is not ‘educational’ to non-adherents.”

“It is no answer to say that non-adherents need not watch those channels. That is like saying that the government can provide direct aid to the religious mission of sectarian schools because non-adherents can enroll elsewhere,” she wrote.

“The problem was not a lack of clarity, but that we were too clear,” Tristani wrote. “We actually tried to give meaning to our rule. What the majority really means is that they prefer a murky and enforceable rule to a clear and enforceable one.”

And, she concluded, proponents of the guidelines shouldn’t hold their breath about future action on them. “I doubt that a rulemaking on this subject will ever see the light of day,” Tristani wrote.

AOL-Time Warner critics focus on cable and access

AOL-Time Warner critics focus on cable and access

By Rod Perlmutter, News Editor, Media Central

(Additional material from news services)

KANSAS CITY, Mo., Jan. 10, 2000 (MediaCentral) – All the headlines about the proposed Time Warner Inc.-America Online Inc. merger mention billions of dollars, but critics say the real story is millions of cable subscribers.

Specifically, the key to the deal is Time Warner’s 13 million cable subscribers — and just who will have access to them. That’s the opinion of several industry analysts, online reporters and consumer groups, who expressed either opposition or skepticism about the deal.

On Monday, top Internet services provider America Online and Time Warner, the world’s largest media company, announced that AOL will buy Time Warner for what the Associated Press reported would be billion in stock. If approved, it would be the largest merger ever.

Shares of both companies soared on news of a deal that will create an empire that reaches from magazines and movies into cyberspace and that promises to remake the landscape of how people communicate, are entertained and informed, around the globe.

Prior to the announcement, the biggest merger on record was MCI WorldCom Inc.’s agreement to buy Sprint Corp. for billion.

It’s the cable

Sergio Non, the Inter@ctive Investor reporter for, was skeptical about AOL CEO Steve Case’s reported reasons for wanting to acquire Time Warner.

“No matter how much Case praises Time Warner’s content, for AOL this is all about cable distribution, not owning Sports Illustrated and the rights to Pat Metheny records. … You can get content anywhere … but not just anyone has a broadband system that passes 20 million homes.”

AOL and Time Warner promised on Monday to promote open access on what will be their cable network — Time Warner’s network — which has 13 million customers and is available to more than 20 percent of U.S. homes. That’ll likely prevent AT&T from foot-dragging or backsliding on conversion of its network to open access.

If equal access is one of the issues, then prepare for a contentious debate.

“It’s still unclear under what terms cable companies will provide access to outsiders that want to provide broadband services,” wrote Tom Steinert-Threlkeld, reporter for Inter@active Week.  “What is worrisome here is the same sort of questions that plague independent communications companies that want access to Bell company phone lines in local markets.”

Witness, for example, AT&T’s opposition to the Federal Communications Commission’s Dec. 22 decision to allow Bell Atlantic Corp. to offer long-distance service in New York. It was the first time since the 1984 break-up of AT&T that the FCC allowed a “Baby Bell” company to provide long-distance telephone service in its own region.

One of the FCC conditions for allowing a Baby Bell to offer long distance was for it to prove that it allowed other phone companies within its region equal opportunity to provide local service, and AT&T argued that Bell Atlantic hadn’t proved that yet. AT&T sued for an emergency stay against the FCC decision, which a federal appeals court blocked.

 Complex web of media giants

The Time Warner-AOL deal would produce a complex relationship among AOL, Time Warner and No. 1 cable operator and long-distance giant AT&T. Time Warner is the No. 2 cable operator.

AT&T is seeking to acquire Media One Group Inc., which owns 25 percent of a joint venture called Time Warner Entertainment, which holds the bulk of Time Warner’s assets, including more than 11 million cable television subscribers. Time Warner owns the remaining 75 percent of the venture.

If AT&T’s deal is approved and AOL and Time Warner merge, AT&T would own 25 percent of a venture that holds a substantial portion of AOL Time Warner’s cable assets.

Time Warner and Media One also jointly own a high-speed Internet access service called Road Runner. AT&T owns the largest stake in the only other major cable ISP, Excite AtHome Corp.

Some groups said it was ironic that AOL, which has been critical of AT&T over cable access, would bid for Time Warner.

“The key aspect from the AOL-Time Warner press conference was the statement by Levin, endorsed by Case, that it’s time to take the issue of access regulations out of Washington and out of the localities,” Peter Arnold, executive director of Hands Off the Internet, a group based in Washington that opposes government attempts to regulate web content. “As both men stated, individual companies are much better able to serve consumers by structuring relationships without concern about whether it might violate some misguided government regulation.”

“For a year now, AOL-backed groups have been active in pushing state and local access regulation in franchise transfers and renewals across the country,” Arnold said. “It will be interesting to see if they are as aggressive in promoting this regulation in the service territories for AOL-Time Warner.”

 Opposition but probably antitrust OK

Jamie Love, Director of the Washington-based Consumer Project on Technology, said federal regulators should oppose the merger. Love gave five reasons:

  • AOL is the single most important force today in advocating open access to the cable broad band platform.
  • If this merger is approved, AOL’s interests will be fundamentally changed.
  • AOL and Time-Warner are direct competitors as Internet content providers on broadband services.
  • One relevant market for AOL and Time-Warner as content providers is for providing navigation and interface services to Internet users, such as menus for electronic commerce.
  • If AOL can buy Time-Warner, will a Microsoft/AT&T merger be far behind?

AT&T and Time-Warner are both trying to set up broadband Internet services that can discriminate among content providers, and effectively degrade services offered by competitors.  But some lawyers said the takeover likely will not cause serious antitrust problems.

“It does not appear there are antitrust issues that would provide a significant impediment to this transaction,” said Steven Salop, a professor of antitrust law at Georgetown University Law School.

Antitrust lawyer Marc Schildkraut, of Howrey & Simon in Washington, agreed that the merger would probably pass muster after a close examination.

“They will be looking at the same kinds of things they looked at when Time Warner acquired CNN,” Schildkraut said.

That merger — announced in 1995 and approved in 1997 — raised questions about vertical integration. The Federal Trade Commission was concerned that the new company could raise the prices for programming because it would both produce programs and distribute them through the country’s second largest cable system.

In this merger, AOL would be in a position to distribute content produced by what is now Time Warner.

At this point, the Justice Department and Federal Trade Commission have yet to sort out which agency will be reviewing the transaction, Reuters reported.

It’s not clear whether the Federal Communications Commission would have to issue an opinion on the merger.

Michael Balmoris, spokesman for the FCC, said that if the deal involved any sort of transfers of licenses, such as for cable franchises, that would require FCC approval.

But forget about regulatory battles or opposition from competitors to the AOL-Time Warner deal. There’s another battle that’s about to begin, some critics wrote, and it’s a lot closer to home.

Imagine combining two corporations with the likes of Ted Turner, Steve Case, and Gerald Levin all under one roof.

Case stated during the Monday press conference that “there are a lot of cooks on stage, but … there is a big meal to serve here. …There’s plenty for a lot of fine chefs to oversee.” That made’s Sergio Non scoff.

“Somehow, I don’t see Wolfgang Puck, Emeril Lagasse and Paul Prudhomme collaborating on a meal anytime soon,” Non wrote.


Judge rhymes to refute a Yuletide lawsuit

Judge rhymes to refute … a Yuletide lawsuit

By Rod Perlmutter , News Editor, Media Central, and wire services

KANSAS CITY, Mo., Dec. 8, 1999  (MediaCentral) – In an era when lawyers are writing best-selling crime novels, it’s not surprising that there are a few judges who pride themselves on their ability to turn a phrase.

U.S. District Judge Susan Dlott, in Cincinnati, displayed her talents this week in response to a lawsuit about Christmas and the First Amendment.

Her response, quoted Tuesday in the Cincinnati Post, was an original nine-stanza poem.

“I thought it was apt in light of Dr. Seuss and How the Grinch Stole Christmas,” said U.S. District Judge Susan Dlott told the Post. “That’s where I got my inspiration.

Judge Susan Dlott dismissed the suit filed by lawyer Richard Ganulin which charged that the federal establishment of Christmas as a national holiday violates the constitution’s First Amendment mandate that the government and religion remain separated.

The judge did dispose,
first, by writing in prose.

In the prose selection of her opinion, the judge wrote that Christmas has become secularized and the U.S. Supreme Court has long recognized that “inescapable fact.”

Rejecting Ganulin’s charge that the establishment of Christmas as a legal public holiday violates his right to equal protection under the law, Judge Dlott said, “The court has found legitimate secular purposes for establishing Christmas as a legal public holiday.”

“When the government decides to recognize Christmas day as a public holiday, it does no more than accommodate the calendar of public activities to the plain fact that many Americans will expect on that day to spend time visiting with their families, attending religious services, and perhaps enjoying some respite from pre-holiday activities,” Judge Dlott said, quoting from previous federal court decisions.

“Ganulin and his family have the freedom to celebrate, or not celebrate, the religious and the secular aspects of the holiday as they see fit. The court simply does not believe that declaring Christmas to be a legal public holiday impermissibly imposes Christian beliefs on non-adherents in a way that violates the right to freedom of association,” the judge said.

Ganulin, an assistant City of Cincinnati solicitor who filed the suit as a private citizen, argued that making Christmas a national highway violates his right to freedom of association.

But the judge ruled that Christmas “has a valid secular purpose, it does not have the effect of endorsing religion in general or Christianity in particular, and it does not impermissibly cause excessive entanglement between church and state.”

And, now, it is time
to read her words in rhyme:

 Judge Susan Dlott’s poem:

The court will address
Plaintiff’s seasonal confusion
Erroneously believing Christmas
MERELY a religious intrusion.

Whatever the reason
Constitutional or other
Christmas IS NOT
An act of Big Brother!

Christmas is about joy
And giving and sharing
It is about the child within us
It is mostly about caring!

One is never jailed
For not having a tree
For not going to church
For not spreading glee!

The court will uphold
Seemingly contradictory causes
Decreeing “The establishment” AND “Santa”
both worthwhile “CLAUS(es)!”

We are all better for Santa
The Easter Bunny too
And maybe the great pumpkin
To name just a few!

An extra day off
Is hardly high treason
It may be spent as you wish
Regardless of reason.

The court having read
The lessons of “Lynch”
refuses to play
The role of the Grinch!

There is room in this country
And in all our hearts too
For different convictions
And a day off too!

Editor’s note:

“Sure,” you might think,
“I know all about
But what did she mean
when she talked about

“Lynch” refers to Lynch v. Donnelly, a 1984 U.S. Supreme Court decision that upheld the right of Pawtucket, R.I. to erect a Christmas display in a park owned by a nonprofit organization located in the center of the city. The display included Santa Claus, a Christmas tree, a banner that read “Seasons Greetings,” and a Nativity scene crèche.

Though the display had been used for more than 40 years, a group sued the city, stating that the crèche, because it was owned and funded by the government, violated First Amendment separation of church and state.

The Court ruled, 5-4, in favor of Pawtucket. The majority opinion, written by the late Chief Justice Warren Burger, stated that the U.S. government had a long history of recognizing that religion played a role in public life, and that the use of religious symbols in public, by itself, did not violate the separation of church and state.

“Executive orders and other official announcements of presidents and of the Congress have proclaimed both Christmas and Thanksgiving national holidays in religious terms,” Burger wrote. “And, by acts of Congress, it has long been the practice that federal employees are released from duties on these national holidays, while being paid from the same public revenues that provide the compensation of the chaplains of the Senate and the House and the military services. … Thus, it is clear that government has long recognized — indeed it has subsidized — holidays with religious significance.”

“It would be ironic, however, if the inclusion of a single symbol of a particular historic religious event, as part of a celebration acknowledged in the Western World for 20 centuries, and in this country by the people, by the executive branch, by the Congress, and the courts for two centuries, would so ‘taint’ the city’s exhibit as to render it violative of the (First Amendment separation of church and state),” Burger wrote.

“To forbid the use of this one passive symbol — the crèche — at the very time people are taking note of the season with Christmas hymns and carols in public schools and other public places, and while the Congress and legislatures open sessions with prayers by paid chaplains, would be a stilted overreaction contrary to our history and to our holdings. If the presence of the crèche in this display violates the Establishment Clause, a host of other forms of taking official note of Christmas, and of our religious heritage, are equally offensive to the Constitution.”