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Dear Reader:

We wanted to let you know that, after nearly three years of operation on the World Wide Web, National Journal's Insider Update: The Telecom Act ceased publication as of January 1, 2008.

We took this step at a time when the National Journal Group is moving to increase technology coverage -- including reporting on telecommunications and broadcasting issues -- in several of its other publications. In particular, National Journal's CongressDaily -- our twice daily publication for Capitol Hill insiders -- will be adding staff in the coming weeks for this purpose.

CongressDaily will feature the kind of detailed coverage of telecom issues, both on Capitol Hill and at the Federal Communications Commission, that you are accustomed to seeing in Insider Update -- plus a lot more.

If you are interested in a trial subscription to CongressDaily, please call 800-424-2921 or e-mail us at memberships@nationaljournal.com. Thank you for your readership and support of Insider Update, and please don't hesitate to write to me at lpeck@nationaljournal.com if you have any questions or concerns.

With best regards,
Lou Peck Editor In Chief

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FCC Is Praised For Digital TV Mandate

By David Hatch

(Wednesday, September 12) The FCC elicited praise from the cable and broadcast industries for new rules mandating the availability of television signals via cable in multiple formats beginning in early 2009. The goal is to ensure that analog cable customers -- about 40 million households, or 35 percent of subscribers -- can view broadcast stations after TV outlets switch to digital signals.

But the American Cable Association, which represents smaller systems, complained that the requirements would force its members to spend up to $150,000 each in additional equipment and labor costs, potentially forcing some out of business.

The item was approved unanimously Tuesday night by the agency's five commissioners after last-minute negotiations delayed the vote by 11 hours. Without this action, FCC Chairman Kevin Martin said in written remarks, "some broadcast stations would have become unwatchable" on 120 million cable TV sets.

Under the approach, cable operators would carry each broadcaster's primary signal in analog and digital for three years following the Feb. 17, 2009, digital transition. The FCC has pledged to consider extending the regulations, which are set to expire in 2012.

During a telephone briefing Wednesday, National Cable and Telecommunications Association President and Chief Executive Officer Kyle McSlarrow said the restrictions would be good for cable customers. He expressed that view despite the fact that NCTA originally argued that no mandates were necessary.

"Yesterday's ruling is an important step in protecting analog cable subscribers from losing access to some of the most diverse programming on television, including religious and Spanish-language programming," Dennis Wharton, a spokesman for the National Association of Broadcasters, said in a statement.

But not everyone is happy. "If forced to comply with this order, small operators will have less capital to invest in [high-speed Internet access] because they need to purchase costly equipment" to meet the requirements, Matthew Polka, president and chief executive officer of the American Cable Association, warned in a statement. The FCC did not provide an exemption for small systems but invited them to request waivers.

FCC Commissioner Jonathan Adelstein, one of two Democrats on the panel, dissented on that portion of the item. "While I am pleased that the order provides for waivers," he complained in his opening statement, "it is not fair to ask these tiny rural systems to engage lawyers in Washington when a simple exemption would have sufficed."

In a related development, the FCC extended for five years a ban on exclusive video-programming contracts and initiated a new proceeding to examine the practice of programmers "tying" the availability of popular channels to less-viewed ones. Some analysts think the real goal of the new proceeding is to make it easier for the FCC to require cable systems to offer per-channel pricing, known as a la carte, a model that cable strongly opposes.

McSlarrow sought to downplay that theory. "The FCC has very limited authority in this arena," he said, expressing confidence that his industry would "make the case that the system we have today works very well for customers."

In other developments, the FCC took steps to ensure that emergency dispatchers can better pinpoint the locations of wireless callers using "enhanced 911" services that carry phone traffic over the Internet.

And Qwest Communications withdrew a "forbearance" petition seeking relief from federal regulations granting telecom competitors access to its networks at heavily discounted rates. The company could not be immediately reached for comment. In a bulletin to investors, Medley Global Advisors said Qwest dropped the petition because it didn't have the votes for passage.


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