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Thursday, January 24, 2008

NCTA Appeals Commission’s MDU Order

On January 22, 2008, the National Cable & Telecommunications Association (“NCTA”) filed a Petition to Stay a Federal Communications Commission (“Commission”) Order, prohibiting exclusive contracts between multichannel video programming distributors (“MVPDs”) subject to section 628 of the Communications Act and owners of multiple dwelling units (“MDUs”). NCTA petitioned the D.C. Court of Appeals for review of the Order on January 16, 2008. Prior to the Commission’s ruling, exclusive contracts were not regulated by the Commission. NCTA takes issue with the fact that the Order not only bans exclusive deals on a prospective basis, but also renders all previously exclusive deals void, stripping MVPD providers of their contractual rights and jeopardizing their ability to provide video, voice and data services.

NCTA’s petition rests on the premise that the Commission has no statutory authority to prohibit exclusive deals, and even if it did, the Commission can not abrogate existing deals. Further, NCTA argues that the Commission’s decision is arbitrary and capricious as it dramatically changed its position and analysis from just four years ago and, failed to state why meddling with existing contracts results in any tangible benefit for consumers.

Given the wide range of parties involved and the nature of the issues, the Court will certainly have its hands full trying to balance the interests of all parties involved to reach a fair and workable outcome.

Wednesday, January 16, 2008

Recent Forbearance Petitions Demonstrate Need for Meaningful Intercarrier Compensation Reform

On January 11, 2008, Embarq filed a forbearance petition with the Commission to eliminate the “Enhanced Service Provider” (“ESP”) Exemption to interstate access charges. Embarq claims that grant of its petition would make ESPs telecommunications carriers, thus subject to regulation. ESPs would no longer be considered “customers” of telecommunications carriers.

The Embarq petition makes clear that it is targeting specific types of companies for new regulation. Foremost, Embarq seeks to create additional regulatory obligations for interconnected VoIP providers, such as cable operators and Vonage. In addition, the proposed regulation would extend to purely Internet-based calling services like Skype. Most damaging is that the petition appears to treat all ESPs, including conference calling companies, voicemail providers, and others, as telecommunications carriers, subject to full Commission regulation, including reporting requirements and access charges.

Meanwhile, late last year, Feature Group IP also filed a forbearance petition requesting that the Commission affirm the ESP Exemption, as applicable to advanced IP communication systems.

Both petitions emphasize the greater need of a comprehensive reform effort to treat like services with regulatory parity under a unified rate scheme. Rather than perpetuating the interim regime, which is built upon discriminatory regulations, sponsored by industry giants, the Commission should seize the opportunity as a means toward obtaining equal treatment for all telecommunications traffic by eliminating disparate intercarrier compensation rate structures for otherwise identical functionality to even the playing field among providers and enhance consumer benefit.

Tuesday, January 08, 2008

FCC Seeks Comment in MDU Exclusivity Proceeding

On Monday, January 7, 2008 an FCC order which voids exclusive contracts between multichannel video programming distributors (“MVPDs”) subject to section 628 of the Communications Act and owners of multiple dwelling units (“MDUs”) was published in the Federal Register. The FCC also released a notice of proposed rulemaking (“NPRM”) seeking comment on whether providers of Direct Broadcast Satellite (“DBS”) and Private Cable Operators (“PCOs”) should be permitted to have exclusive access to MDUs. The notice also considers prohibiting exclusive marketing arrangements and bulk billing. The purpose of the NPRM is to determine whether these practices benefits or harms video consumers in MDUs. Comments are due on or before February 6, 2008 and reply comments are due on or before March 7, 2008.