Martin cancels election day vote on telecom overhaul - white spaces vote to proceed

by JOELLE TESSLER, Associated Press

The head of the Federal Communications Commission has canceled a controversial Election Day vote on a proposed overhaul of telecommunications regulations that many consumer advocates feared would lead to higher phone bills.

Abandoning the vote is a setback for FCC Chairman Kevin Martin, one of three Republicans on the five-member commission, who had hoped to pass his proposal before power changes hands in Washington. Martin pulled the item from the agenda for Tuesday's FCC meeting amid mounting opposition from many corners of the telecommunications industry, consumer groups, Congress — and even his fellow FCC commissioners.

Martin had been seeking to reform the multibillion-dollar "intercarrier compensation" system, the byzantine menu of charges that telecom carriers pay to access each other's networks and connect calls. Martin wanted to move toward uniform, lower rates.

His plan also included major changes to the $7 billion Universal Service Fund, the federal program that subsidizes telecom service in rural and poor communities through a surcharge on long-distance bills. Among other things, Martin would have required carriers to use Universal Service money to invest in broadband networks in parts of the country that lack high-speed Internet connections.

The proposed overhaul of telecom access fees had the support of the biggest phone companies, including Verizon Communications Inc. and AT&T Inc., which argue that the existing rules are outdated. In a statement Monday, AT&T said that without changing the system, "our regulatory regime will remain broken and stuck with a 20th-century economic model designed for the black rotary phone."

But a coalition of competing carriers and rural phone companies feared Martin's plan would diminish the money they get for completing phone calls to their subscribers. Consumer advocates also warned that the proposal could lead to higher phone bills — particularly for rural customers — as phone companies sought to recover lost access revenue from other sources.

And Martin's four fellow FCC commissioners objected to addressing his proposal before seeking public comments on the issues that it raises.

In a joint statement Monday, the four commissioners — Democrats Michael Copps and Jonathan Adelstein and Republicans Robert McDowell and Deborah Tate — said Martin could have waited for public comment and still scheduled a vote on his plan at the FCC's Dec. 18 meeting. They said public review was especially important "in light of the difficult economic circumstances currently facing our nation."

Now, Martin said, he does not expect to be able to move forward with his plan this year. In an interview, he lamented being unable to vote on his proposal Tuesday, saying the ideas it raises already have been debated in Washington for years. He said the canceled vote represented "a real missed opportunity" to reform outdated regulations and extend broadband services throughout the country.

In order to comply with a Wednesday deadline set by a federal court, the FCC still has to address a narrow slice of the intercarrier compensation rules related to dial-up Internet traffic. Martin had used that court deadline to push for his broader proposal.

The FCC is also still set to vote Tuesday on whether to open up unused portions of the television airwaves known as "white spaces" to deliver wireless broadband service.

That proposal is a high priority for public interest groups and big technology companies, including Google Inc. and Microsoft Corp. They say white spaces could spur widespread, affordable broadband services because the vacant spaces between TV channels can be used for wireless signals that penetrate walls, carry a great deal of data and reach wide geographic areas.

But the plan is fiercely opposed by the nation's big TV broadcasters, which argue that using the fallow spectrum to deliver Internet connections could disrupt their over-the-air signals. Manufacturers and users of wireless microphones — including sports leagues, church leaders and performers of all stripes — have also raised concerns about interference.

Still, many analysts predict unanimous FCC support for the white spaces proposal. Last month FCC engineers concluded that potential interference could be eliminated with wireless transmission technologies that can detect and avoid nearby broadcast signals.

In addition, the FCC is due to consider two major wireless deals.

Verizon Wireless, a joint venture between Verizon and Vodafone Group PLC, is seeking approval to buy Alltel Corp. for $5.9 billion plus the assumption of $22.2 billion in debt.

The acquisition, which would make Verizon Wireless the nation's largest wireless carrier, won Justice Department approval last week after Verizon agreed to sell assets in 22 states to address government concerns about reduced competition.

The FCC might require Verizon Wireless to sell additional assets in other markets. It might also include conditions to protect Alltel's roaming agreements with other regional and small wireless carriers. Public interest groups are also hoping the FCC will attach some sort of "open access" rules to force Verizon to open its networks to all devices and applications.

Sprint Nextel Corp., meanwhile, is seeking FCC approval to spin off and merge its new WiMax wireless broadband network with that of Clearwire Corp., which already has a WiMax-like network in parts of the country. Google, Intel Corp. and a group of cable companies are investing billions into the $14.6 billion venture, which will carry Clearwire's name.

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