FCC Chairman Martin Backs Internet Tax Ban Extension

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Washington -- Federal Communications Commission chairman Kevin Martin said Wednesday that he supports extending the federal law that bans taxation of high-speed Internet access service provided by cable and phone companies to millions of consumers.

“I think that we need do whatever we can to extend the moratorium on Internet taxes for as long as possible,” Martin told reporters after testifying before the House Small Business Committee on FCC rules for a $10 billion spectrum auction set to begin Jan. 24, 2008.

The Internet tax moratorium expires on Nov. 1 unless extended by Congress. Lawmakers on Capitol Hill have been at work on a compromise for weeks, but no deals have been announced.

In his testimony, Martin insisted several times that the FCC’s auction rules would give small businesses a chance to acquire licenses because the FCC restricted the geographic size of a license area and provided bidding credits to so-called designated entities that do not have the resources of a large telecommunications carrier.

“I think that will allow them to end up competing,” Martin said.

In his comments to reporters, Martin wouldn’t say whether Liberty Media would have to agree to provide programming a la carte to gain FCC approval to acquire News Corp.’s 38.4% interest in DirecTV.

“I don’t have any particular comment about that transaction or about the discussions at the commission on it,” Martin said about a deal that has been pending at his agency for 231 days, well past the informal 180-day merger review deadline.

Martin also indicated that the FCC would not decide in October whether to allow unlicensed devices to use vacant channels within the spectrum block allocated to local TV stations. Martin has ordered more interference studies on so-called white spaces devices.

“I don’t know for sure what the timetable will end up being,” Martin said, referring to a final FCC ruling. “You’d have to ask the engineers what kind of timeframe they’ve come up with for the next round of testing.”

Martin said he had no problem if the tests included cable set-top boxes, which could fail from interference when unlicensed wireless devised use TV channels 3 and 4.

“If there are concerns about the impact those devices might have cable set-tops boxes, if the cable industry wants them to be involved in the testing, I’ve said to have an open round of testing to make sure this doesn’t interfere with anything,” Martin said.

Martin wouldn’t comment on when the agency’s Media Bureau would rule on a program access complaint filed by Virtual Digital Cable, a Web site that streams linear cable programming, in January.

VDC is seeking mandatory access to several Time Warner networks, including TNT, TBS, CNN and CNN Headline News. Time Warner has filed an opposition, stating among other things that Web sites are not entitled to license cable networks under federal program access laws.

Martin couldn’t pinpoint when the agency would adopt rules that would extend to incumbent cable operators some of the new local franchising rules adopted last December for local phone companies.

The FCC was supposed to vote on the new rules at its Sept. 11 meeting.

“We ended up pulling it off of that because several of the other offices complained there were too many things that were on the September agenda meeting,” Martin said. “It’s on circulation. As soon as everyone ends up voting it, it will come out.”

In a ruling that local governments are fighting in federal court, the FCC said that local franchising authorities had to act within 90 days on cable franchising applications filed by local phone companies that had pre-existing authority to occupy local rights of way.

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