Adam Bender

ORLANDO, Fla. -- The U.S. needs a “coherent, cohesive and comprehensive” national broadband strategy so it can restore its place as the world leader in telecom, FCC Commissioner Jonathan Adelstein said in a Tuesday PCIA Conference keynote. “Even though we have made strides, I am concerned that we are not keeping pace with our global competitors,” he said. “U.S. consumers are paying twice as much as Japanese customers for connections that are twenty times as slow. This isn’t just a public relations problem, it’s a real productivity problem, and our citizens deserve better.” Adelstein also gave his audience a brief update on FCC designated entity and special access plans.

Nokia pushed harder into software, paying $8.1 billion cash to acquire mapping data giant Navteq. The deal follows several software-focused announcements the past year, as Nokia has tried to reach beyond the hardware focus of Motorola and other historical rivals and lay the basis for fighting future competition from Google, Apple and Microsoft, analysts told us. “This is about growth,” not cost reductions, Nokia Chief Financial Officer Rick Simonson said in a Monday conference call. “Now is a time we can get out ahead of people.”

Private equity firm Bain Capital Partners agreed to buy 3Com, the acquired company said Friday. Bain, which this year agreed to acquire Clear Channel, is picking up 3Com for $2.2 billion cash. 3Com’s former joint venture partner Huawei Technology will get an unspecified minority interest and become a commercial and strategic partner of the company. In a teleconference, 3Com CEO Edgar Masri said going private would give the company greater flexibility by taking away the “intense quarterly focus” of publicly held businesses. 3Com considered “a number” of offers, but sold to Bain because they have a history of working together and Bain has a “track record” of success with invested companies, Masri said. 3Com’s board approved the deal, set to close Q1 2008, and plans to recommend that shareholders do the same, 3Com said. 3Com also needs “customary” regulatory approvals. Until the deal is completed, it will be “business as usual” at 3Com, Masri said. In 2003, 3Com and Huawei formed Huawei-3Com technology, a 3Com-controlled joint venture that sold Ethernet and IP switches to enterprise buyers. 3Com paid $882 million in November 2006 to buy Huawei’s 49 percent stake.

Vonage’s troubles may not be “that big of a deal” for the VoIP industry, iBasis CEO Ofer Gneezy said in an interview, referring to the four court cases Vonage is involved in (CD Sept 27 p4, Sept 26 p2). IBasis is an all-IP international voice wholesale business that’s U.S. customers include VoIP providers Skype and Yahoo. Cable companies represent the main power in VoIP because they have big brands and bundling opportunities, Gneezy said. He said he would get worried only if “Verizon and Sprint declared battle on the cable industry,” but it’s “very unlikely [telcos and cable companies] will engage in a thermonuclear exchange,” he said. Meanwhile, Vonage and SunRocket “are discussing” the competitor’s allegations that Vonage misuses SunRocket’s customer list, a Vonage spokesman said.

Shareholders approved a merger of iBasis and Dutch incumbent Royal KPN’s international wholesale voice business, and the deal is set to close Oct. 1, iBasis said Thursday. IBasis gets KPN’s wholesale voice business and $55 million cash, and KPN gets a 51 percent stake in the combined company. The new iBasis will have more than 1,000 customers, and its traffic could make iBasis one of the three largest carriers of international phone calls, iBasis said. The transaction is part of an accelerating “wave of consolidation” in the international voice industry,” iBasis CEO Ofer Gneezy said in an interview.

Verizon Wireless’s ban of a NARAL Pro-Choice America text-messaging program was an “incorrect interpretation of a dusty internal policy,” the carrier said Thursday, approving NARAL’s planned SMS alerts. But the ban’s reversal may not have cooled outrage about Verizon’s original decision. House Commerce Committee Chairman John Dingell, D-Mich., and FCC Commissioner Michael Copps slammed Verizon’s interference with consumers’ ability to choose the mobile content they can receive.

Two Vonage patents infringe Verizon patents, but a third may not, the Federal Circuit U.S. Appeals Court ruled Wednesday. The court upheld an Alexandria, Va., U.S. District Court patent infringement and injunction decision on two patents, sending a third back to the lower court for revisions to claim construction language. The two patents upheld should not be called invalid due to a recent Supreme Court definition of “obviousness,” but the lower court should discuss that issue for the remanded patent, it said. The court vacated a $58 million plus 5.5 percent royalty damage award since the lower court didn’t specify how the blanket amount was to be divided among the patents.

Congress can’t give telcos retroactive immunity without understanding the surveillance they took part in, Senate Judiciary Committee chairman Patrick Leahy (D-Vt.) said at a hearing. If the president and the Justice Department want to stop lawsuits against businesses, they should give Congress authorization documents it has subpoenaed, he said. In testimony, National Intelligence Director Mike McConnell agreed that “oversight is a good thing,” but said he can’t force the administration to hand over documents. “You're asking me if I can solve it,” he said. “I cannot.” McConnell said he has never refused to provide the committee anything it sought and has made “recommendations” to the administration about the “need to provide insight.” That’s not enough, said Sen. Russ Feingold (D-Wis.). If McConnell is serious about getting retroactive immunity for telcos, he should make it “more clear” to the president and DOJ that the committee needs the authorization papers, he said. In his testimony McConnell largely repeated his remarks last week to House hearings. He is “happy” to review proposed Protect America Act revisions with Congress and the Foreign Intelligence Surveillance Act court, McConnell said, noting criticism of a phrase allowing warrantless targeting of communications “concerning” someone outside the U.S. “If ‘concerning’ is the wrong word, let’s get to the right word,” he said. McConnell stressed that any FISA update should require warrants for surveillance inside the U.S. Citizens and noncitizens in the U.S. have court protection against warrantless wiretapping, he said.

An August interview with the El Paso Times didn’t confirm telco cooperation with a federal surveillance program, National Intelligence Director Mike McConnell said Thursday at a House Permanent Select Committee on Intelligence hearing. “The words I chose were ‘private sector,'” he said. McConnell said that he hadn’t asked the White House for the right to declassify information revealed for the first time in the Texas paper, and he didn’t need to. The president delegates declassification to the intelligence director, he said. Disclosing surveillance details to the Times “was a judgment call,” McConnell said. Committee chairman Rep. Silvestre Reyes, D-Tex., focused questions to McConnell on his rejection of HR-3356, a failed bill that would have updated the Foreign Intelligence Surveillance Act. The committee had developed the legislation after talks with the intelligence director. On the surface, McConnell said, the bill seemed to deal with his three main needs: no warrant requirement for overseas surveillance, private sector cooperation, and a mandate for warrants when targeting American surveillance. But McConnell’s lawyers decided parts of the bill could be read as derailing its intent, he said. Much of McConnell’s testimony reprised his comments Tuesday to the House Judiciary Committee (CD Sept 19 p7). Asked whether he would accept more-explicit FISA bans on privacy abuses, McConnell largely echoed testimony Tuesday by Kenneth Wainstein, Justice Department assistant attorney general. “As long as we read it over to make sure there are no unintended consequences,” McConnell said. The American Civil Liberties Union was also on the scene Thursday, deriding McConnell’s appearances this week as “exaggeration,” “outright fibbing” and part of a “charm offensive” intended to “gut” FISA. The committee cancelled a member-witness period set for the hearing. Later that day, Committee member Rep. Jane Harman (D-Calif.) submitted what would have been her testimony. Harman belonged to the “Gang of 8” regularly briefed on the Terrorist Surveillance Program. “The law can and must accommodate” the program, she said, urging that Congress “come together” to ensure needed changes are made. “It would be truly short-sighted to give this or any future White House a blank check, and to neuter the crucial oversight roles played responsibly for almost 30 years by the Intelligence Committees and the FISA Court,” Harman said.

The FCC “missed the train” when it put open access conditions on the 700 MHz auction, Verizon CEO Ivan Seidenberg said at the Goldman Sachs Conference, webcast from New York. It will be “very difficult to make [conditions] work” to create more competition,” he said. The FCC “didn’t need to impose government intervention to create market structure,” he said. Seidenberg discussed major wireless carriers’ interest in rurals. Majors will keep buying rurals, provided rurals want to sell, he said. SunCom’s Monday sale to T-Mobile followed a Rural Cellular sale to Verizon, Dobson Cellular sale to AT&T, and Alltel’s sale to private equity. Verizon didn’t act on Alltel’s desire to sell because the Bell has spectrum in most Alltel markets, Seidenberg said. Nor did Alltel’s size and price “fit what made sense,” he added. Verizon’s three-state wireline spinoff to FairPoint “will get done” by the end of Q1 2008 “at the latest,” he said. Verizon and FairPoint have shareholder approval and are working at getting state approvals, he said. Seidenberg said Verizon and Vodafone have a “very good operating relationship,” but the CEO declined to comment what that relationship may look like in the long term.