Cingular Wireless CEO Stan Sigman said Tues. he would make a regulatory pitch that a $41-billion takeover of AT&T Wireless could be approved without divestitures. But analysts predicted regulators may require shedding of assets in at least some markets for a deal that would create the largest U.S. carrier. Consumers Union promptly denounced the plan, saying it comes at a time when service quality is already a problem industrywide.
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As state lawmakers get down to the serious business of their 2004 sessions, regulatory reform bills advanced in 6 states. They would alter PSC procedures and deregulate phone rates.
The FCC reportedly is close to voting down AT&T’s petition seeking exemption from access charges for calls transported on its IP backbone. Sources said FCC Comr. Adelstein had indicated he probably would join FCC Chmn. Powell and Comr. Abernathy in voting against the request. Adelstein reportedly had concerns about the petition’s legality. An option would have been to include the AT&T petition in the VoIP rulemaking that was initiated at the agenda meeting Thurs., but that didn’t happen, one source said. The problem is there’s “no good answer to the universal service concern” raised by AT&T’s petition, an FCC insider said. Meanwhile, a group of midsize telecom companies mostly serving rural areas urged the FCC to “act promptly” and deny an AT&T petition seeking exemption from paying access charges on phone-to-phone IP services. “This traffic is clearly telecommunications traffic subject to access charges under existing FCC precedent because there is no net protocol conversion between the originating and terminating points of the call,” the companies wrote last week in 2 identical letters to FCC Comrs. Martin and Abernathy. The letters were signed by CenturyTel, Commonwealth Telephone Enterprises, Consolidated Communications, CT Communications, D&E Communications, FairPoint, Iowa Telecom, SureWest, TDS Telecom, TXU Communications and Valor Telecom. The companies said how their networks originated and terminated calls for AT&T had “not changed, only the way AT&T transports a call over its own network [had] changed.” They warned the commissioners that “allowing AT&T to engage in self-help by withholding access payments” ran counter to FCC policies and the “certainty that [they] need to attract investment in their networks and promote universal service.” They said they were “concerned” the Commission’s failure to act quickly on the petition would pressure other carriers into “taking self-help measures similar to those taken by AT&T.” They also warned the FCC that “allowing this practice to continue [risked] undermining other regulatory policies such as E911 and CALEA” and had the “potential of interfering with the collection of monies for public policy funds, such as universal service.” The companies urged the FCC to reaffirm that the traffic described in the AT&T petition was subject to access charges and deny the petition.
With demand for VoIP services increasing in Europe, govts. at both the pan-European and national level are beginning to focus on whether -- and how -- IP-based telephony should be regulated. The U.K. Office of Communications (OFCOM) has set a meeting later this month on regulatory and consumer protection issues involving Voice- over-Broadband (VoB). A recently announced March 15 European Commission (EC) workshop will review a 187-page report on VoIP and related convergent services. Both bodies say the key issue is ensuring VoIP doesn’t hamper consumer access to emergency services.
Changes in indecency laws are in the works, as several proposals were floated for a bill that would increase FCC fines for indecent broadcast. Fresh from a marathon 7-hour hearing Wed. (CD Feb 12 p7), House Telecom Subcommittee members Thurs. unanimously approved the original version of HR-3717, by Subcommittee Chmn. Upton (R-Mich.) and ranking Democrat Markey (Mass.) At least 11 amendments were floated during the markup Thurs., as members questioned whether fines would be large enough, affiliates should be subject to fines for network broadcasts and the FCC should revamp its complaint process.
The FCC Thurs. modified the “all-or-nothing” rule to permit rate-of-return carriers to bring recently acquired price cap carrier lines to rate-of-return regulation without obtaining a waiver. However, an industry source said it was hard to tell whether rate-of-return and price cap carriers could stay mixed without a waiver.
The debate over the Internet tax moratorium has morphed into a larger discussion of VoIP’s impact on state and local revenue and whether the technology should be taxed. As expected, Sens. Alexander (R-Tenn.) and Carper (D-Del.) introduced a bill Wed. (CD Feb 11 p2), that would revive the expired moratorium 2 years but wouldn’t block as many taxes as another bill, S-150 by Sens. Allen (R-Va.) and Wyden (D- Ore.). At a news conference announcing the bill, Alexander and Carper made clear their intent to prevent tax jurisdictions from losing revenue as voice calls migrate to Internet transmission, because VoIP could be taxed under their bill.
An AT&T petition seeking exemption of phone-to-phone IP telephony from access charges could hurt rural telecom carriers, several associations said in an ex parte filing with the FCC last week. In an ex parte meeting with FCC Comr. Copps and aide Jessica Rosenworcel preceding the filing, the National Exchange Carrier Assn. (NECA), joined by Alltel, Independent Telephone & Telecom Alliance (ITTA), NTCA, OPASTCO and USTA urged the Commission to act quickly and dismiss the AT&T petition: “Continued FCC inaction only invites more ‘free riders’ and exposes rural consumers to unnecessary risk.” They warned the Commission that rural telephone consumers were particularly at risk because: (1) Access charges accounted for more than $2 billion in small company revenue. (2) Access revenue represented 70% of small telco revenue. (3) An access charge exemption of long distance companies’ phone-to-phone IP telephony services “could threaten the financial viability of small rural LECs and could affect consumers and impair customer service efforts by forcing rural LECs to delay network upgrades.” (4) Such an exemption could release long distance carriers from contributing to the Universal Service Fund (USF), which would “greatly threaten the viability of the fund and the provision of universal telephone service to rural consumers.” The associations also argued that AT&T’s use of IP technology to carry a call did “not equal ‘net protocol’ conversion. Calls originate as TDM and end as TDM -- nothing new here.” It also didn’t reduce LECs’ costs of originating or terminating calls, they said. The associations warned that AT&T’s request for “preferential treatment that favors a specific technology” was “an attempt at regulatory arbitrage.” They urged the Commission to treat phone-to- phone IP calls as traditional long distance when addressing the application of interstate access charges. “Reciprocal compensation payments are no substitute for access charges,” they said, and those arguing that continued application of access charges to AT&T would impair Internet growth “offer no evidence to support their claims.” If the AT&T petition is granted, the associations said, all carriers that had to pay access charges would use IP telephony, “gutting the access charge system and leaving SLCs and USF to make up the difference.” They urged the Commission to dismiss the petition “promptly on procedural grounds… Since AT&T is not claiming that it is an ISP, the relief it requests cannot be granted via declaratory ruling.” Meanwhile, AT&T continued to push the FCC to exempt the company from paying access charges when providing its phone-to-phone VoIP services. In ex parte meetings and in telephone conversations with FCC top staffers last week, AT&T said issues related to universal service and access charge contribution affected by the intersection of IP technology with the Public Switched Telephone Network (PSTN) would be “better addressed holistically in an intercarrier compensation reform proceeding that eliminated the access charge regime entirely rather than begin the process of importing the competition- distorting access charge regime into this new technology.”
Several senators opposed to the Internet tax moratorium bill as written will introduce their own measure as early as today (Wed.). Sens. Alexander (R-Tenn.) and Carper (D-Del.) have led the fight against S-150 by Sen. Allen (R-Va.), charging it is an unfunded mandate that would endanger state collection of existing telecom taxes. A draft copy of legislation obtained by our affiliated Washington Internet Daily reveals that the bill largely mirrors a compromise proposed by Alexander and Carper late last year, an analysis confirmed by Hill sources.
Changes at ABC: Richard Wolf promoted to senior vp- telecom & network origination services; Heidi Lobel, ex- MediaEdge, named senior vp-ABC Daytime Network and SoapNet sales… Ex-newspaper publisher Rob Hurless appointed to Wyo. PSC to replace PSC Chmn. Steve Ellenbecker, who leaves in March… Bruce Downs promoted to vp-govt. sales & mktg., Arris… Jerome Kern, ex-TCI and On Command, leaves Liberty Media board… XO Communications promoted Ernest Ortega to pres.-carrier services… Ex-producer Rob Word named senior vp-program development & production, Paxson… Scott Johnson, ex-Gardner, Carton & Douglas, joins Fletcher, Heald & Hildreth; Steve Lovelady named a senior consultant… Michael Ketcham, ex-Marconi, appointed CFO, named Tandberg… Bo Hedfors of Hedfone Consulting joins Kineto Wireless board.