The FCC’s Triennial UNE Review order, when it’s finally released, may be viewed by the financial markets as more favorable to the Bells on the UNE-P issue than originally thought, Legg Mason analysts said in a report issued Thurs. It’s not that the UNE-P language is expected to change basic concepts, but rather it will have more details and be seen in a different political light, the analysts said. They said that among reasons for possible changes in market perception were: (1) The disadvantages to the Bells of the UNE-P portion of the order came as a shock to the markets because the assumption beforehand was that the order would benefit the Bells. Now that there’s been more time to study the issue, the order doesn’t appear to be quite as bad as originally thought. “The market, in its disappointment on that issue, did not appear to notice that the FCC had put in place a process that, in combination with other factors, would lead to a transition away from UNE-P, albeit over time.” (2) The FCC, as it fills out the sketchy outline approved in Feb., is expected to provide more specific guidance to state regulators on how to do their UNE-P analysis. That would discount the original view that “the FCC was giving discretion t the states to keep UNE-P for as long as they would want,” the report said. Legg Mason said the Bells themselves tended to emphasize that view, probably to encourage the FCC to clarify the state discretion issue. (3) The market undoubtedly would react to companies’ reactions. After the Feb. 20 decision “the Bells had both political and regulatory reasons to exaggerate their disappointment.” Now, they may have “an economic incentive to say that the decision is better than they expected.” (4) The 3-year transition that the order requires when a state finds UNE-P no longer is necessary “will be more favorable for the Bells than some thought.” Legg Mason said that was because: “The UNE-P providers are likely to be cut off from adding new customers well before the 3-year period is over. They are also likely to pay gradually higher wholesale prices during the transition.” Legg Mason emphasized it didn’t expect “a huge market reaction,” just a more favorable reaction than before.
Country of origin cases
Small wireless carriers sent a flurry of petitions to the FCC seeking temporary waivers of Enhanced 911 Phase 2 obligations. Without additional time, the smallest carriers, or Tier 3, face an initial deadline of Sept. 1 for starting to sell automatic location identification (ALI)-capable handsets. MobileTel, which serves rural parishes in La., petitioned for a waiver, telling the FCC it originally planned a network-based Phase 2 solution, but found that “approach is not economically or technically feasible in its service area.” MobileTel is a Tier 3 carrier, which means it has fewer than 500,000 customers, with an analog and TDMA network. To meet E911 requirements and “market demands,” the carrier said it was moving to CDMA technology and would use a handset-based Phase 2 solution. MobileTel said it had begun installing CDMA technology and expected most customers would have transitioned by the end of 2007. The smallest carriers face a Phase 2 timetable that includes ensuring that by Nov. 30, 2004, all new digital handsets activated can transmit ALI data and by Dec. 31, 2005, ensuring 95% of subscribers have such handsets. MobileTel proposed a new schedule, with Sept. 30, 2005, for ensuring at least half of all new CDMA handsets sold are ALI-capable and Dec. 31, 2007, for 95% of CDMA subscribers having such handsets. It said a network-based Phase 2 solution would have cost $1-$1.5 million, which would have been “extraordinarily burdensome for a small rural carrier” and wouldn’t have guaranteed Phase 2 compliance. South Canaan Cellular Communications filed a separate petition outlining similar plans for a CDMA overlay and seeking the same timeline for a handset-based solution. “South Canaan has been unable to find any vendor that provides a handset-based solution for analog systems or that can provide a network-based solution in an economically feasible way,” it said. Because CDMA technology isn’t compatible with its existing network, the carrier said customers who bought CDMA phones before full deployment of the network overlay would have only intermittent digital service. Arctic Slope Telephone Assn. Coop (ASTAC) also sought a Phase 2 waiver, saying it was planning a handset- based technology. “Developers of handset-based solutions did not announce on a timely basis that they were discontinuing development of Phase 2 solutions for the TMDA protocol, including development of a TDMA-based ALI-capable handset,” the carrier said. It plans to overlay its existing network with GSM technology by Sept. 2005. “The fact that GSM handsets are not presently generally available would make it impossible for an operator such as ASTAC to meet the current handset deployment benchmarks even had its network conversion been completed,” it said. ASTAC sought an extended implementation schedule, including a Dec. 31, 2005, deadline for ensuring that all handsets sold and activated were ALI- capable. Public safety groups urged the FCC last month to not grant forbearance to Tier 3 carriers on certain E911 requirements. A coalition of Tier 3 carriers has a petition pending before the agency that asks for forbearance from enforcement of Phase 2 location accuracy requirements until after Dec. 31, 2005. Other carriers petitioning for a waiver included Leaco Rural Telephone Coop and Brazos Cellular Communications.
Submitting e-mails of MCI employees dealing with customers who weren’t getting accurate caller ID readings, Verizon told the FCC in a filing Tues. that such evidence showed MCI was deliberately stripping “Calling Party Number” (CPN) information from calls to avoid paying access charges. Verizon submitted the data as an ex parte filing in a seemingly unrelated proceeding in which AT&T has sought a ruling that its phone-to-phone IP telephony service was exempt from access charges (WC Doc. 02-361). Verizon said MCI had filed in this docket supporting the ruling sought by AT&T, but it concluded that MCI’s “extreme measures… to disguise the nature of the traffic and thereby avoid paying the access charges” showed an MCI recognition “that this traffic is, and always has been, subject to access charges.”
AT&T Wireless, Cingular and Verizon Wireless told the FCC that a July filing by Globalstar was “not well founded.” In a letter to the Commission, Globalstar had criticized the Commission’s decision to revoke its 2 GHz mobile satellite service (MSS) license “without first providing adequate notice of the substance of the rule” (CD July 18 p12). Globalstar said the policy was made clear in a decision to approve a similar Boeing license modification, but only after Globalstar’s license was revoked. The only similarity between the applications was that both companies proposed modifications at their first milestone deadlines, the wireless carriers said: “Because the Globalstar contract would have delayed final construction and certification of system operations by up to 2 years, its license was properly declared null and void on this basis.” Boeing’s modification would allow the satellite to be completed by the original deadline, so there was no need for a “new ‘post hoc’ explanation” of the Globalstar decision, they said.
In a joint filing at the FCC, Consumers Union, Public Knowledge and the Center for Democracy and Technology said they feared the “plug-&-play” agreement reached by the cable and consumer electronics (CE) industries could lock out the use of computers and computer technologies from interoperability with cable systems. Personal computers and other devices will “increasingly be central to the consumer experience of digital content,” they said, and a wide range of technologies, from WiFi to USB to Internet Protocol, “are plainly and unnecessarily excluded from the plug-and-play proposal.” If the FCC is going to adopt all or part of the proposal, it should ensure that the DFAST license allows for a diversity of content protection technologies, not just those contemplated in the original proposal, they wrote. They also called for “a more neutral authority” than CableLabs to test and certify digital cable-ready content protection devices. The groups said they believed security schemes based on encryption, perhaps combined with rights expression languages, could provide more flexible content protection.
The FCC denied a National Rural Telecom Co-op (NRTC) petition for reconsideration of 2nd-round assignments in the Ka-band for geostationary satellite orbit (GSO) fixed satellite service (FSS) birds. NRTC didn’t file for a license during the 2nd round, the Commission said, but it told the Commission that it didn’t agree with the order’s comment that vacated orbit locations would be made available for existing Ka-band licensees before new applicants. NRTC, which has indicated an interest in operating a Ka-band system at 113 degrees W, said the rule “creates an unauthorized and inappropriate preference for existing Ka-band licensees.” The Commission said it didn’t agree but would allow “current licensee[s] the opportunity to seek a location that it may have originally requested and that may better conform to its business plans than the location assigned to it.” The policy doesn’t prevent NRTC from filing an application, the Commission said, particularly since there are Ka-band orbit locations still available. Separately, the Commission clarified its policy further, saying that if the satellite application freeze were lifted before Aug. 26, modification applications filed on or before that day would be considered before applications filed after that date. Applications filed before Aug. 26 will be treated as though filed at the same time and conflicting requests will be resolved by dividing the spectrum at the orbital locations, the FCC said.
PanAmSat told the FCC it intended to withdraw its application to launch its PAS-12 satellite to 83 degrees W and requested a refund of its $82,690 in filing fees. PanAmSat said the original application was filed in 1995. It said it chose to withdraw the application because the Commission never had acted on it and because of the new space station licensing order that “rewrote the book for [fixed satellite service (FSS)] space station licensing. The rules that the Commission adopted… subject PanAmSat to new financial, business and regulatory risks that carry severe consequences.”
Intelsat can operate its Intelsat 709 at 85.15 degrees E, the FCC said Tues. The satellite originally was authorized for operation from 50 degrees W in the C- and Ku- band and already had received approval to modify it to operate at 55.35 degrees W, the Commission said. At the new location, Intelsat’s C-band operations overlap with frequencies being used by Russia’s Statsionar-3, the FCC said, so until the operators complete a coordination agreement, Intelsat must operate its uplink operations at 5925 MHz-6225 MHz, and downlink at 3700 MHz-3900 MHz. The FCC also conditioned Intelsat’s Ku-band operations for the following frequency bands: 10.95 GHz-11.2 GHz, 11.45 GHz- 11.7 GHz, 12.5 GHz-12.75 GHz, 14 GHz-14.5 GHz.
The Nev. PUC plans a prehearing conference Sept. 9 on Sprint tariff changes intended to implement increased pricing flexibility allowed under a 2003 competitive pricing flexibility law (SB-400) signed in June. The law gives Sprint much more freedom to use customer-specific contracts rather than tariffs to provide large business customers with volume and term discounts. Sprint wants to withdraw tariffs spelling out volume and term discounts for 6 different high- capacity digital dedicated and packet-switched services for large businesses. Meanwhile, the PUC called for comment by Sept. 2 on the effects of SB-400 on the PUC’s standards and processes for approving alternative regulation plans of incumbent telcos. The aency asked parties to discuss how the law affected classification of services into competitive and noncompetitive groupings. The original bill had outlined specific criteria for service classification, but the final law left it to the PUC to determine the classification criteria. The agency also wanted commenters to address the interactions between SB-400 and a resolution passed during the 2003 special session (ACR-2) ordering the PUC to conduct a study of telecom services, competition and pricing, particularly whether there might be side effects that could impede PUC action on telecom pricing matters.
The Coalition Provisional Authority (CPA) opened the bidding process for wireless telephone licenses in Iraq to state-owned telecom companies and reduced the bond requirements. It said the changes, which modified the final requirements issued earlier this month (CD Aug 6 p9), were in response to bidders’ concerns that some conditions precluded their participation or were “unduly onerous.” The CPA said the new requirements would allow companies more than 10% owned by a foreign govt. to submit their bids for the licenses as part of a consortium, as long as total foreign govt. participation there didn’t exceed 10%: “This change opens the bidding process to most companies worldwide, even if they are wholly state-owned, provided that company’s ownership of a consortium does not exceed 10%.” Secy. Gen. of the Ministry of Transportation & Telecommunications Shakir Abdulla said: “We would have preferred 0% ownership by foreign governments in Iraq’s system, obviously, but as a compromise we agreed to 10% at the absolute highest.” The CPA also said it had reduced the cost of the performance bond required to be secured as part of the license to $30 million at a substantially reduced cost. The original rule required a bond for the full price of the build-out, thought by some to impose a very significant bonding fee for a build-out estimated at $150 million. The CPA said the changes would encourage more companies to participate in the bid process. “We have provided a level playing field for all interested parties to submit substantive bids for wireless communication in the 3 designated regions,” said Ambassador Paul Bremer, SPA Administrator: “We are proceeding at a rapid pace in this endeavor because Iraq must have a modern communications system for voice and data to jump start the post-war economy.” Bidders must submit their proposals by Aug. 21, and selection is expected by Sept. 5.