As FCC struggles to come to agreement on new UNE rules, analysts and others are predicting long, complicated process before there’s clarity that industry and Wall St. have long sought. New regulatory model “may not happen as quickly as some expect as the process plays out in the states and courts,” Legg Mason said in report Wed. Until UNE rules make their way through states and courts, “there is not certainty as to the new architecture of telecom competition,” report said: “Details and process do matter, particularly in this proceeding.”
Country of origin cases
FCC Chmn. Powell’s legal adviser on media issues, Susan Eid, told Precursor Group conference Tues. that reality was that there were unprecedented levels of competition, diversity and choice in broadcast TV market. Prime-time viewing of broadcast has declined more than 30% in last decade because of competition from cable, she said. Cable captures 20% of ad revenue now, she said, and she believes clustering of cable systems will cause that industry to “compete much more aggressively and, frankly, effectively” with local broadcasters in terms of local content and advertising.
Eldorado Communications last week withdrew its application for review of FCC Wireless Bureau decisions that dismissed obligations of NextWave re-auction winners. Wireless carriers, including Verizon Wireless, had opposed Eldorado’s challenge. Eldorado had asked for reversal of bureau decision that granted NextWave re-auction winners relief on their bid obligations pending conclusion of litigation on those PCS licensees. Eldorado competed with NextWave in original C-block auction, later filing for Chapter 11 bankruptcy and returned spectrum to govt. Eldorado told FCC that Supreme Court’s decision last week in NextWave case made moot its challenges to applications of re- auction winners for any of those licenses. Court sided with NextWave in upholding U.S. Appeals Court, D.C., ruling that reversed Commission decision to cancel NextWave’s licenses for nonpayment.
Auction for multichannel video distribution and data service (MVDDS) licenses was rescheduled for June 25, FCC announced Fri. Auction originally was to be Feb. 12, then was rescheduled for Aug. (CD Nov 29 p5). Commission said petitions for reconsideration and replies on MVDDS 2nd Report & Order were pending and were obstacle to final decision on use of component economic areas (CEAs) vs. designated market areas (DMAs) to list geographic licensing areas for service. Latest notice asks for comments on terms and conditions of auction, including reserve prices, minimum opening bids and simultaneous multiple round auction design, FCC said. Comments on auction procedures are due Feb. 13, replies Feb. 20. Upfront payment deadline is May 30.
Senate Commerce Committee will postpone today’s (Tues.) hearing on future of spectrum policy due to memorial service for Space Shuttle Columbia astronauts. Hearing, originally scheduled for Feb. 4, 9:30 a.m., Rm. 253, Russell Bldg., hasn’t been rescheduled. Space, Science & Technology Subcommittee Chmn. Brownback (R-Kan.) said it was “top priority” to determine causes of tragedy and he was prepared to assist NASA with investigation.
Mobile satellite service (MSS) providers will have option to use ancillary terrestrial component (ATC) to supplement their satellite services under certain conditions, FCC said Thurs. Text of order wasn’t available by our deadline, but news release outlined key points, which included 8 different gating criteria and covered interference concerns for 2-GHz and L-band. Commission also adopted rulemaking on Big Leo band to address additional spectrum issues. As part of 5 interlocking items released Thurs., Commission reallocated 30 MHz from MSS band at 2 GHz for 3G wireless. CTIA still called actions “split decision for consumers,” saying it was likely to challenge ATC order.
Clear Channel Communications Chmn. Lowry Mays defended size and influence of his company to Senate Commerce Committee as those concerned about consolidation of radio stations accused Clear Channel of engaging in anticompetitive practices. Mays’s defense included debate with Senate Commerce Committee Chmn. McCain (R-Ariz.) on how much market share his company held. Since Telecom Act of 1996, which relaxed radio ownership rules, Clear Channel has grown to 1,200 stations from 60. Mays also defended Clear Channel on accusations that ownership of concert promotions dictated which acts got more air time.
Hughes Electronics’ operational status and day-to-day operations won’t be affected by sale of AOL Time Warner’s stake in company, Hughes spokesman said. AOL Time Warner spokeswoman confirmed reports Wed. that company had sold its more than 80 million Hughes shares. Price wasn’t disclosed, but closing price Tues. was $10.45 per share, and no one would confirm reports stake was sold for $800 million. AOL Time Warner spokeswoman said company sold its stake in Hughes shares “as a part of current focus on debt reduction.” Bank of America (BoA) spokeswoman confirmed that it had bought shares, but said deal was “not a strategic acquisition, but an overnight deal.” Original 1999 transaction between 2 companies was worth nearly $1.5 million, originally for preferred stock. At end of 3 years, preferred automatically converted to common stock. Both Hughes and AOL planned to market DirecTV, DirecPC and AOL-Plus interactive TV together following 1999 transaction (CD June 22/99 p5). Hughes spokesman said AOL Time Warner deal didn’t end possibility of joint effort, but likelihood of implementation decreased as time passed. AOL didn’t return calls for comment.
FCC Chmn. Powell told reporters Wed. he expected UNE review order to be on agenda of Commission’s Feb. 13 open meeting, despite some speculation it could be delayed. He said agency definitely must act by Feb. 20, effective date of remand by U.S. Appeals Court, D.C., that could vacate agency’s UNE rules and leave telecom market in “chaos.” Added Powell: “I'm not sure what would happen. We would have 50 jurisdictions trying to figure out what to do in the absence of federal rules.”
FCC International Bureau requirement that EchoStar choose one orbital slot from 2 western locations instead of 4 “is a case of arbitrary and improper agency action,” company said in application for review. Application follows Jan. 3 letter in which EchoStar said selection of 148 degrees W was made under protest (CD Jan 8 p10). Filing said Bureau explanation that “it is appropriate that EchoStar’s orbit location/channel selection is made from its original request and upon which our due diligence finding was based” was “sketchy” and contrary to Commission policy. EchoStar said Bureau’s offer of 2 slots was departure from “first-come, first-served” policy. It said Compass Systems had requested use of 157 degrees and 166 degrees W slots, also sought by EchoStar, and that application still was pending. “If the Bureau is barring EchoStar from selecting one of these 2 slots based on that pending request,” action is inappropriate because letter to EchoStar didn’t name pending request as cause, and pending permit can’t “restrict the slot selection of an entity with an existing permit.”