FTC and U.S. Postal Inspection Service (USPIS) started new national fraud prevention campaign to help senior citizens, who are increasingly becoming targets of telemarketing fraud, FTC said Mon. In conjunction with USPIS fraud prevention efforts, U.S. Senate passed resolution, introduced by Sens. Levin (D-Mich.) and Collins (R-Me.), designating week of Aug. 25 as “National Fraud Against Senior Citizens Awareness Week.” Chief Postal Inspector Lee Heath said: “Fraud complaints are on the rise, and more people aged 60 and over are becoming victims.” According to Alliance Against Fraud in Telemarketing & Electronic Commerce, senior citizens account for 26% of telemarketing fraud victims. National Consumers League said illegal telemarketing operations cheated citizens out of at least $40 billion annually. It said significant number of illegal contest and prize scams originated in Canada. USPIS said it had shut down 40 illegal telemarketing operations this year (43% over last year) and stopped 80 deceptive mailing operations (up 40%). During awareness week USPIS is providing fraud-awareness posters to more than 38,000 post office lobbies, placing half-page ads in selected metropolitan markets and mailing fraud-awareness information to 3 million households of seniors.
Country of origin cases
CTIA and Verizon Wireless jointly petitioned U.S. Appeals Court, D.C., last week in challenge to how FCC applied forbearance standard when it granted one-year extension last month on wireless local number portability (LNP). Issue had come up at time that FCC adopted order, with Comr. Martin voting for one-year extension but dissenting on extent to which order addressed forbearance standard.
When Media Bureau Chief Kenneth Ferree first announced that Commission would try using abstract study methodologies to examine cable company consolidation, he said there was possibility study (CD Nov 8 p3) would be found useless and FCC would “throw it out the window.” Despite Commission’s admission that study contained computational errors -- which it said have since been corrected -- and abundance of criticism, even from sworn enemies in telecom industry, FCC insists study has some merit. How much merit it should be given, however, when Commission makes determinations about cable concentration continues to be subject of debate. Staff members we spoke with said privately that study, Horizontal Concentration in the Cable Television Industry: An Experimental Analysis, would be given little weight, if only because it was merely one piece of evidence in proceeding on cable ownership limits.
Controversy in several states about Qwest’s “secret” contracts with some CLECs (CD July 23 p7, June 3 p3) appears now to be complicating FCC’s review of Qwest’s first Sec. 271 petition, due for Commission action by Sept. 11. As part of its review of Qwest’s Sec. 271 petition for Colo., Ia., Ida., N.D. and Neb., FCC late Wed. asked for comment by Aug. 28 on company’s offer to file those previously unfiled contracts for review by relevant state regulators, post them on Web site and make their terms available to other CLECs. Qwest has been criticized by state regulators for not filing all of its CLEC contracts for approval as required by Sec. 252 of Telecom Act. In disputes with PUCs that have been going on for months, Qwest has maintained that those contracts don’t need to be filed because they aren’t directly related to Telecom Act’s interconnection rules. Issue has led to accusations that those unfiled contracts involve deals Qwest made with CLECs to win their support for Sec. 271 entry.
Kan. Attorney Gen. reported 183,300 phone customers enrolled for state’s no-call telemarketing list in week since sign-ups began. Residential customers who sign up by Sept. 23 will be on first list that takes effect Oct. 1. No-call law originally called for list to be effective July 1, run by Direct Mktg. Assn.(DMA), but one provision of state law caused problem for DMA that led state to seek another vendor. State signed with GovConnect Inc. Aug. 12 to maintain list. State now is accepting telemarketer subscriptions to list, priced at $359 statewide or $149 for single area code.
UBS Warburg analyst John Hodulik downgraded SBC, BellSouth and Verizon to “hold” from “buy” based on “estimated impact of UNE-P-based competition on those companies’ core residential service base.” UNE-P stands for unbundled network element platforms, one of entry methods used by local competitors. In report, How Much Pain from UNE-P, Hodulik said Bell line losses to UNE-P “are increasing rapidly,” and “the economics of UNE-P will put additional pressure on Bell margins and earnings.” He said UBS Warburg expected Bells “to generate negative EBITDA [earnings before interest, taxes, depreciation and amortization] from wholesale lines in 18 states,” and long distance service “will only be a partial offset” for Bells because “competitive conditions have dramatically reduced its profitability.” Hodulik said SBC and BellSouth were at most risk but “while Verizon is less exposed, the company’s relatively high leverage makes its equity valuations more sensitive to decreases in free cash flow that can result from market share losses.” Bells have “pinned their hopes on the FCC” to protect them against UNE-P impact but Hodulik said he thought Commission “will find it difficult to dramatically curtail UNE-P.” UBS Warburg also reduced 12-month price targets to $30 from $36 for SBC, $34 from $50 for Verizon and $26 from $28 for BellSouth. Despite all that, Hodulik said, “we continue to believe that these carriers are the long-term winners in the industry.” However, he said, investors needed to know that “the impact of UNE-P will be more dramatic than we had originally expected… The risks of UNE-P-based competition is enough to step back from these stocks until we get more visibility as to the longer term effects of this competitive threat.”
ASPEN -- Broadband will succeed when content can be distributed online with technological protections from piracy, along with concerted consumer education campaign, News Corp. COO Peter Chernin said at Progress & Freedom Foundation Aspen Summit here. Same argument was pitched by Intel Exec. Vp Leslie Vadasz and RIAA Pres.-Gen. Counsel Cary Sherman and cheered by Asst. Secy. of Commerce for Technology Policy Bruce Mehlman. But summit didn’t see resolution of contentious issue of online content distribution, with off- the-record panel on subject Mon. quickly degenerating into name-calling and accusations of industries’ enabling criminal behavior. Much hallway conversation Tues. focused on negative and unproductive tone of much of that dialog, and at least one participant had intended to take some of remarks on record by addressing them in Tues. meeting, but was dissuaded when told it would only further degrade level of dialog. Mehlman, who has hosted several digital rights management forums at Technology Administration, told Summit Tues. that Mon. panel contained more contention than solutions.
FCC Chmn. Powell said Mon. he planned to halt any further streamlining of ILEC accounting rules and said he would soon convene federal-state joint conference to look into issue further in light of financial scandals plaguing telecom industry. FCC in Oct. reduced number of accounts that ILECs have to report to Commission and cut back slightly on rules on affiliate transactions. Agency at that time teed up follow-up proceeding to consider further reductions in ILEC reporting requirements. It’s that follow-up proceeding that Powell now plans to halt.
FCC Wireless Bureau requested comment on waiver request by Qualcomm to use auction discount voucher (ADV) to pay off existing auction debt instead of future bid obligations. In June 2000, FCC awarded Qualcomm $125 million voucher that could be used in any spectrum auction for up to 3 years. Commission did so as result of 1999 U.S. Appeals Court, D.C., decision that directed FCC to designate company under agency’s pioneer’s preference program. Qualcomm sued FCC in 1992 after it was denied pioneer’s preference for developing CDMA technology for PCS systems. In its waiver request, Qualcomm said it had had limited opportunity to use ADV, now valued at $114 million. Voucher expires in June 2003. Qualcomm asked that FCC waive any requirement that voucher be used in auctions occurring after June 8, 2000, and allow voucher to be used to pay debt owed by licensees using CDMA technology in 3 auctions. Those auctions are No. 5, PCS C- block licenses; No. 10, C-block re-auction; and No. 11, PCS licenses for D-, E- and F-blocks. In NextWave re-auction in Jan. 2001, Leap Wireless reached agreement with Qualcomm to provide $125 million in financing to support its bidding by transferring ADV to Leap. Those licenses have since been returned to NextWave after U.S. Appeals Court, D.C., ruling overturned results of re-auction. In Aug. 1 waiver request, Qualcomm told FCC that original ADV order contained assumption that it would be used in what was then upcoming 700 MHz auction. “It is noteworthy that the ADV order does not reject use of the ADV in previous auction, i.e., for installment payments,” Qualcomm said. It said value of voucher now was $114 million because it transferred $10.8 million of voucher to Summit Wireless for payment on Jackson, Miss., license that wasn’t in dispute as part of NextWave re- auction. One caveat of voucher is that it be used to build system that uses CDMA technology on which Qualcomm’s pioneer’s preference is based. Of 13 auctions since June 2000, only NextWave re-auction involved licenses for which CDMA technology would be appropriate, Qualcomm said. Smaller 700 MHz auction that starts Aug. 27, after larger block of bidding that had been set to start June 19 was delayed indefinitely by Congress, doesn’t appear to involve bidders who will use CDMA, Qualcomm said. “Finally, the Supreme Court’s acceptance of certiorari in NextWave v. FCC places the spectrum in Auction 35 in a legal limbo that is not likely to be resolved for several years,” Qualcomm said. “Thus, the opportunities for use of the ADV anticipated by Qualcomm and the Commission in early 2000 have simply not come to fruition.” Since June 2000, financial challenges facing wireless sector also have increased substantially, company said. Ability to use ADV to help “undercapitalized companies” retire past auction debt would put voucher to good use, it said. Qualcomm said it had no specific carrier in mind, but had been approached by several. Bureau is seeking comments by Aug. 30, with replies due Sept. 9.
AT&T Wireless, Cingular and Verizon Wireless made joint filing at FCC Thurs., citing steps taken by several mobile satellite service (MSS) licensees that they said required Commission to take fresh look at MSS license grants, spectrum allocation and rules. They said those actions had “further undermined the premises on which their [MSS] licenses were granted and the FCC’s decision not to reexamine the original satellite-only allocation.” Wireless carriers have expressed concern about New ICO’s flexible use proposal that would allow it to provide ancillary terrestrial wireless service in MSS band. “It is now even clearer that the Commission cannot act in the MSS flex docket unless and until it first revisits the satellite-only allocation decision and the MSS license grants, both of which have been pending review for some time,” 3 carriers said. Specifically, wireless operators cited as “new developments": (1) Requests filed by 3 MSS licensees to waive or extend MSS construction milestones, “even though the Commission has proposed to strengthen those milestones in a pending rulemaking.” Filing said there were “serious questions” whether some MSS licensees had entered into noncontingent contracts for system construction. (2) Filings by 2 MSS licensees to transfer unbuilt licenses and spectrum to ICO Global Communications, “notwithstanding that the milestone and antitrafficking rules preclude such efforts.” (3) Globalstar receipt of experimental licenses to conduct 6 months of tests on ancillary terrestrial service without notifying other parties in those proceedings. Wireless carriers said FCC’s Office of Engineering & Technology, when granting experimental license, had not required that detailed report be filed in record. “Given the many new interrelated issues as to the viability of MSS as a satellite-only service and the licenses grants based thereon, the carriers submit that the Commission must return to the starting point and revisit the license grants, spectrum allocation and service rules,” filing said. Carriers said that any action in MSS flexibility proceeding would be “premature” until new issues that they raised were resolved. If FCC acts otherwise, “it will be acting contrary to its market-oriented policies of not picking winners and losers and of awarding spectrum based on its highest and best use,” filing said.