Boeing is “confident it will be able to correct” problem in BSS 601 satellites by mid-April, spokesman said. NASA also remains hopeful Boeing will be able to fix problem in Tracking & Data Relay Satellite (TDRS)-1, which is based on 601 bus and is in useless orbit while company attempts to move it into orbit without exhausting fuel reserves. However, satellite insurance expert said concerns over Boeing satellites were severe enough to cause increase in insurance rates.
Country of origin cases
FCC Comr. Abernathy told reporters Wed. she thought it was “very good news” that providers of cable modem service had started to negotiate voluntarily to give access to independent Internet Service Providers (ISPs). She indicated those moves by cable MSOs would play key role as Commission considered whether to impose “open access” standards on cable modem service. While agency recently declared cable modem service to be interstate information service, it also opened rulemaking seeking to determine, among other things, whether open access was necessary or appropriate, given current market conditions (CD March 15 p1). In recent weeks, Comcast (CD Feb 27 p4) and AT&T Broadband (CD March 13 p6) -- which have merger application pending before Commission -- both announced agreements to allow outside ISPs aboard their pipes. Consumer groups have questioned their motives and whether companies were offering true “open access.” AOL Time Warner also allows multiple ISPs but is under FTC consent decree. AOL TW executives contend, however, that multiple ISPs are good business model and would make sense with or without consent decree.
FCC granted VoiceStream temporary waiver of its wireless priority access service (PAS) rules Wed., clearing way for first system of its kind for emergency and govt. users. National Communications System (NCS) is expected to award contract shortly to VoiceStream for GSM-based PAS system, which provides national security and emergency personnel priority access to wireless networks during emergencies. FCC Comrs. Copps and Martin voiced concerns about ability of consumers not on priority list to still make wireless calls during emergency. Martin issued separate statement but approved order, while Copps issued lengthy partial dissent. While backing introduction of PAS, Copps argued Commission should have “required VoiceStream to disclose to its customers the effect the PAS will have on the ability of those Americans not on a PAS list to make calls during an emergency.”
N.J. Board of Public Utilities voted 3-0 to reaffirm Jan. decision to support Verizon’s Sec. 271 application to FCC for interLATA long distance entry. BPU, along with Justice Dept., supported Verizon’s original application, which carrier withdrew. Verizon refiled March 26 after cutting nonrecurring UNE charges that had threatened to derail original bid. Verizon said BPU’s reaffirmation of support recognized its “clear demonstration” that it has met all requirements of Telecom Act for long distance entry.
EchoStar filed appeal with U.S. Supreme Court to protect what it called First Amendment right of consumers to choose programming, it said Tues. Company is seeking to overturn Sept. 2001 ruling by U.S. Appeals Court, Atlanta, that upheld constitutionality of ban on EchoStar broadcasting local news and information outside of local market. Challenge arose out of 1998 lawsuit that TV networks filed in U.S. Dist. Court, Miami, to stop EchoStar from providing ABC, NBC, CBS and Fox programming to consumers unless programming originated from network affiliates closest to viewers’ homes.
Adelphia Communications said Mon. that it had asked SEC to give it extension on filing its annual 10-K report to give its auditors more time to review its “co-borrowing” practices. Those practices have been called into question since Adelphia disclosed in conference call with analysts that it had $2.3 billion in off-the-books debt that was co- borrowed by Rigas family (CD March 28 p5) through Highland Holdings, which owns cable systems with 300,000 subscribers. Analysts say they haven’t gotten sufficient assurances from cable company about assets backing that debt, and those jitters have sent Adelphia’s stock into downward spiral in recent days, losing more than $1 billion in value in less than week. Not helping situation is bankruptcy filing of Adelphia Business Solutions, which was spun off from Adelphia Communications in Jan. but which got substantial amount of its funding from Adelphia. Also exacerbating situation is fact that Adelphia had $14.7 billion in debt at end of 2001, not including $2.3 billion already cited.
In wake of default on interest payments late last week, Metromedia Fiber Network (MFN) Mon. announced changes in management, with John Gerdelman, ex-Mortonsgroup consultants, named pres.-CEO and Robert Doherty, ex-Salomon Smith Barney, appointed exec. vp-finance. Gerdelman and Doherty have been charged with formulating proposal for MFN’s creditors to restructure company’s debt. They replace Pres.-CEO Mark Spagnolo and CFO Randall Lay, who left company. MFN said if it was unable to restructure its debt it would have to file for protection under Chapter 11. Company said it missed $8 million interest payment on $231 million debt originally held by Nortel Networks. MFN said that triggered “cross-default” on several other debt issues. MFN said it also had deferred $30 million interest payment on $975 million in debt held by Verizon and would be in default if it didn’t make payment by April 15.
Eldorado Communications said Fri. it planned to seek review of FCC decision to return 85% of deposits by winners of Jan. 2001 PCS re-auction (CD March 28 p1). Eldorado, which had competed with NextWave in original C-block auction, had opposed carrier’s refund request, contending it would amount to unfair and discriminatory treatment of Eldorado and minority-owned and small businesses that were intended to benefit from PCS auction. FCC order concluded Eldorado lacked standing to challenge refund request. Eldorado, which filed for bankruptcy protection after auction, had returned C-block licenses it won in bidding and agreed to forfeit money already paid. “We think the FCC is wrong on the question of our legal standing and wrong in balancing the equities between the giant carriers, who got their money back at no risk to their licenses, and the small businesses, who had to forfeit their licenses and lose their deposits,” Eldorado CEO Will Yandell said. Eldorado Managing Dir. Stephen Roberts said although company would seek review of FCC order, it continued to believe Commission should encourage settlement of NextWave dispute “as long as the small businesses who were injured by NextWave’s conduct are included.”
NBC executives received no harsh questions from affiliates -- most notably on station charges at FCC against network practices (CD Aug 24 p3) -- in meeting in N.Y. Tues. afternoon. Although allegations still are pending, “that’s essentially a dead issue,” NBC Chmn. Robert Wright told us after nearly 4-hour session. Meeting was scheduled after TvB conference same day (see separate story, this issue) by affiliates, originally without NBC involvement, under association bylaws requiring them to meet annually. However, top NBC executives -- Wright, Pres. Andrew Lack, TV Network Pres. Andy Falco, Sports & Olympics Pres. Dick Ebersol, Entertainment Pres. Jeff Zucker, News Pres. Neal Shapiro -- made presentations, answered questions. Executive of large TV group attending his first NBC affiliates’ meeting expressed “surprise at how upbeat the discussions were.” Falco said “everybody was very happy,” with no divisive issues raised. He told reporters most new affiliation contracts being signed by NBC include payment of compensation, but “we're not universally paying comp… There are so many different deals” that have been and are being negotiated with stations. Outgoing Affiliates’ Chmn. Jack Sander of Belo said meeting “illustrates the high regard that NBC holds for the stations and the strength NBC provides its affiliates.” Roger Ogden of Gannett Bcstg. was elected to replace Sander. Newly elected affiliate board members are Terry Hurley, Cordillera Communications; Marci Burdick, WAGT Augusta, Ga.; Terry Mackin, Hearst-Argyle TV.
European Commission (EC) alleged Dutch incumbent telco KPN was abusing its “dominant position regarding the termination of telephone calls on the KPN mobile network through discriminatory or otherwise unfair behavior.” EC sent statement of objections to KPN Wed., charging company, through its subsidiaries KPN Mobile and KPN Telecom, had violated competition rules of EC Treaty. Case stems from complaint filed by WorldCom in 1999. “Studies show that fixed-to-mobile termination rates in Europe can be ten times higher than the average charge for fixed-to-fixed interconnection,” EC said: “This results in undue barriers for newcomers to the market and high prices for consumers.” WorldCom’s original complaint had charged there were similar conditions in Sweden and Germany. EC said complaint against Germany was withdrawn after operators there dropped termination rates 50%, and in Sweden, national competition authority is addressing issue. In EU, concern over competitiveness of mobile call termination markets was raised in OECD report in 2000 that questioned why it’s more expensive to call from fixed-to-mobile network in off-peak times than to make call in opposite direction. “Despite a decrease of around 10% over 2001, average peak time rates charged by EU mobile operators for terminating telephone calls on their respective networks remain approximately 10 times higher than the average charge for fixed-to-fixed interconnection,” EC said. Unlike in other EU countries, in Netherlands all telecom traffic must pass through fixed line network of KPN, only telco with direct interconnection with wireless networks in that country. “This absence of direct interconnection significantly reduces the scope of services that WorldCom and other operators can offer to their customers,” EC said. Commission said it had reached “preliminary conclusion” that provision of terminating access on KPN Mobile’s public wireless network constituted “separate product/services market” and that company had dominant position in that market. EC said that at retail level, users who wanted to call subscriber of particular mobile operator couldn’t choose alternative wireless carrier for terminating their calls to recipient. At wholesale level, all public network operators have regulatory obligation to offer calls to other networks by purchasing wholesale terminating access services on each network, “for which there are no substitutes,” EC said. It said its charge that KPN was abusing its dominant market position stemmed from “unfair pricing practices amounting to a margin squeeze between KPN Mobile’s wholesale terminating services offered to other network operators and the retail prices of KPN Mobile/Telecom for certain mobile/fixed services offered to business customers in The Netherlands.” KPN said it was “aware that the Commission wants to announce new market definitions to regulate mobile call termination across the European Union.” KPN said case shouldn’t have singled it out “for this purpose, as KPN ’s mobile call termination rates are by far the lowest in the Netherlands and in line with the European Union average.”