Mo. PSC told Verizon to file detailed description of rates, terms and conditions under which it makes its “One Easy Price” intraLATA toll calling plan available to toll competitors. PSC said it needed information in order to decide whether to grant AT&T petition for reconsideration of Aug. decision dismissing AT&T challenge to Verizon tariff for 9-cent-per-min. residential calling plan that took effect Aug. 1. AT&T contended Verizon’s retail rate was less than 10 cents per min. in originating and terminating access charges it and other IXCs must pay. AT&T argued that because Verizon’s access charges were above cost, its access profits made up for its retail toll losses. Verizon said plan was begun to match 9-cent toll rate of AT&T and other IXCs and that 9-cent plan was available to competitors at usual discounts and conditions. AT&T countered that competing IXCs couldn’t make profit on “usual” terms and only reason it offered service at loss in Verizon areas was to maintain statewide long distance coverage at averaged rates. PSC put AT&T’s reconsideration petition on hold pending its review of Verizon’s Easy Price terms to intraLATA competitors. PSC in Aug. had said that even if Verizon were charging below-cost rate, it simply was matching competition’s retail rates. PSC saw no impairment to competition since Verizon would provide plan to toll resellers at discount.
Country of origin cases
At our deadline, FCC authorized SBC to offer long distance service in Ark. and Mo., giving company Sec. 271 authority in all of its original 5-state Southwestern Bell territory. WorldCom spokeswoman said company was disappointed that FCC would give SBC entry “despite problems in both states with pricing and reliable OSS [operational support systems].” Comr. Copps concurred in voting. FCC noted that SBC uses regionwide OSS that FCC already approved in giving SBC Sec. 271 authority for other states in same region.
Lucent completed sale of fiber cable unit to Furukawa Electric for $2.3 billion, $225 million less than originally agreed. Furukawa said it would pay $2.13 billion in cash and its partner in acquisition, CommScope, would pay $173 million in cash and equity to buy business. Two companies formed venture to operate part of cable business. In separate agreement, Corning said it would purchase for $225 million remaining portion of business, which consists of 2 joint ventures in China. Lucent’s fiber cable unit had more than 6,000 employees and sales of $2 billion last year. Earlier in year, analysts expected unit to sell for $4-$8 billion, with $5-$6 billion most likely range.
Spectrum, direly needed for rescue operations following Sept. 11 terrorist attacks, was unavailable due to misallocation of bands intended for public safety, wireless analysts said at New America Foundation forum Thurs. on “The Great Airwaves Robbery.” Only about 20% of wireless calls attempted on Sept. 11 in N.Y.C. and 40% in Washington were completed, CTIA Pres. Tom Wheeler said. “The nature of wireless communication transformed on Sept. 11,” he said, citing 400% increase in cellphone usage in N.Y. after attacks. “We built a system based on spectrum levels that expected wireless to only be an ancillary service,” and not broad alternative form of communication it has become, he said.
NTT DoMoCo said it would work with Nokia to promote open standard for 3G based on wideband code division multiple access (WCDMA). Two companies will cooperate specifically to develop WCDMA services for applications such as browsing, messaging and to create application execution environment. Technologies developed will allow content to be shared by both Internet and mobile communications networks. Companies intend to share results of effort with mobile industry. Joint announcement followed plans unveiled earlier this week at Comdex trade show in Las Vegas to create 3G standard consortium that would allow mobile products and services to be cross-compatible across regions, services, systems. Major companies supporting effort include AT&T Wireless, Ericsson, Motorola, Nokia, NTT DoMoCo, Samsung, Sony, Vodafone. Group is promoting WCMDA as worldwide 3G standard. NTT DoMoCo on Oct. 1 began offering world’s first 3G services to customers in parts of Japan. Absent from consortium is Qualcomm, original inventor of CDMA technology, which instead is pushing its CDMA-2000 for 3G.
Following delays caused mainly by chip problems in its receivers, Sirius Satellite Radio Wed. set Feb. 14 launch date in Denver, Houston and Phoenix markets, saying national rollout would be complete by 3rd quarter next year.
FCC denied bid by consumer groups to hold AT&T to original divestiture conditions on its acquisition of MediaOne. Consumers Union, Consumer Federation of America and Media Access Project wanted FCC to enforce its original deadlines for AT&T and MediaOne to meet certain conditions before their merger could proceed. FCC suspended deadlines 2 weeks after U.S. Appeals Court, D.C., on March 2 struck down Commission’s rules limiting media ownership, finding that agency’s 30% cap on number of subscribers nationwide any one cable operator could reach was arbitrary (CD March 5 p1). Original conditions were that by May 19 AT&T would divest its interests in Time Warner Entertainment or end its involvement in video programming or divest its interests in other cable systems to meet 30% horizontal cap. Under original order, AT&T was supposed to report on March 20 whether it believed it would meet May 19 deadline and, if not, immediately submit trust agreement to sell off some of its assets to meet requirements. FCC, in issuing its latest order, said it recently issued Further Notice of Proposed Rulemaking in hope of resolving cable ownership issues. AT&T argued that Appeals Court ruling undermines FCC ownership rules and essentially made merger conditions null and void. At minimum, AT&T argued, FCC should continue to suspend deadlines until agency had new, legal ownership rules. Consumer groups cited public interest as overriding interest, saying FCC should stick to its original deadlines. Consumers Union also sought further reconsideration, asking that FCC reopen case in order to conduct new public interest analysis. Consumers Union’s Gene Kimmelman said Commission was “obviously disinterested” in enforcing ownership limits but must set cable ownership limits if it was to fulfill Congress’s goal of protecting public interest. FCC order, Kimmelman said, “shines a very strong light” on agency’s ownership proceedings. Comrs. said in their order that they believed suspending deadlines was “the prudent and proper course of action” and that it would be “inappropriate” to reopen merger process now. Comr. Copps, only Democrat on Commission, said in separate statement that while he was sympathetic with consumer groups, he “reluctantly” concurred with his colleagues. However, he said, Commission should keep in mind that, as time went by, continuing to suspend rules “becomes tantamount to their elimination.”
Covad announced financial deal with SBC worth $150 million that’s expected to provide enough funding to enable former to reach cash flow positive position by 2nd half of 2003. Agreement includes $50 million loan plus restructured resale and marketing terms worth $100 million, but doesn’t increase SBC’s 5% ownership of company. Covad, which expects to emerge from Chapter 11 in Jan., said deal increases Covad’s cash on hand more quickly than under old sale and marketing agreement with SBC. New agreement includes: (1) One-time $75 million prepayment, secured by Covad assets, that SBC can use toward purchase of Covad services over next 10 years. (2) $50 million, 4-year loan, secured by Covad assets, with interest payments deferred for 2 years. (3) Payment to Covad of $10 million restructuring fee in exchange for Covad eliminating SBC’s revenue commitments under original resale and marketing agreement. (4) Elimination of $15 million co-op marketing fee, which was required in resale and marketing agreement and was owed by Covad to SBC. “This infusion of capital will be one of the final steps in our plan toward financial stability for Covad,” Covad CEO Charles Hoffman said. News drove Covad stock up 33.7% to $1.15 Tues.
Infusion of several hundred million dollars into govt. telecom and information technology (IT) infrastructure project upgrades has been negotiated in conference report (H. Rpt. 107-278) on FY 2002 Commerce, Justice, State Depts. (CJS) appropriations bill (HR-2500). House-Senate conferees late last week also agreed on $245 million FCC budget, finding middle ground between $238.6 million House proposal and $252.5 million Senate recommendation. FCC appropriations would be offset by $218.8 million in fee collections. House Rules Committee planned hearing Tues. evening to set boundaries for floor debate on report, tentatively scheduled this (Wed.) afternoon.
Telecom bills in Wis., Ill., Minn. and Mich. legislatures are staying alive but may not see final action this year, which means they all would carry over to 2002 sessions. Wis. Senate unanimously passed bill prohibiting information providers from transferring calls from toll-free numbers to pay-per-call service numbers or international numbers. Bill (SB-35) would make offense criminal misdemeanor punishable by fine of up to $10,000 and up to 90 days in jail. Measure now is before Assembly’s Information Policy & Technology Committee. Bill also would require preamble at start of pay-per-call service directing callers to inform Wis. Dept. of Agriculture, Trade & Consumer Protection if they were connected without consent. Telecom carriers also would be required to furnish Wis. Dept. of Justice with data on call transfers between toll-free and pay-per-call numbers or international numbers. Legislation would prohibit telephone carriers from billing for pay-per- call providers convicted of rule violations, but would allow PSC to grant waivers from billing ban on case-by-case basis. Wis. Senate also passed bill (SB-260) that would conform state wireless service taxation to federal Mobile Telecom Sourcing Act. Wis. bill would tax mobile services if customers’ “place of primary use is within this state, regardless of where service originates or terminates.” Bill now is before Assembly Ways & Means Committee. Recent Ill. bill to prohibit publicly funded schools from selling their students’ personal information to marketers (HB-3641) has been assigned to House Rules Committee. But with only 6 session days remaining before Ill. House adjourns for year, it probably will be carried over to 2002 session. State Rep. John Curry (D-Mt. Zion), bill sponsor, said legislation would ensure that tax-supported school districts or public colleges and universities protected student identities. Bill would bar institutions from selling lists of student names, postal addresses, phone numbers or e-mail addresses to financial institutions that issued credit or debit cards or to commercial business enterprises such as retailers or telemarketers. New bill in Minn. legislature would prohibit toll charges for phone calls that originated and terminated within same school district. Supporters said bill (HF-2585) would help parents and students in sprawling rural school districts who now paid toll charges on calls between school and home. Measure has strong support from rural Democrats but strong resistance is expected from House Republicans. Bill is before House Regulated Industries Committee. Mich. Senate Judiciary Committee recessed for Thanksgiving break without taking action on House-passed “cybercourt” bill (HB- 4140) that would establish electronic online court with full legal authority to address business-to-business civil disputes over $25,000. Bill was scheduled for consideration Nov. 8 but was taken off calendar just before committee session. Panel will return Nov. 28 and will remain in session until mid-Dec.