BellSouth (BS) told N.C. Utilities Commission (NCUC) it continued to meet the 12 Sec. 271 competitive checklist points on which agency cleared carrier 3 years ago and now has fully complied with remaining 2 points on which agency flunked BS in that unsuccessful bid. BellSouth made statement as NCUC opened hearings, set to run through Nov. 5, to update record in company’s interLATA long distance entry case. BS said CLEC complaints about pricing and delivery of unbundled network elements and other wholesale services went well beyond what was required of incumbent by Telecom Act. “There are seven FCC Section 271 decisions that explicitly set forth the requirements of the checklist,” said Cindy Cox, BS senior state regulatory dir. “All this commission need do in this proceeding is determine whether BellSouth meets those requirements.” She said many issues raised by CLECs in 1998 had since been addressed in arbitration cases and other dockets and no longer should be factors in 271 case. Also testifying were economists who said BellSouth’s long distance entry would benefit public through lower prices and more choices in both long distance and local exchange service. But CLEC and IXC interests said BellSouth’s long distance entry wouldn’t be boon to competition but rather would be knockout blow to competitors, already struggling due to economic downturn, because of BellSouth’s overwhelming local exchange dominance. They also contended BS still wasn’t giving them proper high-volume wholesale service and billing as required by Telecom Act. Current hearings were delayed from original May date because of similar complaints from CLECs then. NCUC also wanted to wait for operation support system (OSS) test results from other BellSouth states. BS recently received favorable OSS test report in Ga., but competitors said NCUC should wait for results of OSS testing now under way in Fla. because that program better addressed key technical issues such as BellSouth’s ability to handle large volumes of CLEC service orders. Fla. test results are due in late Dec.
Country of origin cases
FCC Wireless Bureau issued order Mon. announcing level of construction required under build-out requirements that mandated substantial service for 900 MHz specialized mobile radio (SMR) licenses. In order adopted Fri., bureau concluded construction notification by Cingular Interactive hadn’t met requirements of those rules. Company told FCC that its SMR system operated as integrated network and that because it was nationwide, showing of “substantial service” should be based on aggregate view rather than license-by- license basis. Cingular Interactive contended that at minimum, system would provide coverage to at least 30% of population in each of its licensed markets by construction deadline. Bureau said it disagreed, both because of its interpretation of rule and because showing was “based on actions yet to be taken.” But bureau described how Cingular Interactive could show it was providing substantial service in each market if it achieved certain construction levels by deadlines. FCC rules require that for each 900 MHz SMR license in major trading area (MTA), operator must construct and begin operating enough base stations to cover at least 1/3 of population within 3 years from original license grant and 2/3 within 5 years. At issue for Cingular Interactive were 39 of 900 MHz SMR licenses of total of 85 it owns. Order stipulated that for markets in which 900 MHz SMR licensee held multiple channel blocks, company must meet FCC construction requirements for each block in MTA. “We do conclude, however, that the nationwide nature and scope of the network is relevant under the service’s construction standards in determining the sufficiency of service in each of Cingular Interactive’s individual license areas,” order said. Because Cingular Interactive’s system operates on national network, order said, FCC will consider as “relevant” extent of coverage available to subscribers throughout 900 MHz SMR system when evaluating substantial service in particular area. “We note, however, that under the Commission’s 900 MHz SMR standards, significant construction across a multi-MTA system will not be sufficient to remedy a failure to construct with respect to a particular license,” order said.
If govt. is serious about DTV transition, it should offer “entertainment food stamps” to people who resist giving up free broadcasts, said Thomas Hazlett, scholar at American Enterprise Institute. In fact, he advocated “very targeted” subsidies for cable or DBS service on limited basis during transition. Speaking on panel on DTV transition, Hazlett said that by year’s end 87% of U.S. households were expected to receive their TV by cable or DBS, and proportion was expected to grow to 91% by 2004. FCC is pushing transition to digital from analog to make way for use of analog spectrum for other purposes such as public safety, military and other commercial uses such as data services. Similar notion was discussed years ago, though not in terms of “food stamps,” by then-FCC Chmn. Reed Hundt and his chief of staff, Blair Levin. However, idea wasn’t generally embraced by stakeholders at time because of political considerations. Contacted Fri., Levin said idea made sense “purely as an economic matter.” Hazlett’s mention of it prompted serious discussion Fri. at 2-part AEI panel. Debate focused on govt.’s role in speeding transition, consumer preferences and market forces, as well as competitive aspects involving broadcasters, cable and DBS operators.
Disney completed its previously announced acquisition of Fox Family from Haim Saban and News Corp. Acquisition closed Wed. with final purchase price of $5.2 billion, including $2.9 billion in cash and assumption of $2.3 billion in Fox Family obligations. Price was down $100 million from original offer.
FCC Fri. upheld Common Carrier Bureau’s designation of Western Wireless as eligible telecom carrier (ETC) in Wyo. ETC status enables carrier to receive federal universal service support. Commission denied petitions for reconsideration filed by rural telcos Golden West Telephone Co-op, Project Telephone Co., Range Telephone Co-op, Chugwater Telephone Co., RT Communications. Comr. Martin “concurred” on part of order, saying he was concerned about FCC’s “policy of using universal [service] support as a means of creating competition in high-cost areas.” Martin said he was “hesitant to subsidize multiple competitors to serve areas in which costs are prohibitively expensive for even one carrier.” Bureau had concluded that Western Wireless would provide service throughout required geographic area and would promote competition and new technology. Petitioners said: (1) State regulators were better suited to deal with ETC request. (2) Rural telcos would suffer harm. (3) Final FCC order included exchanges not mentioned in original Western Wireless petition. (4) Western Wireless’s service area impermissibly crossed state boundaries.
SES America offered GE Americom larger stake in exchange for lower cash payment in proposed $5 billion transaction, industry sources said. Deal is expected to close shortly. U.S. and European regulators have approved transaction. SES had planned $700 million IPO to help finance $2.7 billion payment to GE Capital along with 25.1% stake in merged company. However, company cancelled IPO because of poor market conditions. Under new terms, GE Capital would receive 27.5% stake and $2.4 billion in cash, $300 million less than originally planned. “The main reason we are doing this is to have financial headroom to take advantage of opportunities in the near future,” SES CEO Romain Bausch said.
Negotiators were closing in Thurs. on deal on NextWave’s PCS licenses, with changes in areas such as carrier payment timelines and guarantees of when spectrum tab would be paid in full. Talks continued Thurs. morning at OMB on proposal in which NextWave would be paid $9.55 billion upfront that would be secured through 2002 legislative appropriations package, industry source said. Bankrupt carrier then would net $6.3-$6.5 billion, after first level of taxes were paid. One point of contention in final rounds of talks has been how Verizon Wireless’s request for additional time to make payments would be handled (CD Oct 1 p5), sources said. Under revised terms of deal now under consideration, 2-part payment process to govt. reportedly sought by Verizon would be scaled back to one payment to be made in May, source said. Verizon Wireless would have letter of credit to guarantee its full payment in that time, mechanism that other carriers could sign on to as well. Re-auction winners would agree to keep intact total of $16 billion that was bid for NextWave licenses at auction, including $10 million in new cash for govt. as well as $3 billion on hand from upfront payments required in Jan. re-auction.
SBC said it entered agreement to acquire remaining Prodigy shares for $6.60 per share, amounting to $465 million, for 70.4 million shares it doesn’t own. SBC, which already owns 42% stake in ISP, said new price was 21% more than it originally offered Sept. 21 and 64% higher than stock’s average closing price for calendar year through Sept. 21. Phone company said Prodigy’s special committee of 3 independent board members had determined that agreement was fair to Prodigy stockholders. In addition, Telmex and Carso Global Telecom, which hold 34% of voting equity in Prodigy, said they would accept revised offer, SBC said Thurs. Transaction is expected to close in 4th quarter if approved by Prodigy shareholders.
FCC notification procedures for stations to assert nonduplication rights for DBS are unnecessarily burdensome, Emmis TV Bcstg. said in ex parte filing at Commission. Emmis suggested procedures should be more like those for asserting nonduplication rights in cable environment. Cable rules originally also included demand for information about specific programs, but Emmis said requirement was modified since network-affiliate relationship wouldn’t allow providing information. Emmis called current satellite rules “unworkable.”
Revenue will increase more than 500% for companies that provide streaming media services, to more than $5.3 billion in 2005 from $900 million this year, with satellite-based services making up significant portion of that growth, Cahners In-Stat Group said in report. It’s emerging growth industry for satellite and fiber service providers, report’s author Gerry Kaufhold said: “It’s driven by basic business principles. Either it saves you money or it makes you money.”