Cal. Gov. Gray Davis (D) signed bill directing Cal. Horse Racing Board to develop rules for online or telephone “advance deposit wagering” on horse races by Jan. 1. Under AB-471 organizers of race meets next year can establish prepaid accounts for individuals and accept betting instructions from those persons by phone, Internet or “other electronic media.” Davis reversed previous policy against expanding gambling, aides said, because of changing legal climate and amendments to original bill that will improve working conditions for track workers who take care of race horses. Currently, Cal. allows on-site betting at 34 gambling sites, including racetracks, certain fairs and Indian casinos. Last year, Davis vetoed similar betting bill as expansion of gambling.
Country of origin cases
Alaska Native Wireless (ANW), Verizon Wireless and VoiceStream reiterated calls to FCC to investigate qualifications of NextWave to hold C-block licenses. Aug. 15 filing at FCC by carriers, which won NextWave licenses in Jan. C-block re-auction, was response to NextWave request that Commission dismiss challenge to its qualifications to reclaim PCS spectrum (CD July 31 p1). NextWave asked FCC last month to reject petition by carriers that cited concerns over foreign ownership issues, designated entity status and financial qualifications to meet licensee requirements. Original petition by 3 companies contended U.S. Appeals Court, D.C., decision that remanded FCC’s NextWave license cancellation decision addressed only issues related to bankruptcy code. Carriers said that meant Commission still could decide on other grounds not to reinstate licenses of NextWave, which disagreed. “The NextWave decision is not self-executing and issuance of the [remand] mandate will not automatically reinstate the licenses at issue without further action by the Commission,” 3 carriers said in response to NextWave filing. “As a matter of sound public policy and administrative efficiency, the Commission should undertake such investigation prior to any action to reinstate the licenses.” Carriers disputed NextWave argument that D.C. Circuit’s remand precluded FCC’s undertaking investigation they sought. Carriers said they wanted FCC to probe “what appears to be a lack of material information regarding whether respondent [NextWave] is in compliance with the Commission’s designated entity and foreign ownership rules.” Three carriers cited 2nd plan of reorganization that NextWave has filed with U.S. Bankruptcy Court, White Plains, N.Y., saying it provided “little to no information regarding who will own and control the company, if and when respondent emerges from bankruptcy. It is this dearth of information that drives the fundamental need for the requested investigation.” They cited lack of details on whether NextWave would comply with designated entity and foreign ownership rules. - - MG
Revised land valuation proposal for fiber and other utility infrastructure projects in marine sanctuaries is nearing completion, NOAA source said. Agency’s National Ocean Service earlier this year (CD May 2 p4) sought comment on draft recommendation to sell 25-year cable permits in protected areas for up-front $125,000 per mile right-of-way fee. Source said transition to Bush Administration, in addition to industry complaints that first 15-day comment period was insufficient, were primary reasons that Dept. of Commerce reopened matter. He said Commerce was likely to set 45-day window for comments on revised plan, which differs from original, containing updated information on fair market value of marine sanctuary properties: “We want to make sure our economists have the latest data.” He said revised plan was in “final stages of clearance” and was being reviewed by gen. counsel’s office. NOAA probably will publish revision in Federal Register by Fri.
U.S. Cellular Corp. (USCC) and Rural Cellular Assn. (RCA) petitioned U.S. Appeals Court, D.C., for en banc hearing to reconsider its ruling that upheld FCC decision to remove carrier cost-recovery requirement as precondition to provision of Enhanced 911 service. Corr Wireless, part of rural carrier group challenging original FCC order, also is seeking D.C. Circuit review. In order, Commission had deleted carrier cost recovery precondition, which was seen as slowing down rollout of E911 services. Agency concluded carriers didn’t have to meet E911 Phase 1 and Phase 2 requirements until guaranteed state or local govt. funding was in place. Rural carriers, including USCC, had challenged FCC decision, and D.C. Circuit sided with Commission (CD July 2 p1). “Despite a directly analogous wireline model where the incumbent local telephone monopoly charges the state and local governments to provide comparable wireline E911 service, the panel decision affirmed the FCC’s orders that created this unfunded mandate on wireless carriers,” petition said. RCA and USCC argued that ruling ignored Sec. 201 of Communications Act, which limits FCC authority to regulate wireless carriers through Administrative Procedure Act and other legislative provisions. Calling decision to roll back carrier cost recovery conditions “irrational,” RCA and USCC asked court to rehear case and vacate FCC’s order. Rural carriers cited D.C. Circuit decision in 1996 in CompTel case in which court said Communications Act barred departures from principles of cost causation without compelling justification. Rural carriers contend that FCC order at issue departs from that principle because public safety answering point that orders E911 service from wireless carrier “has been excused from paying” for service. Petition said: “No reasonable court would sustain a federal order requiring ambulance makers to provide ambulances for free to state and local governments because the emergency rescue service was otherwise in the ‘public interest.’ Because the FCC orders at issue effectively require the very same thing, this court should rehear this case and vacate the FCC orders under review.” Rural carriers said issues were of “exceptional importance.” They said FCC mandate would require operators to spend billions of dollars to upgrade their networks to meet E911 Phase 2 deadline of Oct. 1.
SAN ANTONIO -- National Conference of State Legislators (NCSL) task force on state and local taxation of telecom and e- commerce adopted resolution at convention here encouraging states to adopt uniform sourcing rules for transaction taxes on telecom services, clarifying tax sourcing rules for mobile telecom, bundled services, postpaid and prepaid calling and private communications. Telecom industry and Streamlined Sales Tax Project (SSTP) subgroup on sourcing must agree to rules and Telecom Tax Reform Initiative should provide input, officials said.
AT&T got go-ahead Thurs. to immediately sell large chunk of its stock in Cablevision Systems and permission to shed rest in 2002. AT&T has been trying to dispose of its 30% stake in Cablevision to raise cash and pare debt(CD May 9 p8). Depending on price of stock at time of sale, deal could be worth as much as $3.5 billion, company sources say. AT&T originally sought to shed its 48.9 million shares in May when it registered sale with SEC. Cablevision exercised its right to block sale for up to 145 days without stating reasons. Industry sources said Cablevision delayed to forestall disclosing key financial information.
SBC greeted release of FCC’s new colocation order (CC 98-147) Thurs. by repeating its concern that order went too far in permitting competitors to place certain switching equipment in ILEC central offices. Commission approved order at July 12 agenda meeting (CD July 13 p2). SBC Senior Vp Priscilla Hill-Ardoin said company might decide to appeal, once it reviews order further. Revised order expands ILEC requirements even beyond original FCC order that was vacated by U.S. Appeals Court, D.C., she said: “It is clear from the 1996 Act and the D.C. Circuit Court decision that only equipment which is defined as ‘indispensable’ and ‘necessary for interconnection or access to unbundled network elements’ is required to be colocated. The Commission’s conclusion that switching equipment meets the statutory standards flies in the face of marketplace evidence that CLECs have deployed approximately 1,000 of their own switches… and none are colocated in an ILEC’s central office.” She said there were additional aspects of order, such as cross-connection requirements, that created “additional regulatory uncertainty for the industry.” USTA Vp Lawrence Sarjeant said it was “critical” that FCC “strike the right balance and… meet the legitimate business needs of both incumbent carriers and new entrants.”
Previous applicants for wireless licenses are suing FCC for $148 million, contending that’s current value of licenses on which they charged Commission reneged on promise to award spectrum via lottery. Class action litigation is led by lottery applicants that include Gene Folden, Boca Raton; Judith Longshore, Canton, N.Y., Coastal Communications Assoc., Charleston, S.C. Lawsuit, filed in U.S. Court of Federal Claims, argued that agency had breached “implied contracts” to award 7 cellular licenses by lottery, saying govt. owed them and other lottery applicants pro rata share of current market value of spectrum. Applicants said they paid U.S. $855,200 to participate in lotteries that Commission held in 1989. FCC later found lottery winners to be unqualified and scheduled replacement lotteries for 6 of 7 licenses in July 1996, cancelling re-lotteries few months later. In 1997, Congress cancelled FCC’s authority to use lotteries, replacing them with auctions. After that, FCC awarded spectrum to 3 of originally disqualified lottery winners at direction of Congress. Plaintiffs said FCC “apparently intends” to auction 4 remaining cellular licenses that had been at issue. FCC Wireless Bureau released order March 2 that denied reconsideration of lottery participants’ application for 7 licenses. Licenses at issue are in Ark., Fla., Minn., N.D., Pa., P.R. and Tex. and range in estimated value from $4 million to $53.5 million. Suit said FCC, by not awarding 7 licenses by lottery, deprived applicants “of their contract rights to have chances of winning licenses.” Robert Kerrigan, attorney for lottery applicants, said govt. took money from applicants, kept $200 per applications that had been paid and then used another system to award licenses. “Although the government can do that from a regulatory perspective, the folks who paid to enter the lottery are entitled to the benefit of their bargain, which in this case is their pro rata share of the fair market value of those licenses,” he said. Kerrigan has represented state of Fla. against tobacco industry. He said there were 926 members of class of lottery applicants for 7 licenses who would share value of $148 million on pro rata basis, depending on which lotteries they entered, “minus expenses and attorney fees.”
Nokia plans to supply gear for J-Phone Group’s 3rd-generation wireless network in Japan that’s based on Wideband CDMA, terms not announced. Nokia said it would provide mobile packet switching system and radio access network. Nokia earlier had signed pact with regional firms J-Phone East and J-Phone West to provide radio access network. New agreement expands on that contract and adds first phase of mobile packet switching system to J-Phone Central and J-Phone West. Vodafone has 60% economic stake in J-Phone. Japan Telecom, 3rd largest telco in that country, originally held majority stake in wireless unit J-Phone and its regional wireless operating companies. Series of deals with BT and AT&T Wireless gave Vodaphone and Japan Telecom majority control. J-Phone Group received 3G license in June 2000 and plans to begin next- generation wireless service in Japan next year.
In latest twist in protracted legal battle over NextWave’s C- block licenses, FCC plans to ask U.S. Supreme Court to review U.S. Appeals Court, D.C., ruling that returned licenses to bankrupt carrier. In meantime, Commission asked D.C. Circuit to stay results of its June remand that otherwise would take effect Aug. 13 by returning to NextWave licenses on which it had bid $4.7 billion in 1996. D.C. Circuit in June reversed FCC decision that canceled NextWave licenses for missed payment, throwing results of $16.8 billion re-auction of those licenses into chaos. “High court review will protect the integrity of the FCC’s auctions program, which Congress has chosen as the best method of assigning scarce and precious spectrum resources to those that will put them to their most productive use,” FCC Chmn. Powell said. Commission plans to file petition for certiorari at Supreme Court Sept. 22.