Minn. PUC hearing officer recommended Qwest be punished for violating Sec. 251 and 252 of federal Telecom Act because of what he called its “knowing and intentional” failure to file 25 local agreements or contract amendments it made with CLECs. Administrative Law Judge Allan Klein’s recommendation said penalties would be in order because Qwest had offered special deals to favored few partly to quell dissent at hearings on its request for PUC support of its Sec. 271 long distance entry bid. He suggested PUC had opportunity to be “creative in fashioning a remedy” that could be tied to Qwest’s Sec. 271 petition. Klein didn’t suggest specific penalties. PUC could fine Qwest up to $10,000 per violation per day and impose nonfinancial conditions to close case. ALJ said unfiled agreements or amendments affected compensation, service quality and other terms and conditions for interconnection, UNEs, resale, rights-of-way, numbering. Minn. Dept. of Commerce, which filed original complaint alleging secret Qwest-CLEC deals in Feb., said ALJ’s recommendation “captured Qwest’s lack of respect for the regulatory process” and reflected economic harm to competition because of unfiled deals. State Commerce Dept. said it would ask for maximum financial penalty, which would reach $50 million, plus nonfinancial remedies that could include functional or structural separation of carrier’s wholesale operation. Qwest said ALJ’s recommendation was wrong and should be rejected by PUC. It said filing obligations are “unsettled area of federal law” that ultimately must be decided by FCC, not state ALJ. Carrier also faulted process, saying author of key testimony against it didn’t appear at ALJ hearings and therefore couldn’t be cross-examined. ALJ’s recommendation isn’t final word on matter. Parties over next 3 weeks will file exceptions to recommendations, with PUC tentatively planning Oct. 24 vote on case. If PUC voted to convict, it likely would set separate proceeding to fix penalty. AT&T, which has complaints pending in other Qwest states alleging secret Qwest deals with CLECs, said it hoped Minn. ALJ’s recommendation would spur other states to scrutinize situation more carefully.
Arch Wireless told FCC that pending proposals that would apply connection-based universal service assessments wouldn’t be fair to paging carriers. Instead, Arch said in ex parte filing that capacity-based, per-connection assessment was more appropriate for paging carriers if FCC decided to replace existing universal service contribution system. “All of the connection-based proposals that have been filed in this proceeding would increase paging carriers’ assessments to unjust and discriminatory levels,” Arch said. For example, Coalition for Sustainable Universal Service proposed that one-way paging carriers contribute at rate of 25 cents per pager, figure given in recent further notice. Joint SBC- BellSouth proposal would assess each paging connection at higher rate of 50 cents, Arch said. Paging carriers, under current revenue-based system, pay on average 7 cents per pager, filing said. “No one has explained how such a three or sixfold increase in paging carriers’ assessment levels would be equitable or nondiscriminatory, particularly given the reduced number of paging subscribers that exist today compared to the time the existing methodology was adopted,” it said. Proposals now before Commission also don’t spell out clearly how 2-way paging would contribute to universal service, Arch said. It said that in case of SBC-BellSouth proposal, plan would treat asymmetrical connections less than or equal to 6 Mbps as one “qualifying service connection,” assessing it at same rate as voice-grade line. “Such treatment clearly would be inequitable for paging carriers given the substantially lower capacity provided by paging networks,” Arch said. If FCC opts for contribution methodology based on connections, it should create “equitable and nondiscriminatory” assessment rate for paging carriers based on transmission capacity of their networks and services, company said. It said one-way and 2-way paging networks offered transmission capacity that was “small fraction” of capacity provided on other networks. If connection-based contribution method ultimately were chosen, it should use capacity-based assessment for paging carriers based on capacity they provided relative to other wireless operators, Arch contended, and that would mean one-way pagers would be assessed at rate that was 1/20 of that set for mobile wireless voice connection. Two-way pagers would be assessed at rate 1/10 of level of any commercial mobile radio service operator voice assessment.
Public safety groups told FCC that some clarification or change in existing Enhanced 911 rules might be needed but certain modifications shouldn’t be retroactive. Verizon Wireless recently asked Commission to stipulate that wireless carrier wouldn’t be in violation of E911 Phase 2 deadline when public safety answering point (PSAP) couldn’t yet receive and use more detailed location information because either PSAP or LEC hadn’t completed necessary network upgrades. Sprint PCS endorsed modified approach to one that Verizon outlined. Verizon had said its clarification could be carried out while keeping in place previous FCC decision that required licensees to start Phase 2 deployment in advance of actual PSAP readiness. Under existing rules, PSAP request for more-detailed Phase 2 information is deemed valid if PSAP can show it has ordered necessary equipment and has vendor commitments to have it installed and operational within 6 months. National Emergency Number Assn., Assn. of Public-Safety Communications Officials and National Assn. of State 911 Administrators told FCC that some changes might be needed to address LEC and PSAP readiness issues raised by Sprint and Verizon: “However, in the end, as we have said previously, implementation will depend more on common-sense accommodations reached in good faith among the parties than on rule changes. Nevertheless, removal of lingering uncertainties remains a worthy objective.” Groups said any relief from 6-month requirement should hinge on there being agreement between carrier and relevant PSAP on need to extend implementation deadline. Such agreement could take form of letter from PSAP agreeing to revised schedule, groups said. “Submission of that letter to the FCC would relieve the carrier of its 6-month requirement and avoid the need for enforcement action,” filing said. But public safety groups stressed that carriers shouldn’t have right to “unilaterally” extend compliance date because they perceived that PSAP wasn’t ready, whether because of equipment installation delays or because LEC hadn’t done necessary database upgrades. Filing raised concerns that Verizon and Sprint proposals would involve rule changes that would be applied retroactively. “Retroactive rulemaking is usually not a good idea and we cannot accept it here,” filing said. Although there may be more valid PSAP requests than carrier facing Dec. 2002 deadline can handle, “these need not be summarily invalidated,” filing said.
EchoStar and DirecTV should “engage in operator-to- operator meetings” with SES Americom on coordination agreement on USAT-S1 satellite, SES said. Discussions should be held well in advance of proposed govt. meetings scheduled for Dec., it said in filing at FCC.
US LEC petitioned FCC for declaratory ruling reaffirming that LECs we entitled to recover access charges from IXCs for providing access service on interexchange calls that originate from or end on mobile wireless networks. US LEC said long distance carrier, which it didn’t name, had challenged US LEC’s billing for access service provided on long distance calls to and from commercial mobile radio service (CMRS) subscribers. It said such challenge hadn’t emerged in past but that issue was relevant for FCC to clarify as more wireless end users used their phones as part of national, long distance pricing plans. “Under the existing compensation structure established by the Commission, it is clear that LECs are entitled to access charges for these calls, and it is also clear that the prevailing practice is for LECs to assess access charges for these calls and for the IXC to pay these charges,” US LEC said. Competitive carrier sought “prompt ruling” from FCC “reaffirming” right of LECs to bill for access service they provided on such calls “to dispel any controversy or uncertainty surrounding this issue.” Company said FCC had acknowledged that until wireless operators generated enough traffic to justify direct connections to IXC points of presence, most CMRS carriers were expected to rely on LECs to interconnect interexchange traffic to IXCs. As wireless subscribers step up their use of national long distance calling plans, LEC networks increasingly will be called on to provide access service to IXCs, US LEC said. “It is vital that LECs be able to recover access charges for providing this access service,” company said. FCC recently ruled that Sprint PCS wasn’t barred from charging AT&T access fees for use of Sprint PCS network, but that AT&T wasn’t required to pay them absent contractual obligation to do so. That decision “reinforces” idea that LECs can impose access charges for CMRS traffic, US LEC said. “Unlike CMRS providers, LECs have tariffed access charges and their access charges are regulated,” filing said.
Verizon appointments as part of reorganization in Washington office: Kathryn Brown, ex-FCC chief of staff, joins as senior vp-public policy development and international govt. relations; Susanne Guyer promoted to senior vp-federal regulatory affairs; Ed Young becomes senior vp-industry analysis and relations… Broadwing board promoted Kevin Mooney to CEO, replacing Richard Ellenberger, resigned as CEO and from board; Jack Cassidy advanced to COO; Daniel Meyer moves up to board chmn., with Mooney and Cassidy joining board… Lyman Fisk promoted to vp-data services, Integra Telecom… Bill Currer, ex-Cogent, named pres.-CEO of Channel Master.
Itron, which supplies automatic meter reading equipment to utilities, opposed ArrayCom request to FCC to postpone auction of one 5 MHz license in 1670-1675 MHz band. Citing downturn in financial markets that has made it difficult to raise capital for auctions, ArrayCom sought 6-month delay of bidding, until April 30. FCC adopted order earlier this year implementing service rules for 27 MHz in 7 separate bands that had been reallocated to nongovt. from govt. use, including 5 MHz at 1.6 GHz. Itron has nationwide authority to operate wireless meter reading equipment in 1427-1432 MHz on secondary basis and is potential bidder in 1670 MHz auction. Itron contended ArrayCom hadn’t provided Commission with sufficient justification to postpone auction and that delay would defer rollout of new services to public in that band. Itron said that if agency concluded economic conditions supported delay, “it should consider reducing the upfront payment amount and the minimum opening bid, but it should not delay the benefits of new services to the public in order to satisfy the financial needs of one particular company.” Itron said there was no guarantee telecom financial markets would turn around in 6 months. Itron also rejected ArrayCom’s making comparison to decision to postpone bulk of 700 MHz auctions, which were to have started June 19 until Congress indefinitely delayed bidding for all but smaller licenses in lower band. Itron said: “Congress delayed the auction of the bulk of the 700 MHz spectrum not because potential bidders were facing difficulties in raising money for the auctions, but because the telecommunications policy and spectrum management principles regarding this particular portion of the spectrum were unsettled.” FCC last week revised schedule for auction, for which short-form applications had been due Sept. 25. New date for those filings is Oct. 1, with upfront payments due Oct. 15, mock auction Oct. 25, with auction beginning Oct. 30.
Against backdrop of new study that showed minorities hadn’t risen to senior levels of cable industry to degree that mirrored society, NCTA Pres. Robert Sachs told almost 200 cable executives here in N.Y. that cable must step up its efforts to rectify “underrepresentation of minorities and women on boards and in senior management.” Sachs’s comments came at opening of 2-day conference of National Assn. of Minorities in Communications (NAMIC).
Proposed merger of AT&T and Comcast Cable would likely have impact on “competitive terrain,” Senate Judiciary Antitrust Subcommittee Chmn. Kohl (D-Wis.) and ranking Republican DeWine (O.) said in letter to FCC Chmn. Michael Powell and Justice Dept. antitrust chief Charles James. Letter outlines “concerns” the senators have with merger, but doesn’t say DoJ or FCC should reject merger. While merger doesn’t seem to raise traditional antitrust issues related to geography overlap of services, it does involve other questions about “competitive effects of this complex merger” on issues such as content diversity, set-top boxes and Internet market, letter said. Company as sizable as AT&T- Comcast could affect diversity of programming and content, letter said. If deal is approved, 3 largest cable companies would control 65% of cable market, letter said. “Such a concentrated market raises the concern that a small number of cable companies can act as a ‘gatekeeper,’ i.e., that a programmer would be unable to successfully market its product without the approval of one or two large companies,” letter said. Such situation would pose threat to innovation and diversity in both news and entertainment, letter said. Senators urged careful investigation of content issues. Also, market share of merged company could affect market for set-top boxes, letter said, adding that Telecom Act of 1996 has yet to produce competitive market in this area. “We trust that if allowed to merge, AT&T-Comcast would lead industry efforts to encourage a truly competitive market” for set-top boxes, letter said. Merged AT&T-Comcast Cable could have ramifications on Internet content market, letter said: “For example, the law does not prohibit cable companies from blocking access to Web sites or charging individual Web sites a fee before allowing consumers access to them, and we have heard allegations that such conduct is occurring in certain markets.” Comcast has said it hasn’t used such tactics, letter said, but it was important that Comcast continue to avoid anticompetitive behavior. Size of merged company also would affect broadband market, letter said, and AT&T-Comcast already had begun arranging for additional ISP choices on their joined system. “We believe that more progress in this area is necessary to promote long-term competition in this market,” letter said. Letter followed a Sept. 19 hearing before the Antitrust Subcommittee at which James updated Kohl and DeWine on the merger (CD Sept 20 p7). Both panel members expressed concern about the continuing consolidation of media outlets.
In continuing battle over unbundled network element (UNE) regulation, CompTel held news conference Fri. to dispute Bell company arguments that making UNEs available to competitors was harming their financial stability. CompTel Pres. Russell Frisby said Bells were spreading numerous “myths” about situation such as: (1) UNE rates were below cost. Frisby said state regulators had looked at those rates many times and more often than not had lowered rather than raised them. (2) Competitors used UNE platforms to cherry- pick lucrative customers. Frisby countered that UNE-P was used most often to serve residential and small business customers. (3) Competitors that used UNEs didn’t want to invest capital or deploy new facilities. Frisby said “that’s just wrong” because “UNE-P providers are making capital investments in long distance, broadband and local networks.” (4) UNE-P was harming Bells’ profitability. “It is worth noting that the Bell companies’ profits also have taken a hit because the companies have squandered hundreds of millions of dollars in bad foreign investments,” Frisby said. (5) State regulators were lowering UNE prices because they were too wedded to old view of regulatory policy. Frisby, former Md. state regulator, said “nothing could be further from the truth” because state regulators were closer to real world than was federal govt. He said “FCC only deals with paper.” with no opportunity to question witnesses as state commissions do. “State proceedings are more focused on fact- finding,” he said. On other issues, Frisby said: (1) He expected Bells to work for “some sort of rider on some sort of appropriations bill” to gain broadband relief. “The Bells are spending an awful lot of time on the Hill. I wish the Bells spent as much time in the market or in each other’s markets.” (2) FCC was wrong in looking at intermodal competition in context of wireline broadband regulation because “2 monopolies are no better than one.” (3) He feared policymakers would buy argument that Bell deregulation was needed to ease bad economy: “For years the medical community thought the cure for illness was to apply leeches, which is what the Bells are suggesting, bleeding CLECs to cure the economy.” USTA spokeswoman said CompTel had “chosen to ignore economic reality.” She said USTA also favored fair competition but: “The current situation brings neither fair nor real competition. Current regulations jeopardize healthy companies by forcing them to foot the bill for others.”