FCC denied Sprint’s petition to introduce new accounting rate for international telephone and ISDN service with Vietnam Telecom International. FCC said rate of 90 cents per min. was too high, violating 23-cent benchmark for low-income countries such as Vietnam. Sprint had negotiated reduction from $1.20 per min. but FCC said it wasn’t enough.
Legg Mason said in research note Wed. that while govt. won in 70% of cases before U.S. Supreme Court, there were some vulnerabilities in govt.’s legal argument in NextWave case that “could tip the balance in NextWave’s favor.” Firm also said it appeared unlikely that winners of Jan. 2001 NextWave re-auction ultimately would have to pay for spectrum at total $16 billion set in that bidding. Pending high court review, FCC has refunded all but 15% of deposits paid by winning bidders, who would be required to pay full amount they bid on spectrum if court reversed U.S. Appeals Court, D.C., decision that had ruled against Commission’s cancellation of NextWave licenses for missed payment. Meanwhile, Wall St. Journal editorial Wed. took FCC to task over “ongoing NextWave spectrum fiasco,” arguing Commission decision to not release re-auction winners from their bid obligations “is paying havoc with an industry already in chaos.” Editorial said Verizon Wireless had $8.7 billion liability, “money it can’t effectively touch because of the 10-day future payment obligation.” It said FCC booked $4.8 billion that NextWave bid on those PCS licenses in federal budget in 1997 and then booked $16 billion from 2001 re- auction, as well, minus money lost from NextWave. “Chairman Michael Powell keeps promising a telecom revival, but this FCC money-grubbing doesn’t help,” editorial said. “The re- auction is tying up much-needed investment capital.” Journal referred to recent study by American Enterprise Institute economist Gregory Sidak that concluded that if released, $16 billion in NextWave re-auction overhang would increase gross domestic product by $19-$52 billion. Separately, Legg Mason cited mounting pressure for FCC to remove $16 billion re- auction overhang. CTIA and group of economists have urged FCC to cancel auction or allow winning bidders to opt out of obligations, citing drag on carrier finances. “Although the FCC may not act until after the Supreme Court decision, we believe that the FCC will find it increasingly difficult to stand by an abstract commitment to the integrity of the auction process in the face of mounting claims that such a position stands in the way of contributing to economic recovery,” Legg Mason said. Analyst report said it believed re-auction winners ultimately wouldn’t be compelled to pay prices set in bidding. Among vulnerabilities in arguments in case govt. has laid out to Supreme Court, Legg Mason cited: (1) Congress has carved out exceptions for other govt. actions taken to promote regulatory objectives, but not for spectrum auctions. (2) Justices may follow reasoning of D.C. Circuit, which focused on Sec. 525 of U.S. Bankruptcy Code, which stipulates federal agency can’t cancel license solely for nonpayment of debt dischargeable in bankruptcy. “It’s difficult to argue that the FCC cancelled the license for a reason other than solely because of NextWave’s failure to pay a dischargeable debt.” (3) High court could conclude that FCC created tension between Communications Act and bankruptcy law “by permitting the C-block auction winners to pay off unguaranteed debts in installments over 10 years.” However, report said that among factors that weighed in govt.’s favor in Supreme Court case was strong argument that D.C. Circuit’s decision placed Sec. 525 in conflict with Communications Act provision directing FCC to allocate spectrum by auction. Sidak study, set for Mon. release, is expected to say economic stimulus of releasing carriers from re-auction would free $12-$38 billion by end of 2005, date by which NextWave- related litigation is expected to play out if FCC wins at Supreme Court because of outstanding issues that would be taken up at D.C. Circuit.
FCC should deny Verizon’s Sec. 271 application for Va. because company “rejects an inordinate number of UNE [unbundled network element] loop orders on the grounds that ‘no facilities’ are allegedly available,” Allegiance Telecom told agency in comments filed Wed. Allegiance said Verizon made “liberal use of the ‘no facilities’ excuse” for not providing UNEs to competitors even when there were available simple fixes such as adding “a line card or simple electronics.” Allegiance told FCC: “To the extent that Verizon makes similar minor adjustments to accommodate its own retail customers’ requests for service, its failure to make the adjustments to accommodate CLEC requests for unbundled loops is clearly discriminatory.” Also commenting on Va. application, Sprint said local markets hadn’t been “opened fully and irreversibly to competitive entry” as required by Telecom Act. “Although Verizon claims that meaningful competition exists, competition in the residential market is de minimis,” Sprint said. “In this application, Verizon estimates that competitors in Virginia provide service to approximately 228,000 residential lines [which] equates to approximately 8 percent of the residential lines in Virginia,” Sprint said: “While this percentage may exceed those in other states in which the RBOCs have received Section 271 approval, it nevertheless indicates that competitors are not willing to make a sizeable investment in the residential market.” Alliance for Public Technology, proponent of deployment of broadband services to consumers, supported Verizon’s petition, taking position it had in past -- that eliminating Sec. 271 restrictions and letting Bells enter long distance service would speed broadband deployment.
Group of 33 companies and trade groups warned FCC Chmn. Powell of “imperative need” for Commission to move ahead on ultra-wideband (UWB) testing in “an open and transparent manner.” Aug. 20 letter cited questions raised by Sen. Burns (Mont.), ranking Republican on Senate Commerce Communications Subcommittee, who asked Powell late last month to provide information on UWB testing, including whether FCC would seek comment on test plan it would use to evaluate UWB interference. FCC earlier this year adopted controversial UWB order that presented technical requirements allowing commercial technology to move forward, but indicated at that time it would do testing over next year to evaluate what, if any changes, were needed on UWB restrictions. Industry letter was signed by trade groups such as Air Transport Assn. of America and U.S. GPS Industry Council and by companies including American Airlines, AT&T Wireless, Boeing, Ericsson, Lockheed Martin, Nokia, Nortel, PanAmSat, Qualcomm, Sirius Satellite Radio, Sprint, United Airlines, Verizon Wireless, XM Radio. They stressed that “well-designed” test program could provide data on which FCC could “validly determine” what if any modifications to UWB order should be made. “However, in order for this test program, and any Commission action based on its results, to be effective and acceptable, it is critical that the program be conducted in an open and impartial manner, with ample opportunity for input from the private sector,” letter said. Many of entities signing letter have filed petitions for reconsideration of UWB order approved in Feb., raising concerns about potential UWB interference to GPS, wireless and other systems. Letter also said FCC’s plan to review UWB rules in 6-12 months should be implemented only after test program had been finalized “and its results made available for public comment.” Burns had asked FCC to respond to series of questions by Aug. 31.
Dept. of Justice told FCC Wed. it saw variety of problems with Qwest’s Sec. 271 petition for Mont., Utah, Wash. and Wyo. (CD July 15 p5) and recommended that Commission approve it “only if it is able to assure itself that the concerns expressed in this evaluation have been resolved.” This is 2nd petition filed by Qwest for entry into long distance business. First, also pending FCC action, involves 5 states (CD June 14 p1). DoJ’s concerns were directed mainly at operations support system (OSS) and unbundled network element (UNE) pricing. Dept. said Qwest’s application “demonstrates that it has succeeded in opening its local markets [in those 4 states] in many respects.” However, DoJ said, “Qwest’s assertions that it provides adequate manual order processing and electronically auditable billing for UNE-platform service remain questionable.” Justice said “it’s also unclear whether the UNE rates in Montana and Wyoming, which were developed recently, are appropriately cost-based.” DoJ noted it had voiced same concerns in evaluation of Qwest’s first application, which is due for FCC action by Sept. 11. Asst. Attorney Gen. Charles James said it was clear that competitors had made progress in entering business markets in 4 states under review. “Questions remain, however, about aspects of Qwest’s OSS and pricing that merit further examination by the FCC,” James said. Deadline for FCC action on this petition is Oct. 10. Qwest Senior Vp Gary Lytle said company was pleased with DoJ'S “conditional” approval of its Sec. 271 application. “We strongly believe we are successfully addressing with the FCC the few remaining issues identified by the DoJ,” he said. “This evaluation, along with the positive recommendations from public utility commissions in all 4 of these states, will help move our application through the process at the FCC.”
Telesat Canada filed petition for declaratory ruling to gain U.S. market access for C-band, Ku-band and Ka-band capacity on Anik F2 satellite to be located at 111.1 degrees W. Telesat also wants Anik F2 to be added to Permitted Station List. Both petitions were unopposed. Company also filed unrelated reply comments with Commission on orbital debris. Telesat said satellite facility operators had strong incentives to minimize orbital debris and it would be inappropriate for FCC to extend space station orbital debris conditions to non-U.S. licensed space stations, either directly or through U.S. earth station licensing procedures.
Fighting to stay alive, Globalstar dramatically reduced prices for handsets and rates for calls to unprecedented level as it moved closer to leaving bankruptcy that started 6 months ago, spokesman said Wed. As expected (CD July 22 p4), Globalstar reduced cost for certain high-volume users packages to 17 cents per min. for high-usage calls in U.S. and Caribbean. Similar price plans are expected to be introduced in other global markets, spokesman said. Before cuts were announced, Globalstar prices ranged from 79 cents to $1.60 per min., virtually same as rival Iridium. Handsets also have been reduced 25% from $799 to $599.
FCC asked for comments by Sept. 18 on Verizon request to discontinue federally tariffed physical colocation service in former Bell Atlantic region. Verizon said it would continue to offer physical colocation through state tariffs or interconnection agreements and limit federally tariffed service to virtual colocation. In Aug. 16 application, company said it sought action to eliminate inconsistencies resulting from fact that it now offered physical colocation at both state and federal level. Company told FCC: “Differences in regulatory activity in the state and federal jurisdictions have created inconsistencies in rate levels and rate structures between the state and federal tariffs for physical colocation that have been difficult for Verizon to reconcile. As a result, many carriers have ’tariff shopped’ between the state and federal tariffs, seeking the lowest rates rather than submitting applications based on how the arrangements will be used.” Verizon said FCC rules didn’t require LECs to provide expanded interconnection through physical colocation and most other Bells limited their federally tariffed offerings to virtual colocation. Reply comments are due Oct. 3.
ASPEN -- Broadband will succeed when content can be distributed online with technological protections from piracy, along with concerted consumer education campaign, News Corp. COO Peter Chernin said at Progress & Freedom Foundation Aspen Summit here. Same argument was pitched by Intel Exec. Vp Leslie Vadasz and RIAA Pres.-Gen. Counsel Cary Sherman and cheered by Asst. Secy. of Commerce for Technology Policy Bruce Mehlman. But summit didn’t see resolution of contentious issue of online content distribution, with off- the-record panel on subject Mon. quickly degenerating into name-calling and accusations of industries’ enabling criminal behavior. Much hallway conversation Tues. focused on negative and unproductive tone of much of that dialog, and at least one participant had intended to take some of remarks on record by addressing them in Tues. meeting, but was dissuaded when told it would only further degrade level of dialog. Mehlman, who has hosted several digital rights management forums at Technology Administration, told Summit Tues. that Mon. panel contained more contention than solutions.
FCC should minimize regulation of orbital debris, many in satellite industry say. Led by Satellite Industry Assn., operators generally said Commission shouldn’t establish new rules to mitigate orbital debris. FCC decision to begin proceeding for new rules governing space debris is “unnecessary regulation” because satellite industry has “commercial self-interest to regulate itself,” SES Americom attorney Phil Spector told us: “There has never been a problem.” He said satellite operators “believe it’s overreaction to widely publicized problems of Iridium.”