By 4-1 vote, FCC adopted notice of inquiry (NOI) on interactive TV (ITV) services Thurs., starting formal proceeding that it promised when it approved AOL’s takeover of Time Warner (TW) with additional regulatory conditions late last week. But Commission backed away from weightier, more urgent proposed rulemaking on ITV issue that its Cable Bureau staff had recommended, bowing to strong lobbying from cable, to disappointment of consumer advocates and other cable critics. Move follows regulatory conditions imposed on AOL-TW deal last month by FTC that prohibited merged company from interfering with content supplied by other ISPs and ITV providers or discriminating against such competitors (CD Dec 15 p1).
FCC Enforcement Bureau fined SBC $94,500 for violating requirement that it post notices on its Internet site identifying central offices that have run out of physical colocation space. Notice requirement is one of conditions placed by FCC when it approved SBC-Ameritech merger. SBC spokesman said company didn’t dispute that it made “a few clerical errors.” However, “we think it was unfortunate that the Enforcement Bureau feels it necessary to propose a penalty for a few errors of this nature,” he said. Posting is necessary so CLECs don’t waste their time waiting for space in central office that can’t be provided instead of finding other ways to serve their customers. Violation occurred in audit period of Oct 8, 1999-June 8, 2000.
Northern Communications agreed to buy broadcast group owner Shockley Communications for undisclosed price, companies said. Northern also said it would spin off KXLT-TV (Ch. 47, Fox) Rochester, Minn., to Shockley family. Northern will sell 5 former Shockley-owned ABC affiliates in Wis., plus 2 postproduction facilities, to Quincy Newspapers. Northern is private investment group that buys privately owned properties and “maximizes assets” by spinning off components, it said. In separate transaction, Lee Enterprises said it would sell KMAZ (Ch. 48, TBN) Las Cruces, N.M., to Council Tree Hispanic Bcstrs. for undisclosed price. Sale will complete Lee’s exit from commercial broadcasting.
Cingular Wireless and VoiceStream filed applications with FCC for approval of proposed license exchange. Subsidiary of Cingular would exchange PCS spectrum in L.A. and San Francisco for spectrum held by VoiceStream subsidiaries in N.Y. and St. Louis. VoiceStream also proposed giving Cingular license in Detroit now held by Cook Inlet/VoiceStream GSM in exchange for Cingular spectrum in San Francisco. To carry out exchange, some of licenses would be disaggregated or partitioned. Comments are due at FCC Feb. 20, replies March 2.
Nortel said it lost $1.41 billion in 4th quarter, compared with $172 million income year ago. Revenue during period rose 34% to $8.8 billion. Company said it had record full-year results with revenue up 42%, although net loss for year climbed to $3.47 billion from $351 million last year. Nortel officials said they were “extremely pleased” by 4th-quarter results because of strong growth in optical Internet, wireless Internet and core IP networking areas.
Cost of wireless phone service dropped average of 6.9% last year in 25 metro areas, Econ One research group said. Subscribers to 600 min. per month plans saw deepest average price reductions, 10.1%, from $66.63 to $59.91, company said. Overall average in 25 cities was calculated across plans with 30, 150, 300 and 600 min. of use. Average price for all such plans dipped to $39.60 last month from $42.53 in Dec. 1999. St. Louis, Dallas and Kansas City saw biggest price declines -- 18.2%, 15.6% and 14.4%, respectively, Econ One said. Sacramento price plans increased 4%. Although average prices dropped last year, 19 of 25 cities surveyed in Dec. saw increases in monthly service plans. It said “aggressive” handset pricing could explain why services prices didn’t drop more in Dec..
Speculation about replacement for FCC Chmn. Kennard continues. Among latest rumors: (1) One telecom source speculated Thurs. that Bush might name Republican Comr. Powell interim FCC chairman while also appointing Texas PUC Chmn. Pat Wood to Commission. Under this scenario, Powell would eventually move to high antitrust enforcement post in administration, allowing Wood to take over as FCC chairman. Besides role in Dept. of Justice, source said, Powell could become new FTC chairman, replacing Clinton appointee Robert Pitofsky. Source also speculated that Republican Comr. Furchtgott-Roth would leave Commission soon, opening another seat for Bush nominee. (2) Another source said one of FCC’s Democratic seats may be filled by Ivan Schlager, former Democrat staff dir. on Senate Commerce Committee and now at Skadden, Arps, at request of Sen. Hollings (D-S.C.), ranking minority member of Committee.
Bidding in FCC’s C- and F-block PCS auction reached $16.7 billion after 67 rounds Thurs., with Verizon Wireless maintaining wide lead of $8.6 billion in total bids. Alaska Native Wireless, which is designated entity with AT&T Wireless investment, followed with $2.9 billion, Cingular Wireless-backed Salmon PCS with $2.5 billion. After top 3, bidding has remained at much more modest levels, with Cook Inlet/VoiceStream GSM having $505.1 million in net high bids, VoiceStream PCS with $475.1 million, DCC PCS with $418.3 million and Leap Wireless International with $341.2 million. Auction of 422 PCS licenses began Dec. 12 and is expected to end shortly.
Telecom Business Notes: (1) Qwest won contract worth more than $100 million to provide network capacity to Cable & Wireless. (2) Viatel said it realigned its operations to focus on high- growth businesses and would stop providing consumer voice services in countries “that do not meet long-term corporate objectives.” Streamlining will lead to staff reduction of about 30%. (3) Time Warner Telecom plans IPO of 4.4 million shares of its Class A common stock. Proceeds will be used to repay portion of $700 million senior unsecured bridge loan that Time Warner Telecom used to finance purchase of GST Telecom’s assets.
As FCC Chmn. Kennard departs today, he leaves legacy as extremely decent man who might have been more effective if he were more of a politician, industry officials told us. “He is a prince of a man, honorable, honest,” said one telecom lobbyist. “But I don’t believe he’s a politician at heart and it’s hard for that kind of person to survive the political cauldron in Washington.” No one we talked with disputed Kennard’s honorable nature. Even his ideological opposite, Comr. Furchtgott-Roth, said Thurs. that he viewed Kennard’s departure to make way for Republican as “somewhat bittersweet” because Kennard was “one of the finest, most decent individuals I've ever met.”