Companion Senate and House bills to provide $3 billion in loans to rural carriers could enhance existing federal broadband deployment initiatives, but NTIA’s “consultation” role in proposed Rural Utilities Service (RUS) program would add unnecessary layer of bureaucracy that could detract from program’s effectiveness, rural telecom industry source said. HR-2038, co-sponsored by Reps. Stupak (D-Mich.) and Pomeroy (D-N.D.), and S-966, co- sponsored by Sens. Dorgan (D-N.D.), Minority Leader Daschle (D- S.D.), Johnson (D-S.D.), Murray (D-Wash.) and Wellstone (D-Wis.), would make loans at 2% interest available until Sept. 30, 2006. Program would provide funds and “other extensions of credit” for network infrastructure projects in nonmetropolitan area communities with 20,000 or fewer residents.
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Lehman Bros. analyst Blake Bath said Bell companies were “on the verge of massive long distance entry” that would give them access to market with $43 billion in potential revenue by 4th quarter and $107 billion by mid-2002 when they would have 90% entry. In report Fri., Lehman said it thought pace of Sec. 271 approvals was 25% ahead of original forecasts, with FCC and state regulators increasingly favorable to long distance competition and more willing to accept uniform operations support system testing and multistate applications. Long distance entry is “largest near- term revenue catalyst” for Bells, based on their performance in Tex. and N.Y., Lehman said. It raised its 2002 long distance entry actual revenue forecast for Bells by $1.2 billion to $4.5 billion. In addition to accelerated entry, Bells also will benefit from anticipated “deemphasis” of customer marketing and retention by AT&T and WorldCom plus “downscaled business plans by many CLECs,” report said.
Rural Telecommunications Group (RTG) wants FCC to revise buildout requirements for PCS wireless licensees to strengthen construction mandates but enforce them in way that moves away from current “all-or-nothing” scenario. RTG commented on request to FCC Wireless Bureau by Leap Wireless for more time to construct certain basic trading areas. Without taking stance on Leap request, RTG said FCC shouldn’t face “stark choice of either granting these waivers or automatically cancelling Leap’s licenses in total.” Commission rules require 30 MHz broadband PCS licensee to place adequate signal over 1/3 of population of licensed area within 5 years of licensing and 2/3 of population within 10 years. For 10 or 15 MHz license, operators must cover 1/4 of population within 5 years or show they provide “substantial service.” Failing to meet mandates means licenses are forfeited. “RTG believes that the broadband PCS requirement is at once too liberal and the consequences for failing to meet it too draconian,” group wrote. RTG suggested FCC revise standard to require adequate coverage of all of licensed geographic area within 10 years of licensing. If licensee misses date, FCC should accept applications to provide coverage to unserved area, RTG said. “If only one such applicant steps forward to do so, award that applicant a license for the ‘unserved area’ of the original PCS license,” group said. RTG stressed that under current system, up to 33% of population could be left unserved by PCS carrier, even after several renewal cycles for particular license. Change would reflect unserved area rules for cellular licensees, in which part of geographic area that operator isn’t covering is made available to carrier willing to provide service, RTG said.
Broadband is next great driver of economy, but its widespread deployment is being hampered by several factors, Legg Mason Managing Dir. Blair Levin said at Congressional Internet Caucus panel on broadband technologies and applications Thurs. Broadband has potential to stimulate new forms of e-commerce, entertainment, education and health care, Levin said, but it requires “huge upfront investments” at time when consumer demand is hard to predict. Moreover, he said, issues of service quality and provisioning, uncertainty about how to reach all Americans and lack of knowledge about what broadband is and how it relates to other forms of communication have delayed broadband deployment. Broadband wasn’t at heart of 1996 Telecom Act, Levin said, so many of questions weren’t thoroughly thought through.
SBC Communications agreed Thurs. to sell its Americast cable TV systems in Midwest to cable overbuilder WideOpenWest (WOW), which wants to construct fiber-rich broadband networks in western half of nation, for price thought to be no more than $800 million in cash. Americast cable overbuilds, which SBC inherited in its purchase of Ameritech, have 310,000 video subscribers in Chicago, Cleveland, Columbus and Detroit markets and pass 2 million homes in 115 franchise areas. Terms weren’t disclosed but industry analysts believe WOW paid fire-sale price of around $2,500 per subscriber for hybrid fiber-coaxial (HFC) systems, which comes out to about $775 million. Companies said transaction, which is subject to approval by local cable franchising authorities, would take several months to complete.
General Accounting Office (GAO) confirmed in report Tues. that there wasn’t yet enough collected research to establish link between radiofrequency (RF) emissions from cellphones and adverse health effects. But report, requested by Sen. Lieberman (D-Conn.) and Rep. Markey (D-Mass.), also said lack of research results meant health effects couldn’t necessarily be ruled out. GAO outlined series of recommendations, ranging from how Food & Drug Administration (FDA) and FCC could make more safety information available to consumers to how FCC could revamp its specific absorption rate testing guidance. Markey, ranking Democrat on House Telecom Subcommittee, also stressed need for changes in cooperative R&D agreement between FDA and CTIA to ensure that trade group follows FDA recommendations on specific research proposals. “In no way should the FDA’s independent medical judgment be compromised,” he said at news conference.
Va. Corp. Commission approved 3-year extension of Verizon Va. (formerly Bell Atlantic) freeze on basic exchange rates, through 2003. Agency said continuation of freeze, originally due to expire this year, was condition for its approval of Bell Atlantic- GTE merger that created Verizon. Agency also approved modification in regulatory plan, proposed by Verizon and agency staff, to prohibit any rate increases in basic or discretionary services, even if justified by inflation or exogenous factors, if company wasn’t in compliance with Va. service quality standards. Approval means Verizon Va. comes under same regulatory plan as agency adopted in Dec. for Verizon South (formerly GTE). CLECs Cavalier Telecom and AT&T opposed plan, saying its adoption was premature because it could give Verizon greater pricing flexibility for unbundled services while issues of rates, terms and operation support systems for wholesale services remained unsettled. VCC said CLECs’ concerns were “being addressed in other forums” and that Verizon Va. met statutory requirements for plan approval.
U.S. Supreme Court ruled that Wharf Holdings violated federal securities law when it reneged on its oral pledge to grant stock option in its Hong Kong cable system to United International Holdings in 1992. In unanimous decision issued Mon., Supreme Court held that Wharf executives offered United option to acquire 10% of cable system’s stock in return for various services but never intended to carry out that promise. Upholding 2 lower court rulings, high court held that Sec. 10b of Securities Exchange Act of 1934 covered transaction, despite Wharf’s claims that law didn’t cover oral contracts and that decision favoring United would prompt other federal securities suits against it. In original case, jury awarded $67 million in compensatory damages and $58.5 million in punitive damages to United, Colo.-based cable operator that helped Wharf bid for Hong Kong system and raise $66 million in financing for it. Tenth U.S. Appeals Court, Denver, then upheld jury award but Supreme Court agreed to review case.
It’s “too simplistic” to question whether FCC Chmn. Powell supports telecom competition just because he also advocates deregulation where appropriate, he said in interview with Communications Daily. “Of course we favor competition,” he said. “The policy of the entire country is to favor competition.” What has been misunderstood is more “subtle” question of when intervention is right and when it isn’t, he said. Powell said he didn’t believe in jumping too quickly into new regulations or keeping old ones that no longer are necessary. Telecom Act requires FCC to review regulations periodically and determine whether they still are appropriate, so this isn’t new concept, he said: “There are appropriate places for regulation, but they should be carefully scrutinized and one should be hesitant to interfere with those operations without clear and demonstrable reasons for doing so.”
AT&T said it would issue more than 80 million shares of its common stock to Comcast and 75 million to Cox to settle its Excite@Home “put” agreement with its fellow MSOs and keep them as equity partners in Excite@Home. Under its revised agreement with Comcast and Cox, AT&T said, it will grant them additional shares to keep them as Exite@Home investors and receive tax deduction worth estimated $1.2 billion. While Cox and Comcast now will have higher tax bills, they will receive enough shares to cover their additional costs. Under original deal announced in Jan., 2 MSOs would have received total of 134 million shares, or about 21 million shares fewer, for their 60.4 million shares in Excite@Home, nation’s largest high-speed ISP with 3.2 million subscribers. Separately, AT&T said it continued to discuss with Excite@Home proposed restructuring of their backbone fiber agreement and joint initiative to maintain and improve current network performance levels, but companies haven’t been able to reach agreement.