European Commission (EC) said Wed. it suspected Germany’s Deutsche Telekom was charging anticompetitive rates for access to its local network. In statement of objection, EC contended that DT had abused its dominant market position through unfair pricing for local loop access. For retail local loop access, DT has more than 98% market share, even 4 years after Germany opened that market to competition, EC said. Commission said it believed DT abused its dominant market position in way that amounted to “a margin squeeze between its wholesale and retail tariffs.” “After 4 years of complete liberalization of the telecommunications markets in Europe, competition has come to a critical stage,” EC Competition Comr. Mario Monti said. “This is particularly acute in the local loop where many very promising new entrants have already been forced to give up their business.” EC said it considered DT to hold dominant market position for wholesale and retail local loop access. Alternatives such as fiber networks, wireless local loop, satellites, power lines and upgraded cable TV networks “are not yet sufficiently developed and cannot be considered as equivalent to DT’s local loop network,” EC said. Competitors such as Mannesmann Arcor complained to EC, saying there was insufficient spread between DT’s tariffs for retail subscriptions and wholesale local loop access. EC said DT could have averted “margin squeeze” situation by cutting wholesale access fees, increasing retail subscription fees or both. “In general, it is the Commission’s position that vertically integrated operators like DT must indeed fix their retail prices at a level sufficiently above the wholesale prices so as to allow new entrants to compete,” EC said. DT has 2 months to provide arguments rebutting EC’s preliminary analysis. Arguments also can be presented at oral hearing. Commission said it wouldn’t adopt final position until after those steps were completed. In Dec. 2001, EC began infringement proceedings against Germany, Greece and Portugal for failing to implement provisions of European Union regulation on local loop unbundling. EC said DT recently adopted tariff changes for both wholesale and retail service that were “step in the right direction” but it said they were “far from being sufficient in order to rebalance the local loop access tariffs.”
Coalition of private wireless operators on Mon. backed Cingular Wireless plan for 800 MHz rebanding that would move public safety operators to 700 MHz. But in face of “political” challenges expected to beset proposal, including required legislative changes, private wireless licensees called their alternative “repacking” 800 MHz band at cost of $1.2 billion, compared with $2.7 billion of original Nextel proposal, officials said Mon. FCC filing deadline closed Mon. on notice of proposed rulemaking (NPRM) soliciting comments on alternatives for alleviating public safety interference at 800 MHz. Among plans on which Commission sought feedback was proposal submitted by Nextel last fall that would swap 4 MHz of guardband spectrum at 700 MHz, 8 MHz of specialized mobile radio spectrum in lower channels of 800 MHz and 4 MHz of SMR spectrum at 900 MHz. Under that plan, Nextel would receive another 16 MHz at 800 MHz and from reserve mobile satellite services spectrum. One theme running throughout comments was thorny issue of who would pay cost of relocating incumbents. “There’s an issue of can anybody really afford to do this,” Washington attorney Robert Schwaninger said at Mon. news conference of private wireless operators.
In latest E911 quarterly reports at FCC, carriers cited progress as well as array of continuing challenges to meeting waiver conditions, including slow installation of LEC upgrades for automatic location identification (ALI). In report filed last week, Sprint PCS said pace of LEC upgrades was “major remaining obstacle to completion of Phase 2 deployment.” It said: “While the majority of LECs appear to have now agreed that such upgrades are necessary, details of how, when and where these upgrades will occur have still not been supplied.” Sprint said deployments scheduled for first half of this year now had been delayed until fall as result of LEC delays and “Sprint’s entire Phase 2 deployment schedule is now threatened.” Sprint PCS urged FCC to require LECs to disclose publicly Phase 2 ALI update schedules so public safety answering points (PSAPs) and wireless carriers could provide that information. Under that scenario, Sprint said, carriers could focus their E911 conversion efforts on areas that had ALI databases that were Phase 2 capable. In other areas, Sprint PCS said that in first quarter of this year it: (1) Completed installation of Phase 2 switch modifications in all Lucent markets in U.S., nearly 3 months ahead of schedule. (2) Sold more than 500,000 GPS-enabled handsets, up from 200,000 in 4th quarter of 2001. (3) Installed more than 240 Phase 1 systems in 3 months and trimmed number of Phase 1 PSAP requests pending more than 6 months by almost one-third. Nextel told FCC in report filed last week that it hadn’t received documentation from PSAPs required by FCC order issued in Oct. on validation of Phase 2 request’s validity. In response to request for clarification by city of Richardson, Tex., FCC in Oct. outlined what constituted valid PSAP request for E911 service. Order said such requests were valid if any upgrades needed on PSAP network would be completed within 6 months of request and if PSAP had made “timely request” to LEC for trunking and other facilities needed for E911 data to be transmitted. (Sprint PCS and Cingular Wireless filed petitions for reconsideration of Richardson order last year). In its E911 report, Nextel said it had requested that PSAPs that had submitted Phase 2 requests provide information required by Richardson order. “But to date only a very few have even attempted to fulfill the Richardson order’s validation requirements,” Nextel said. It said that in next 30 days, it again would contact each PSAP requesting Phase 2 service and “again attempt to elicit information regarding its readiness for Phase 2 E911 service.” Once validity of those requests is determined, carrier said, it would prioritize them for deployment by Oct. 1 or, for those received after April 1, within 6 months of receiving valid request. Nextel also said it had been continuing tests with Motorola of prototype handset with Assisted GPS (A-GPS) capability at Motorola lab in Fla. In March, Nextel said it and Motorola used preliminary versions of A-GPS handset in live network in Baltimore-Washington area. Although network assistance data weren’t yet available for test, Nextel said Motorola could generate “important information about the handset’s functionality in existing networks as well as performance in a nonassisted environment.” When FCC issued E911 Phase 2 orders last fall, it said it was referring to Enforcement Bureau waiver requests by AT&T Wireless and Cingular on GSM portions of their network. Commission is expected to release order on that decision as early as this week, source said.
EchoStar said first-quarter loss narrowed to $38.6 million from $169.8 million year earlier as it posted better- than-expected gain in subscribers. Revenue increased to $1.1 billion from $861.9 million. EchoStar added 335,000 net new subscribers in quarter, surpassing analysts’ estimates of 313,000, but down from 460,000 additions year ago. It ended quarter with 7.1 million subscribers, is targeting 8 million by year-end.
EchoStar said first-quarter loss narrowed to $38.6 million from $169.8 million year earlier as it posted better-than- expected gain in subscribers. Revenue increased to $1.1 billion from $861.9 million. EchoStar added 335,000 net new subscribers in quarter, surpassing analysts’ estimates of 313,000, but down from 460,000 additions year ago. It ended quarter with 7.1 million subscribers, is targeting 8 million by year-end.
Amid some wireless industry efforts to delay June 19 700 MHz auctions, FCC held first pre-auction seminar for upper band bidding Tues. (Pre-auction seminar on lower band auction is set for today -- Wed.) “We are ready to go, at least operationally,” Deputy Wireless Bureau Chief Kathleen Ham said. She said CTIA had petition pending at Commission to review bureau decision in April to retain June 19 date for auctions of both upper and lower bands at 700 MHz. “I think we are going to resolve that as soon as possible,” she said. (FCC set expedited filing schedule on CTIA petition late last week, with oppositions to group’s petition due Fri.). Meanwhile, filing window opened Tues. for applicants for Ch. 60-69 auction to submit Form 175 short forms. Deadline for final submission of that preliminary bidding form is May 8. Few FCC presenters at day-long seminar made passing reference to tug-of-war between some large wireless carriers, which want auction delayed, and broadcasters and others that are fighting delay. “The ground may move beneath my feet at any moment,” quipped Stanley Wiggins, attorney with bureau’s Policy Div. More than 30 on-site attendees at seminar included representatives of Verizon, AT&T Wireless, Spectrum Exchange, Nextel. Actual participation in auction, however, isn’t signaled until carrier files short form application that contains financial information. Because meeting was streamed, presence of other participants was less visible. As for pending petitions that could affect availability of licenses, Wiggins cited petition for reconsideration filed by National Public Safety Telecommunications Council (NPSTC) last year. NPSTC objected to FCC decision not to change certain technical rules for commercial operators in 747-762 MHz and 777-792 MHz bands. Group said lack of modifications could “greatly increase” harmful interference to public safety operations.
Posting preliminary results for its fiscal year ended Jan. 31, Game Group Plc -- formerly Electronics Boutique Plc -- said its operating profit before goodwill amortization and provision for rebranding increased 126% to ?31.2 million from ?13.8 million year ago. Company took ?5.2 million charge for estimated cost of re-branding its U.K. stores to bear Game name. Chain also said pretax profit before goodwill amortization jumped 102% to ?26.3 million from ?13 million as turnover expanded 48% to ?453.8 million from ?307.1 million, basic earnings per share increased to 3.33 pence from 1.06 pence, final dividend jumped 21% to 0.4 pence from 0.33 pence. Company said it saw positive contribution from acquisitions completed during year to expand business in France and Spain. In year, company’s store base widened to 389 from 311, of which 323 are in U.K. and Ireland and 66 in continental Europe. Game Group said it was off to “excellent start to current year with like-for-like sales up 26% for the first 12 weeks.” Chmn. Peter Lewis said: “Exciting new platforms have ensured that the videogames market is growing and we are confident about our leading role in that market.” Reuters report from London said chain reported Game Boy Advance and PlayStation 2 were top sales drivers in year. Company also said recent Xbox console price cut in Europe to 299 euros from 479 (CED April 19 p2) was likely to boost sales, while GameCube preorders were at high level. Reuters quoted Lewis as saying: “These new consoles, together with the continued success of existing formats, will stimulate further the expansion of our market.”
Movie Gallery said same-store revenue for its first quarter ended April 7 increased 3% compared with its previously announced targeted range of flat to slightly negative same-store revenue for quarter. Dothan, Ala.-based video chain also increased its targeted range for first-quarter pro forma earnings per diluted share to 33-35? from previous range of 26-28?. Company also said it expected first quarter earnings per diluted share of 32-35?. Movie Gallery plans to announce actual results for first quarter May 10. Chain also said Thurs. it had reached agreement to resolve class action lawsuits involving its extended viewing fees. Under settlement, class members will receive one of 3 coupon packages, depending upon amount of extended viewing fees they had paid in past, company said. However, Movie Gallery will continue to charge customers extended viewing fees. CEO Joseph Malugen said: “We believe the agreement is fair and is of mutual benefit to both Movie Gallery and its valued customers. We believe that our extended viewing fee policy is in no way improper and is a valid component of our rental pricing structure. Nevertheless, after considering the time and resources that must be expended to defend multiple cases, we determined that it was in the best interest of our company and our customers to resolve these cases through agreement. This agreement provides value to our customers and allows our management team to focus on our business.” Chain said its agreement was “very similar to the terms of settlement reached in extended viewing fee class action cases involving certain of its competitors within the last year.” Movie Gallery said it would provide eligible customers with coupons with values of $9-$16 that could be used toward movie or game rentals or purchases at Movie Gallery and affiliated stores nationwide. Chain said agreement received preliminary court approval April 19, but was subject to fairness hearing currently scheduled for Nov. 22. If final approval is received, coupons will be issued and will be redeemable Jan. 30-June 30, 2003, it said. Company also announced it was revising its membership agreement to clarify its extended viewing fee policy and was changing its pricing structure on certain of its product offerings. Starting May 27, extended viewing period for all product offerings will match initial viewing period, it said: “As a result, when customers keep a movie or game beyond the initial viewing period, they will automatically re-rent that item for the same price and for another period of the same duration.” Malugen said change in rental policy was result of various market factors, including policies in effect at other nationwide video specialty retailers. He said: “We believe this pricing structure is easier for our customers to understand and is consistent with current competitive practices.”
FTC shuttered spam scam that promised prize from Yahoo but delivered pornography site, Bureau of Consumer Protection Dir. Howard Beales said at news briefing. Calling scheme “one of the worst we've seen so far,” he said it worked this way: Consumers received e-mail congratulating them on winning prize in Yahoo sweepstakes contest. Gift most often mentioned, he said, was Sony PlayStation 2. However, Beales said, message wasn’t from Yahoo, and there was no prize. Instead, he said, “just 5 clicks later you were connected to a pornographic Web site at a cost of up to $3.99 a minute, with no meaningful disclosures along the way.” Come-on appeared legitimate, he said, until consumers waded through 8-9 pages of fine print to discover they would be billed $3.99 per min. for 900-number call, and that Web site was pornographic. FTC doesn’t know how many bogus e-mails were sent out, Beales said, but AT&T billed more than $11 million for 900- number calls from May or June through Dec. 2001. Telecom company was good about issuing refunds to consumers who complained, he said, but agency is seeking redress for those who didn’t get reimbursements as well as permanent injunction closing down operation. In March, FTC charged 3 companies and 3 individuals - - BTV Industries, National Communications Team Inc., LO/AD Communications Corp., Rik Covell, Adam Lewis and Nicholas Loader -- with violating unfair or deceptive practice provisions of FTC Act and Pay-Per-Call Rule, which implements requirements of Telephone Disclosure & Dispute Resolution Act of 1992. Enforcement action, filed in U.S. Dist. Court, Las Vegas, was sealed until Wed. It’s part of International NetForce law enforcement initiative in which FTC, 8 U.S. state law enforcers and 4 Canadian agencies are investigating and bringing 63 actions against alleged deceptive e-mail scams and Web frauds. Court last month issued temporary restraining order that: (1) Gave FTC expedited discovery powers so it could gather information on extent of scam’s harm to consumers. (2) Ordered spam violations stopped. (3) Froze corporate defendants’ assets. Preliminary injunction hearing is set for April 29, FTC said.
SES Americom filed FCC petition for license to launch new satellite service for TV broadcasters and consumers in U.S. Americom2Home would allow programmers or content providers to deliver broadband services directly to public through small satellite dishes and other equipment in which 2-way digital technologies had been incorporated. At time when DBS market is consolidating, new SES service could provided much-needed competition for EchoStar and DirecTV, Pres. Dean Olmstead said. “We plan to create a best-in-class DBS satellite platform,” he said. SES has received “favorable reaction” from some big players in market that could provide content, Olmstead said. He said he planned preliminary talks on interference issues and outline plans for service with EchoStar Chmn. Charles Ergen and DirecTV Chmn. Eddy Hartenstein at Carmel Group Satellite Conference in Monterey, Cal. (see separate story, this issue).