Speakers at a NARUC panel on issues surrounding large incumbents’ selloffs of rural exchanges said the public policy implications of such transactions remain unsettled. Jessica Zufolo, analyst with Medley Global Advisors, noted investors have been urging Bell companies to sell off their low- or no-profit rural landline exchanges and invest the money in higher-profit wireless, Internet and video ventures. “Wall Street expects to see [rural] divestitures. The question is when, at what price and under what terms.” She said there’s lots of uncertainty that might inhibit potential buyers of Bell rural exchanges. Zufolo said universal service fund requirements might discourage smaller telcos from buying up Bell companies’ rural exchanges, if the new owner is forced into costly upgrades to keep receiving subsidies. She said current uncertainties might lead small companies to bid on only small pieces rather than on an entire market or region, or to sit out altogether for now. Consultant Michael Balhoff said “all companies are doing strategic re-evaluations of their rural exchanges” because of technological and regulatory uncertainties. He said rural line prices have slipped substantially as new technologies expand rural competition opportunities, and potential major changes loom to universal service and intercarrier compensation systems that will greatly effect revenue streams. Bob Udell, western region pres. of rural carrier Consolidated Communications, agreed these factors could be “deal killers,” but said other factors bear on his company’s decisions to buy an exchange. He said overall condition of the physical plant and customer records, extent of competition, potential market demand for new or add-on services, network upgrading costs, and regulatory policy regarding multiple universal service providers in a market all can be deal makers or deal-breakers. He said a run-down, neglected exchange in a stagnant rural market in a state that certifies multiple universal service providers wouldn’t be attractive. He said rural companies also want the best possible return on their investments. Dorothy Atwood, AT&T senior vp-regulatory policy & planning, said her company is committed to its rural markets and to exploring new ways for bringing advanced broadband services to underserved rural areas, including satellite and fixed-wireless broadband service. Atwood said public policy should “encourage the ability and willingness to serve rural areas.” She said rural broadband penetration requires regulatory policies that support ubiquitous broadband. Fierce competition, she said, means large companies no longer can overprice in urban markets to subsidize rural customers. Atwood also challenged cable-industry arguments that large incumbent telcos like AT&T don’t need subsidies: “If your are investing to serve rural customers, then public policy should support you. The cable people aren’t. Who’s serving rural America? It’s the wireline and satellite providers.”

SAN JOSE -- Commercial prospects for fixed WiMAX are limited, and even those of the more promising mobile WiMAX are hemmed in by advancing 3G cellular technologies, industry consultants said. Mobile WiMAX will have a role, mainly in converging wireless and wireline communications, said Pres. Monica Paolini of Senza Fili Consulting late Tues. at a Wireless Communications Alliance meeting here. The technology will promote competition by allowing cellular carriers like Sprint Nextel to offer landline service, and new entrants and wireline carriers to get into wireless, she said.

The FCC wants satellite broadcasters to take a stab at drafting rules for the “reverse DBS band” -- spectrum at 17 GHz typically allocated for satellite uplinking but which now may be used for downlinking. Reverse use of the band, long eyed by industry and regulators, could open much spectrum for DBS use, we're told. The Commission Wed. adopted an NPRM seeking comment on licensing and service rules for U.S. satellite broadcasting service in the 17 and 24 GHz bands.

Thousands of transmitters, including those police and fire departments. use, would be endangered if the FCC grants a Multispectral Solutions Inc. (MSSI) request for higher power limits in the 6 GHz band for ultra-wideband-based RFID tags, said the Fixed Wireless Communications Coalition (FWCC). The National Spectrum Managers Assn. (NSMA) also objected to the request for higher power limits.

Growth of wireless broadband service could be stymied by the proposed AT&T-BellSouth merger, opponents said in FCC filings late Mon. and at a news conference Tues. In what appeared to be a growing issue, merger opponents urged the FCC to require AT&T and BellSouth to divest their 2.3 GHz and 2.5 GHz spectrum so the proposed merger won’t hurt the development of a 3rd broadband alternative.

Two proposed rulemakings that could open more satellite spectrum for DirecTV, EchoStar and maybe FSS operators are circulating on the FCC’s 8th floor, with one perhaps making the agenda of the next FCC meeting, FCC officials and industry sources said. Both are vintage satellite conundrums long on the FCC to-do list, sources said: the 17 GHz “reverse DBS band” and “’tweener” DBS satellites. If new Comr. McDowell moves quickly, the 17 GHz NPRM could get a vote at next week’s agenda meeting, we're told; it also could wait until July. The ’tweener rulemaking is moving more slowly, sources said.

Ultra-wideband (UWB) chipmaker Alereon, which predicts UWB could have a breakthrough year in 2006, plans to ask the FCC for permission to transmit at higher power levels at the upper ends of the radio spectrum. Alereon, perhaps in tandem with other UWB firms, plans to ask the FCC to revisit parts of its UWB rules, Alereon CEO Eric Broockman told us. But any proposal for higher power levels for UWB is likely to be controversial.

Aloha Partners, the largest holder of 700 MHz licenses in the U.S., said it will join with satellite operator SES Americom to test-market mobile TV in Las Vegas in the fall, through a new subsidiary, Hwire, using the digital video broadcasting-handheld (DVB-H) platform. Aloha has a test of wireless broadband on 700 MHz in Phoenix. CEO Charles Townsend told us Mon. the Aloha will look at both tests at year-end and decide which course to pursue.

TerreStar has been making the rounds at the Dept. of Homeland Security, Dept. of Defense and the Hill since winning 20 MHz of 2 GHz spectrum from the FCC in Dec., about 6 months earlier than it expected, pres. & CEO Robert Brumley said. Reason: To tailor its hybrid satellite/terrestrial wireless system to govt. demands and security needs, he said. DHS and DoD reaction has been strong, Brumley told a Washington Space Business Roundtable lunch Wed. “There’s a simple business equation for this govt.,” he said: “ Can you fix our legacy problems, and what’s the next generation system going to be?”

Sprint Nextel told the FCC that, unless the Commission intervenes immediately, “it is improbable” it will complete stage one of the 2 GHz Broadcast Auxiliary Service (BAS) relocation by the FCC’s April 6 deadline. In a BAS relocation status report filed late Tues., Sprint Nextel said despite “diligently working to implement BAS relocation, only 17 of the more than 1,000 BAS licensees who must retune their operations have entered into frequency relocation agreements with Sprint Nextel.” Sprint Nextel said it will keep working toward the Commission’s 31 1/2 month complete BAS relocation deadline. A spokesman said Sprint Nextel’s filing isn’t a request for Commission action, but a fulfillment of its BAS status reporting obligations.