Satellite launcher market has “double, if not triple, overcapacity” with addition of Atlas 5 and Delta 4, Lockheed Martin Vp John Karas said. Meanwhile, Japan prepared to make its first foray into crowded market with Sept. 10 test launch of H-2A, National Space Development Agency spokesman said. Japan, which used launch to place Data Relay satellite and test module into orbit, has “established rocket technology of the world’s top class,” Prime Minister Junichiro Koizumi said. Japan is hoping to enter market dominated by U.S. and Europe with new-generation booster, spokesman said. Fourth mission of H-2A is planned later this year. Data Relay satellite was designed to help communication between ground stations and other satellites. It’s first time Japanese booster has launched geostationary satellite in 7-1/2 years and cost it $86 million.

Rural telephone customers are paying more for same telecom services than customers in nonrural areas, said National Exchange Carrier Assn. (NECA) study released Mon. It said rural America was affected by govt. policy that shifted burden of telephone network cost recovery from long distance carriers to end users and govt. support mechanisms. “The FCC’s recent regulatory proposals to reduce access charges even further and the growing questions about the sustainability of the universal service fund mechanism suggest that rural customers are likely to see even more end- user charge increases,” NECA’s Demand Forecasting & Rate Development Dir. Victor Glass said: “While the drafters of the Telecommunications Act of 1996 expected that opening the local telephone network to competition would lower rates and lead to better service, these outcomes are not evident in rural areas.” Study said average cost of line per year in rural telco service areas was $337, with average of 10.5 lines per square mile, compared with 134 in nonrural areas. That’s partly because customer base of rural telephone companies is primarily residential, he said: “For example, special access revenues account for only 18.9% of total interstate revenues, in sharp contrast to its 63.3% share for nonresidential carriers. That means that rural telephone companies have much smaller customer base.” Study said rural customers were less able to absorb increases in end-user charges than were urban customers. Rural median annual household income is $40,600 per year, compared with $46,000 per year for nonrural households, research said. People aged 65 and over represent 14% of rural telcos’ population base, he said, but only 12.2% of other telcos’ population base. However, rural customers’ bills continue to rise, he said. Since 1994, rural basic service rates have risen 36% -- to $28.08 a month in 2002 from $20.69, report said. It said Federal Subscriber Line charge increases alone accounted for 1/3 of that increase, or $2.50 per month. Although rural end users have faced bigger increases in their charges than urban customers, “they are not necessarily sharing in the benefits that should accrue,” NECA said. Only 57% of customers have access to long distance discounts, report said. FCC documented that average long distance rates had dropped to 9 cents per min. in 2002 from 14 cents per min. in 1994, but many rural customers were paying 18-1/2 to 35 cents. Average share of local to total min. in rural areas is 58% compared with 79% in nonrural areas, study said. “That means that rural customers make a lot of long distance calls, but don’t have access to discounts… that is a burden,” Glass said. NECA projected rural interstate access rates would increase 50% to 3.68 cents per min. by 2007. “Rural customers have seen their bills rise more than nonrural customers,” Glass said. Report said nonrural basic service rate increased 10.25% between 1994 and 2001, to $21.84 per line per month from $19.81 to $21.84 or $2.03 per line per month.

Verizon more than doubled its loss to $2.1 billion in quarter ended June 30 from year ago and trimmed revenue forecast for 2002. Carrier attributed net loss to charges related to write-down of certain investments and to $4.2 billion in after-tax charges, including $2.4 billion related to its investment in Genuity. Verizon said last week it was relinquishing its right to reintegrate Genuity, deciding to not reabsorb company that it was forced to spin off as condition of GTE-Bell Atlantic merger (CD July 26 p1). Other charges include $862 million to reflect loss of value of its investment in Telus, Cable & Wireless and other operations and $475 million for severance payments. Verizon also reported charge of $183 million related to its WorldCom exposure. Company updated its 2002 guidance to projected revenue of no growth to minus 1% for full year, compared with earlier expectation of 0-1% growth. Earnings per share before nonrecurring charges now stand at $3.05-$3.09, down from $3.12-$3.17. Capital expenditure estimates were trimmed to $13-$13.5 billion from $14-$15 billion. At end of 2nd quarter, Verizon said it had 9 million long distance customers, making it 4th largest IXC in U.S. Company said it added 800,000 long distance customers in quarter, up 51% from year earlier. It also added 150,000 DSL lines in quarter for total of 1.5 million, 80% increase from same period last year. Verizon said it was on track to meet year-end DSL line target of 1.8-2 million lines. Total switched access lines in service dropped 3.3% to 60.4 million, with largest decrease in business lines, down 11.2% to 564 million. Carriers’ and CLECs’ min. of use fell 7.4% to 66.5 million. High-capacity and digital data revenue rose 6.8% to $1.9 million.

Despite several complaints to SEC about how merged company would be managed, shareholders overwhelmingly approved corporate marriage of AT&T Broadband and Comcast. If ultimately approved by FCC and Dept. of Justice (DOJ), as well as local franchise authorities, merger would form nation’s largest cable company, with 22 million subscribers. Comcast said deal, currently valued at about $50 billion, was expected to close in 4th quarter. Approvals were announced at separate shareholder meetings in Charleston, S.C., (AT&T investors) and in Philadelphia (Comcast). Although analysts had expected votes to favor deal, several institutional investors in AT&T had objected to corporate governance structure of deal. Provisions keep Comcast Pres. Brian Roberts in place as CEO of new company until 2010 unless 75% of board -- 9 of 12 of members -- vote to oust him. Originally, corporate structure didn’t contemplate board elections until 2005, 2-1/2 years after deal was scheduled to close, but investor outcry prompted move to hold elections in 2004 instead. There also were objections to provision that would bar anyone from amassing more than 10% voting power without first getting board approval, but in end that plank passed along with deal.

Adelphia said Thurs. it missed interest and dividend payments totaling $30 million on heels of missing $51 million interest payment on its debt last week. Company said it missed $23.4 million interest payment on its 9-3/8% senior notes and $6.5 million divided payment on its 7-1/2% Series E mandatory convertible stock. Adelphia said its subsidiaries Olympus Communications and Olympus Capital Corp. had missed $10.62 million interest payment and Arahova Communications had missed $4.19 million interest.

Del. PSC approved Verizon proposal to add 5 new unbundled network elements (UNEs) to its statement of generally available terms (SGAT). New UNEs include 2-wire loop, 4-wire loop, DS-1 digital line, DS-3 digital line and customer-specific signaling. PSC also adopted $35 flat rate for Verizon hot-cut switchovers that will stay in effect for 24 months and adjusted other nonrecurring wholesale charges to conform with total element long-run incremental costing (TELRIC). Verizon sought changes to have TELRIC-complaint rates in place before filing its Sec. 271 long distance application. In related matter, PSC plans June 18 hearing on Verizon’s post-entry wholesale performance assurance plan and June 25 hearing on its overall compliance with 14-point Sec. 271 checklist. In other actions, PSC amended payphone rules to allow all providers to offer directory assistance and intrastate call completion rate information orally instead of posting operator service rates at phones. That rule is similar to FCC’s on interstate calls. New rules also require payphone providers to have plans in place for refunding incorrect charges to customers and to post information at phones on whom to call for replacement of damaged or inoperative phones. PSC also approved small Verizon rate cuts under annual adjustment formulas of carrier’s price cap program. PSC ordered 3-cent reduction in monthly residential Touch-Tone dialing charge and 57-cent cut in business Touch Tone. It also ordered 9% reduction in per-min. switched access charges.

Supporters of controversial Cal. bill (AB-2958) to limit PUC price capping authority promised vigorous lobbying efforts to convince state Senate to approve measure, which sailed through Assembly May 9 on 66-1 vote. Pac Bell and Verizon, joined by CWA, NAACP, Congress of Cal. Seniors, Cal. Chamber of Commerce, Cal. Hispanic Chamber of Commerce, Cal. Small Business Assn. and several regional business advocacy groups, held news conference to praise Assembly’s action. They vowed to make sure senators knew of their strong support for legislation. Bill would prohibit PUC from reinstating until 2007 profit-sharing and productivity-based inflation indexing features of Bell and Verizon plans, which agency suspended 3 years ago. PUC is in midst of 4th triennial review of program. Agency has been urged by some competitor and consumer interests to reinstate sharing and indexing to correct allegedly excessive telco earnings and prices. Reinstatement calls were spurred by Bell and Verizon audit reports filed earlier this year indicating companies might have failed to report several hundred million dollars in potentially shareable earnings. PUC and other opponents in May 9 news conference said passage of bill would be bad news for state and telecom industry and vowed to fight it (CD May 10). Telcos said overwhelming bipartisan support in Assembly showed lawmakers agreed that bill was positive step forward for regulatory process. Telcos said opponents’ assertions that bill would entrench incumbents’ monopoly position or lead to reinstatement of rate-of-return regulation by stripping PUC of tools needed to make price cap regulation work, were completely unfounded. SBC attorney Mark Weideman said postponing sharing and indexing wouldn’t impair PUC’s direct authority over prices. Former PUC Comr. Mitch Wilk, who served when program was being developed, said framers of price cap regulation never intended that indexing or sharing be permanent features. He said they were included as temporary safeguards for small ratepayers against uncertain future of competition. He said PUC always had intended program to evolve to today’s pure price cap regulation. Wilk said opposition had “exaggerated” role competition was supposed to play in cap program. Pac Bell and Verizon said current cap plan insulates consumers from investment or revenue losses carriers might suffer due to risks of competition while allowing companies to keep profits if their strategies paid off. SBC’s Weideman said cap system had worked well over last 3 years, producing basic residential rate of only $10.69 monthly while encouraging investment by incumbents and competitors alike, and bill would merely maintain status quo for next 4 years.

Copyright Arbitration Royalty Panel (CARP) ruling setting rates for Internet radio broadcasting (CD Feb 21 p8) managed to aggravate all sides and is raising privacy issues as well, panelists said Thurs. at D.C. Bar Assn. discussion on Webcasting and digital music. Report set rates of 0.014 cents to 0.14 cents per Webcast performance, plus ephemeral license fee of 9%, depending on type of media. Webcasting fees will be retroactive to effective date of Digital Millennium Copyright Act (Oct. 1998), and first payments will be due around June if CARP report is accepted by Copyright Office.

Astrium is seeking $133 million damages from TRW and 2 other companies in U.S. Dist. Court, L.A., for problems associated with solar panel contracts on 9 satellites constructed for company. Following weeks of negotiations, companies haven’t been able to agree, and case apparently will go to court, industry source said. Astrium has revised its original complaint and now is accusing TRW of fraud in its handling of contract. Optical Filter Corp. (OFC) of Natick, Mass., div. of Corning Netoptix, and Pilkington Optronics of Tustin, Cal., were also named in suit, accused of negligence.

As it warned in ex parte filing Dec. 13, AT&T raised monthly universal service line-item fee for residential customers to 11.5% starting first of year, from 9.9%. AT&T had asked Commission for permission to change formula used to determine contributions to Universal Service Fund (USF) because falling revenue had skewed it. It said problem was that FCC determined how much a company should contribute to USF using revenue from 6 months ago. When company’s revenue is falling, as AT&T’s is, using that contribution factor on lower current revenue results in larger per-customer fee, company said. It had asked for permission to base its contribution factor on projected revenue rather than 6-month- old revenue and had offered to true up contributions if there were shortfall once actual revenue total was available.