FCC should consider revoking all of WorldCom’s wireless licenses and Sec. 214 authorizations for lack of “good character and candor,” American Enterprise Institute fellow Gregory Sidak said in speech Oct. 1 at Royal Society of Arts in London that was made available in U.S. Mon. WorldCom’s accounting fraud “poses a serious question for telecommunications regulators,” said Sidak, former attorney at FCC. “By statute, wireless licensees must have ‘character’ as a basic qualification” and company doesn’t have to engage in criminal behavior to be deemed lacking in character, he said. In addition, “WorldCom’s accounting fraud also destroys the company’s credibility in proceedings before regulatory commissions and courts,” Sidak said. Therefore, FCC and other govt. bodies -- state regulatory commissions, federal courts, Justice Dept. Antitrust Div. and U.S. Trade Representative -- also should issue notices “to show cause why pleadings or comments filed by WorldCom should not be stricken,” Sidak said. If FCC stripped WorldCom of its licenses and certifications, company probably would be forced into Chapter 7 liquidation but regulators should resist temptation to give company another chance, he said: “In WorldCom’s case, a second chance holds little promise. Its brand name is probably worthless because of the taint of fraud and its most capable managers probably already jumped ship... Keeping WorldCom on life support would worsen the tragedy.” -- http://papers.ssrn.com/sol3/delivery.cfm/SSRN_ID335180_code02 1001500.pdf?abstractid=335180.
Next 2 weeks will see multiple hearings on Capitol Hill related to copyright and CE issues, despite impending end of 107th Congress. It will shut down no later than 3 weeks from now, possibly to return for lame-duck session after Nov. elections, but perhaps not in any concrete way until Jan. if long-term continuing resolution is passed. That isn’t stopping lawmakers from holding hearings on bills they want to promote, although in almost every case their push won’t have any payoff until next Congress. As many as 4 hearings in next few weeks will deal with digital rights management (DRM), including online peer-to-peer (P2P) file-sharing, DTV copy protection.
DirecTV filed suit against 2 NDS subsidiaries in U.S. Dist. Court, L.A., for alleged misappropriation of trade secrets, breach of contract, fraud and statutory violations relating to provision of conditional access services to DirecTV, NDS said. Suit seeks unspecified damages and injunctive relief. Allegations are similar and related to complaint in earlier DirecTV action against NDS in case that was dismissed in Feb. NDS said allegations were without merit and were pretext designed to enable DirecTV to circumvent restrictions on DirecTV’s future use of NDS’ intellectual property.
AT&T and Comcast announced Tues. that key deadline had passed on their proposed cable merger without action by Justice Dept., indicating deal had won Justice approval by default, but DoJ officials said companies should hold off on celebrating. Agency still could step in at any time until investigation was officially completed, they said. They said they hoped that would be soon, but until then, and until FCC approved merger, transaction couldn’t go forward.
Gearing up for new round of retransmission consent talks, to begin Oct. 1, small cable operators say they're ready to take on broadcast networks at FCC and in Congress. American Cable Assn. (ACA), in FCC filing that’s still in draft form, is asking Commission to initiate either inquiry or rulemaking investigating tactics major broadcast networks have used in securing retransmission consent from small cable operators in each of last 3 rounds of retransmission consent talks, in 1999, 1996 and 1993. ACA board also is drafting proposed legislation to address retransmission consent and other issues small operators believe are driving up monthly cable bills and giving consumers fewer viewing choices. ACA has been in touch with Sen. McCain (R-Ariz.) and others in House and Senate about those issues and believes legislation will be introduced this year, officials said.
European Union (EU) conditionally waived 44.6% antidumping duty on TV sets from 7 Chinese manufacturers, giving them shot at tackling European market. EU and set makers, which had been wrangling ever since EU slapped punitive import tariff on China- made TVs in 1991, agreed to drop duty with quota, provided that minimum price level wasn’t violated. If any of 7 companies -- Haier Electrical Appliances, Hisense Import & Export Co., Konka, Sichuan Changhong Electric, Skyworth Multimedia, TCL King Electrical Appliances and Xiamen Overseas -- breaks price pact, duty will be reinstalled.
Konami has become target of lawsuit by Japan Professional Baseball Players Assn. (JPBA) that charges game maker infringed on copyrights by using images of ballplayers in its games. JPBA, which represents players on Japan’s 12 pro baseball teams, also filed suit against Nippon Professional Baseball (NPB), association of pro baseball teams that has exclusive contract with Konami. Suit is attempt to stop Konami from selling its software in Jikkyo Powerful Pro Baseball series and products including Baseball Pro Yakyu Japan 2001 and Power Prokun Pocket for consoles, Kyodo News Service report said. JPBA also wants Konami and NPB to admit they have no authority to approve use of names of baseball teams and players in April 2000-March 2003 period. Report said JPBA claimed NPB had signed contract in 1999 with Konami for that period -- without prior consultation with JPBA -- giving game maker exclusive rights that prevent other game makers from developing baseball titles. JPBA said rights to images belonged to individual baseball players and it wanted Konami and NPB to start sublicensing Konami’s rights to competing game makers, report said, adding that JPBA said it had yet to receive reply from Konami or NPB. Konami comment was unavailable at our Tues. deadline, but report said game maker indicated it couldn’t comment because it had yet to see suit, although it hoped issue would be resolved quickly by JPBA and NPB. Latter disputed JPBA’s claims, saying it had right to control and use image rights of baseball players because rights had value only because of baseball games held by NPB and other organizations. Case is similar to one involving Sony Computer Entertainment (SCE) in Netherlands (CED Aug 12 p6). SCE was accused of infringing on trademarks of 3 top Dutch pro soccer clubs in game This Is Football 2002. Reuters said shares in Konami tumbled 4.72% to ?2,925 after suit was filed Mon. Its shares had been up for 5 straight trading sessions and hit 3-month high earlier that day. Merrill Lynch analyst Ken Uryu said game maker had no plan to halt selling games in question and he didn’t expect there would be negative impact on Konami’s earnings for current fiscal year, Reuters reported. But report said Uryu wrote note to clients telling them: “The question is whether Konami’s results for the fiscal year to March 2004 onwards will be affected when it will be necessary to update the contract” it now has for baseball games. Konami has been selling 1.4-1.6 million copies of baseball-related games annually for last few years, he said.
FCC should minimize regulation of orbital debris, many in satellite industry say. Led by Satellite Industry Assn., operators generally said Commission shouldn’t establish new rules to mitigate orbital debris. FCC decision to begin proceeding for new rules governing space debris is “unnecessary regulation” because satellite industry has “commercial self-interest to regulate itself,” SES Americom attorney Phil Spector told us: “There has never been a problem.” He said satellite operators “believe it’s overreaction to widely publicized problems of Iridium.”
Battle for control of Gemstar TV Guide International between major shareholder News Corp. and CEO Henry Yuen appears to be nearing climax as joint proposal is submitted to board to restructure management. Gemstar didn’t provide details of restructuring, which was announced late Wed. night, and company officials weren’t available for comment. But people familiar with talks told Wall St. Journal (WSJ) that Yuen, who founded Gemstar and guided it to merger with TV Guide 2 years ago, would become nonexecutive chairman.
Iowa Utilities Board (IUB) called for comments on 30 unfiled Qwest-CLEC agreements that Qwest recently filed after agency tentatively concluded Qwest had violated federal Telecom Act by failing to file them when they were made. Agreements will be posted on IUB’s Web site today (Aug. 9), except for any parts that parties contend are confidential trade secrets. Qwest (Case FCU-02-2 ) split unfiled agreements into 2 groups. First group of 11 unfiled agreements would constitute interconnection agreements under IUB rules. Comments on that group are due Aug. 23. Second group of 19 unfiled agreements would be something other than full interconnection agreement. Comments on that group are due Aug. 19. Case grew out of AT&T complaint in Feb. alleging Qwest had made secret preferential deals with selected CLECs in return for their dropping their opposition to Qwest long distance entry and other regulatory initiatives. IUB initially examined 3 unfiled agreements and concluded all should have been filed. Qwest said it filed latest agreements in interests of full disclosure so case could be settled promptly.