NEW ORLEANS -- AOL Time Warner CEO-Designate Richard Parsons predicted problems at company’s struggling online half, AOL, would abate in latter half of this year as ad dollars began to bounce back. “We still have faith,” he said at NCTA convention here Mon. He predicted that merger of AOL and TW ultimately would be seen by Wall St. as “greater than the sum of its parts.” He denied company was considering splitting off AOL, although he admitted that he and other company executives had to “answer some serious questions about AOL.” He also conceded that at time of merger, executives might have set unrealistic expectations for what deal would produce. “We're probably being justifiably punished for being too exuberant,” Parsons said, referring to AOL TW’s battered stock price.
Covad said it would “vigorously appeal” decision Fri. by U.S. Dist. Court, D.C., dismissing its antitrust suit against Verizon. Court based dismissal on Goldwasser v. Ameritech precedent set when 7th U.S. Appeals Court, Chicago, ruled that violations of Telecom Act generally couldn’t be considered in antitrust proceedings. Covad Gen. Counsel Dhruv Khanna said ruling by U.S. Dist. Judge Gladys Kessler was “erroneously… based on the Goldwasser Decision.” Goldwasser decision, issued in 2000, has put damper on several CLEC efforts to take antitrust action against Bells. In complaint filed 3 years ago, Covad had complained that Verizon denied it access to local phone network in several ways, such as refusing to provide colocation space, denying access to local loops and transport facilities, refusing to maintain adequate operations support systems. Judge concluded that those charges involved Telecom Act and thus couldn’t be considered as antitrust claims. Telecom Act contains duties that “extend beyond the requirements of antitrust law,” Kessler said, and “the plain language of the 1996 Act precludes creation of antitrust claims” for duties created under Telecom Act. Kessler said she read Telecom Act as stating that: “Conduct that was proscribed prior to the 1996 Act remains proscribed after its enactment [but] conduct that did not violate antitrust law prior to the 1996 Act does not now violate antitrust law after the Act. There is nearly unanimous consensus that the 1996 Act imposes affirmative duties of assistance that require far more than the existing antitrust laws now require. If Congress intended antitrust liability and remedies to attach to violations of the specific and affirmative duties set forth in the 1996 Act, it certainly knew how to make its intention known by including provisions to that effect in the 1996 Act.” Judge didn’t accept Covad’s argument that antitrust laws were applicable because Verizon’s denial of access amounted to denial of “essential facility” by monopolist in violation of antitrust law. “Covad’s allegations fail to state an essential facility claim [because they] focus on disputes over the terms for obtaining access to [Verizon’s] network -- an entitlement that was first created by the 1996 Act, not by the antitrust laws,” Kessler said. Those terms are regulated by FCC and states so “there can be no significant harm to competition or anticompetitive effect as a matter of antitrust law,” she said. Kessler said that subjecting those issues to judicial oversight could “interfere with the ability of state regulatory agencies and the FCC to carry out their regulatory missions and could subject ILECs to inconsistent standards of conduct.”
APTS said it reached agreement in principle with Insight Communications for carriage of DTV programs of PTV stations. Under agreement, 31 PTV stations are eligible for carriage in Insight markets. Insight is 2nd MSO to conclude digital carriage deal with public broadcasters, following Time Warner. Accord provides for carriage of more than one PTV station in market under certain circumstances and inclusion of HDTV and multicast programming , as well as for carriage through transition to digital from analog. “Insight has truly embraced the spirit of [FCC] Chairman Powell’s call to cable operators to voluntarily carry broadcasters’ value- added digital program services,” APTS Pres. John Lawson said.
Cingular Wireless cited continued uncertainty over NextWave re-auction as among reasons that FCC should delay 700 MHz auctions now set for June 19. In comments filed late Fri., Cingular said some re-banding plans to alleviate interference at 800 MHz involved relocating public safety operators to 700 MHz, so Commission shouldn’t foreclose that possibility by holding Ch. 52-59 and 60-69 auctions now. Comments of Cingular and others at FCC come as several spectrum proceedings are intersecting. Commission is expected to issue decision as early as today (Tues.) on timing of 700 MHz auction. Floor vote also is scheduled in House today on bill by Commerce Committee Chmn. Tauzin (R- La.) that would compel FCC to postpone auctions. Short forms, in which companies first formally notify agency they plan to participate in auction, are due Wed. Meanwhile, FCC is receiving comments on 700 MHz re-banding proposals for notice of proposed rulemaking (NPRM) that closed Mon. (see separate story, this issue). Cingular emphasized continued uncertainties over NextWave re-auction. FCC is appealing U.S. Appeals Court, D.C., ruling last year that overturned Commission decision to cancel NextWave licenses for missed payment. Ruling led to FCC’s returning licenses that had produced nearly $16 billion in bids at re-auction. “Despite the fact that the auction concluded more than one year ago, the spectrum has been tied up in litigation that, as the result of the Supreme Court’s recent decision to grant certiorari in the matter, may now continue for several years,” Cingular said. Incumbent analog broadcasters, which don’t have to move until completion of DTV transition in 2006 or later, also create uncertainties over 700 MHz spectrum that warrant delay, Cingular argued. It said FCC had “rejected imposing mandatory relocation requirements” for those broadcasters. Cook Inlet Region Inc. (CIRI) also supported CTIA petition for full Commission to review bureau decision to keep June 19 auction date: “The Wireless Bureau’s decision to proceed with the auctions, despite the fact that policies and procedures have not been established with respect to incumbent users, will actually impede the development of existing spectrum-based services and the deployment of new technologies in the 700 MHz band.” As expected, Paxson Communications urged FCC to reject CTIA’s application for review. Paxson said CTIA “presents the Commission with a simple choice: Follow the law or ignore it in favor of speculative legislative and regulatory proposals created as part of a massive last-minute lobbying campaign by the large wireless services providers who are the only parties that stand to gain from delay.” In lengthy comments, Paxson said FCC already had missed Sept. 30, 2000, statutory deadline for auctioning Ch. 60-69. If Sept. 30, 2002, deadline for depositing proceeds in U.S. Treasury from Ch. 52-59 auction were missed, that would “constitute a second and continuing violation of 2 controlling statutory provisions,” company said. “It is time that the Commission step up to its obligations under this statute and enforce the law. As an instrument of Congress, the Commission is required to enforce existing statutes, not positions contained in congressional letters, not arguments of lobbyists hired by the wireless industry.”
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.
Tucked into broadband bill (S-2448) introduced late Thurs. by Senate Commerce Committee Hollings (D-S.C.) is provision aimed at preserving CLEC access to remote terminals and central offices (COs), point of contention among ILECs and CLECs. HR-1542 by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.) would remove interconnection obligations on principle that if Bells invested in DSL equipment they shouldn’t have to open it to competitors. But Hollings’ proposed Broadband Telecom Act of 2002 would offer $500 million in loans in 2003-2007 to upgrade remote terminals and fiber between remote terminals and COs. However, those funds would be available only if the FCC maintained CLEC access to remote terminals. Loans would be part of multibillion-dollar spending package for broadband to rural and underserved areas that would be funded by revenues from telephone excise tax. Bill is co-sponsored by Sens. Clinton (D-N.Y.), Dorgan (D-S.D.), Inouye (D-Hawaii), Rockefeller (D-W.Va.), Stevens (R-Alaska).
Media Institute has asked FCC to put new concept -- “format diversity” -- at top of its criteria in adopting any new radio ownership rules. In reply comments in rulemaking, Institute said agency’s “concept of diversity is in need of substantial readjustment given the nature of today’s media in general, and today’s radio industry in particular.” Under existing competitive situation, format criteria in deciding diversity should take precedent over those currently used -- viewpoint, outlet and source, Institute said. Continued use of “viewpoint diversity runs squarely into 2 problems,” it said, because it’s “extremely difficult to measure directly and it is not particularly relevant to today’s radio content.” Format diversity is better measure because large group that owns several stations in given market takes steps to diversify the content of those outlets “and does not or will not program those stations to compete with one another,” Institute said. No new diversity rules are needed, it told FCC, because format diversity among radio stations “is plentiful at the present time” and is result of marketplace forces, not regulation.
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.
Sens. Ensign (R-Nev.) and Kerry (D-Mass.) introduced bill that would delay 700 MHz auctions from scheduled date of June 19. Bill reflected text of HR-4560, which House Commerce Committee marked up Thurs. and which is scheduled for House floor vote Tues. Ensign-Kerry bill, unveiled late Thurs., came as Sen. Stevens (R-Alaska) continued to press for countervailing legislation that would compel FCC to hold auctions for upper and lower 700 MHz bands on time. Meanwhile, source said Stevens was hosting meeting in his office Tues. with NextWave re-auction winners to discuss possibility of settlement. His office declined to comment on talks, which were said to be exploratory in nature.
Coalition of Competitive Fiber Providers (CCFP) fine- tuned its March 2001 request to FCC for access to ILEC central offices, requesting entry at point that might be more acceptable to ILECs because it wasn’t very far inside central offices. In May 1 letter, CCFP asked Commission for determination that CCFP companies could terminate their fiber in fiber distribution frame (FDF) in central office vault. Vault is first area of central office that accepts cabling from street, which would avoid more intrusive occupation of ILEC property. CCFP said that area also constituted duct and conduit, which it contended its providers had access to under Sec. 224 of Telecom Act. CCFP complained last year that ILECs were refusing to provide its members with access to central office so they could serve CLECs colocated there. At time, CCFP didn’t specify access point. Coalition is composed of American Fiber Systems, City Signal Networks, Fiber Technologies, El Paso Global Networks, Telseon Carrier Services.