NextWave informed U.S. Bankruptcy Court, White Plains, N.Y., Thurs. that settlement agreement of carrier’s PCS licenses had been reached and that “the documents are being finalized,” NextWave Deputy Gen. Counsel Michael Wack said. Carrier told U.S. Bankruptcy Judge Adlai Hardin in hearing that “the private parties [to agreement] may be able to sign those documents today.” Wack said necessary govt. signatures “may take a few days longer.” Bankruptcy judge also set Dec. 28 as date for hearing on motion to submit settlement agreement for court’s approval. NextWave is expected to file reorganization plan with court in Jan. Final approval by bankruptcy court is one of requirements of settlement agreement by FCC, Justice Dept., White House Office of Management & Budget, NextWave and more than dozen participants in Jan. re-auction of NextWave’s wireless licenses. Among recent changes in final rounds of negotiations is promissory note that U.S. govt. will provide to NextWave to provide extra layer of assurance that it will be paid, as long as all other aspects of settlement agreement are in place. Govt. still will be paid more than $10 billion before NextWave receives nearly $6.5 billion, which would be offset by remaining federal and state tax obligations. (Full payment to NextWave is $9.55 billion, but govt. would immediately withhold $3.05 billion as advance tax payment). According to copy of settlement agreement dated Nov. 6 obtained by Communications Daily, NextWave would agree to submit copy of settlement agreement to bankruptcy court within 15 days for approval. (Several sources have said vast majority of details agreed to late Nov. 6 have remained unchanged this week, although govt. was scheduled to put final signatures on document late Thurs.). Settlement agreement draft lays out terms under which govt. would make payment to NextWave on promissory note: (1) On 3rd business day after U.S. has received aggregate cash proceeds equal to or greater than $9.55 billion by reauction winners participating in settlement. (2) On Dec. 31, 2002. After promissory note is paid, NextWave would pay Verizon Wireless $118.1 million as long as Verizon has issued letter of credit to govt., which provides extra layer of guarantee that govt. will be paid. NextWave also would pay Alaska Native Wireless (ANW), designated entity in which AT&T Wireless has stake, $25 million under same terms. ANW and Verizon have agreed to furnish letters of credit to govt.
FCC voted 3-1 at Thurs. meeting to repeal wireless spectrum cap Jan. 1, 2003, and raise it to 55 MHz in all markets during transition period. Comr. Copps delivered impassioned dissent, arguing that “in almost every market in the country, companies have not reached the cap.” Both Bush Administration and CTIA had urged Commission not to implement transition period but to remove restrictions immediately. But FCC said “orderly” transition is needed to allow it to consider what guidelines are required to move from bright- line approach of cap to case-by-case review of wireless license transfers. To assure FCC that Justice Dept. will continue to review such mergers for anticompetitive behavior on case-by-case basis, Asst. Attorney Gen. for Antitrust Charles James wrote to Chmn. Powell Wed.: “The department will continue to safeguard competition through its enforcement activities in the industry and does not believe removal of the spectrum cap rules will diminish its ability to do so.” FCC also eliminated cellular cross-interest rule in urban markets, but kept restriction in place for rural service areas. Spectrum cap has been 45 MHz, except in rural areas, where FCC raised it to 55 MHz in 1999. Interim period raises it to 55 MHz everywhere.
FCC adopted new procedures Thurs. aimed at streamlining review of undersea cable landing applications and eliminating “regulatory red tape.” New procedures are expected to decrease costs to consumers because international telephone companies will face faster, less burdensome approvals. International Bureau said it improved process in several ways: (1) Applicants with no affiliation with carrier that had market power in any of cable’s destination points were eligible for streamlining. In addition, applicant affiliated with market power carrier in World Trade Organization destination market would be eligible if it accepted competitive safeguards. Safeguards include such things as filing quarterly provisioning and maintenance reports. Eligible applications will be acted upon in 45 days. (2) Entities with less than 5% interest in cable don’t have to be licensed, thus eliminating regulatory burden for smaller carriers, Bureau officials said. (3) FCC, to speed licensing, will grant applications by public notice instead of written order in most cases. AT&T said new processes would eliminate regulatory delay and cost and replace “ad hoc, lengthy review” of license applications. “The regulatory certainty and reduced costs… should attract increased cable entry and competition, thereby reducing [customer] prices, improving quality, expanding services and enhancing the ability of U.S. carriers to compete globally.”
FCC Thurs. proposed set of 12 performance measurements to judge how well ILECs are providing unbundled network elements (UNEs) to competitors. Notice of Proposed Rulemaking (NPRM) asks if those 12 are best or whether there are others that should be included. It also asks how national metrics system could be coordinated with state measurement systems. Some observers expect state PUCs to view national rules as floor, giving them option of doing more if they want or sticking to core federal metrics. FCC said plan could lessen ILECs’ burdens by reducing number of metrics they must report if states decide to follow national rules. Many states have far more than 12 measurements and ILECs often face divergent sets of standards set by various states in their regions. FCC staff member said agency’s plan was to develop “small number of metrics that go to the core duty” of ILECs.
House Tues. night approved conference report (H. Rept. 107-272) on HR-2620, FY 2002 appropriations bill for Depts. of Veterans Affairs and Housing & Urban Development and independent agencies. Report contained following communications and broadcast-related provisions: (1) $1,500,000 for flight communications technology at U. of Conn. (2) $200,000 to State U. of N.Y. Colleges of Technology to develop Telecom Center for Education. (3) $125,000 to WXXI Public Broadcasting Council in Rochester, N.Y., for building renovations “to meet health, safety and occupational requirements, as well as to meet FCC mandated digital broadcasting standards.” (4) $100,000 to Woonsocket, R.I., Fire Dept. for communications fire safety equipment and technology upgrades. (5) $90,000 to Wyoming County, N.Y., to replace public safety communications tower and related hardware and computer systems. (6) $25,000 to Clinton County, N.Y., Office of Emergency Services for communications infrastructure improvements, specifically for county services in Lyon Mountain and Ausable Forks regions.
FCC Cable Bureau will take novel approach in analyzing cable ownership rules, using experimental economic model to try to predict how cable operators and programmers would behave if ownership rules changed, Bureau Chief Ken Ferree said Wed. in press briefing at bureau. He said he and other Commission staff members still were “hammering” industry and public interest groups to produce data and analysis, but FCC staff members also would produce their own independent research examining cable horizontal and vertical ownership limits to supplement effort. Ferree said staff was “suspending judgment” on whether experimental economics would produce results, but said new “cutting edge” economic models had proved to be “very good science.” “Rather than sit around and theorize about what would happen in certain circumstances, you can model them and play out these experiments and see what would actually happen with different variables and varying conditions,” Ferree said. FCC staffer Paul Gallant said model was “widely accepted” among economists and outside experts were expected to be called in to aid effort.
EchoStar is confident merger with DirecTV will pass regulatory muster, CEO Charles Ergen told reporters Wed., and he expects Commission and Dept. of Justice (DoJ), which will handle antitrust review, to analyze facts thoroughly before making decision (CD Oct 30 p1). He praised action by FCC Chmn. Powell to set up committee to examine regulatory issues (CD Nov 2 p4): “The Commission is doing the right thing to look at the deal and give it a lot of scrutiny. There is a difference” between facts and “the spin people who lost out on this deal are putting on this deal.”
American ISP Assn. (AISPA) praised FCC Enforcement Bureau for fining SBC $100,000 for not submitting sworn statement sought by bureau in inquiry on DSL provision (CD Nov 5 p5). In letter to Bureau Chief David Solomon, AISPA said it’s “encouraged by this very public demonstration by the Enforcement Bureau that it will not tolerate misrepresentations” that hinder bureau’s work in SBC case. AISPA said Qwest “engaged in a similar misrepresentation” that bureau should investigate as AISPA requested last year.
Dept. of Justice said its concerns about BellSouth (BS) Sec. 271 application for Ga. and La. (CD Nov 7 p6) centered primarily on quality of operator support services (OSS) for unbundled network element platforms (UNE-P) and DSL loops. DoJ said in evaluation issued late Tues. that it had “no substantial concerns” about ability of facilities-based and resale providers to enter BellSouth’s local markets in those states. It also didn’t “foreclose” possibility that BS could convince FCC that those concerns had been addressed during Commission’s review period. Justice said BellSouth was expecting improvements to occur as it and PSCs in La. and Ga. gained experience with new processes and data reporting systems. DoJ said its concerns about OSS operations fell into 4 areas: (1) BellSouth’s use of manual, rather than electronic, processing for many orders. “Orders that are manually processed are more likely to be provisioned incorrectly” and to slow CLEC response to customer inquiries, DoJ said. (2) Inability of CLECs to order UNE-P service by simply submitting customer’s address. “When CLECs cannot place UNE-platform orders by simply referencing the customer’s telephone number, more orders are rejected by BellSouth,” Justice said. (3) Too-frequent outages in electronic interfaces for preordering and ordering, hindering CLECs from submitting orders for new customers. DoJ said BellSouth reported no down time for interfaces in June-Aug. even though Birch Telecom said one interface was “so severely degraded” for several days in Aug. that it could place only fraction of orders it usually submitted. (4) Lack of “stable environment” for CLECs to test whether their software interfaces interacted correctly with BellSouth’s. In addition to OSS issues, DoJ cited concern about reliability of BellSouth’s performance data. It said data integrity also had been concern in 2 earlier BS applications for La. and PSCs in both La. and Ga. developed what they believed were better measures. However, those measurements are new and some problems have arisen, Justice said, “which is not surprising given the magnitude of the endeavor and the brief period within which BellSouth has sought to complete it.” BS described DoJ evaluation as “encouraging news” because “we believe our application provides documentation that addresses [DoJ’s] concerns and we will work with the FCC staff to point out these facts” in reply comments to be filed with FCC Nov. 13. Covad said it was glad DoJ pointed out OSS and performance data flaws because it had been advocating that FCC reject BellSouth application based on those same issues.
FCC should require cable operators to stop blocking fully functional navigation devices for DTV, CEA said in semiannual report on cable-DTV compatibility. Nov. 6 report, following report by NCTA that was filed by Oct. 31 deadline (CD Nov 1 p7), drew heated response from NCTA. CEA said lack of agreement on DTV-cable compatibility “not only suffocates the market” for DTV cable set-tops, but “also stalls the crucial transitional market for DTV receivers.”