Verizon outlined series of interim funding and “credit enhancements” for Genuity Thurs. that total $2 billion. Verizon said financing agreements were in line with FCC order approving Bell Atlantic-GTE merger last June. Verizon bolstered its credit agreement with Genuity, increasing principal amount that Genuity may borrow to $900 million from $500 million. It also extended to Dec. 31 maturity date of all borrowing under credit pact, from original date of May 31. It’s furnishing Genuity with credit enhancements that will provide access to long-term capital sources with maturities of up to 5 years. In joint statement, Verizon co- CEOs Charles Lee and Ivan Seidenberg said recent FCC approval of company’s application to sell long distance in Mass. moved company “one step closer to clearing the necessary regulatory hurdles that will allow us to bring Genuity back into the Verizon family.” They said: “Genuity is facing the same challenges that many other companies are experiencing due to the economic slowdown and this support gives it additional financial stability to strengthen its ability to grow and compete.” Genuity also reported first-quarter results, disclosing plans to trim its work force 12% (more than 600 employees. Chmn.-CEO Paul Gudonis said company hit its revenue and earnings targets. But he said: “We have seen enterprise customers extend the time to make buying decisions as they justify the return on investment associated with their IT spending plans. This has resulted in slower new order growth in the current period.” Genuity said revenue was up 20.8% in first quarter to $299.5 million but net loss deepened 39% to $291.3 million. Domestic revenue from AOL dropped 20% from year-ago period and was flat with 4th quarter of last year. Genuity attributed trend to contractual price reductions reached late in 1999 that took effect Sept. 1. It said total AOL revenue now made up 32% of its total, down from 46% year ago.
As expected, FCC at agenda meeting May 10 will consider reforming universal service system for rural carriers. Commission will vote on whether to accept plan proposed by Rural Task Force (CD May 3 p7). It also will consider 2 other items: (1) Notice of Proposed Rulemaking to determine whether rule barring cross- ownership of newspapers and TV should be eliminated or modified. FCC Comr. Furchtgott-Roth told reporters at media breakfast Thurs. that he had “great skepticism about the value of cross-ownership rules, particularly those not statutorily based, and newspaper cross-ownership is not statutorily based.” (2) Proposal to remove “unnecessary regulatory barriers to the introduction of new wireless devices using spread spectrum and other digital technologies.” As part of that item, FCC will review staff’s denial of application for equipment certification filed by Wi-LAN.
Some wireless technology developers are recommending FCC set aside 5 GHz of spectrum or more when Commission finalizes proposal for service rules for spectrum at 92 GHz. Expectation is that as early as this fall FCC will launch rulemaking, although industry already has been bouncing ideas off Commission for what developers would like to see in that spectrum. On issue whether band should be made available on unlicensed basis or via licenses, panel organized by Wireless Communications Assn. (WCA) has floated idea of hybrid approach that would license some segments and allow others to be unlicensed at more restricted power levels, said Donny Burt, vp-advanced technology, e-xpedient/CAVU. Among “last mile” technologies that can be offered in that band, developers said, are gigabit ethernet-based systems that can connect buildings and extend metropolitan area networks.
TV affiliates aren’t seeking FCC enforcement action against networks, Network Affiliated Stations Alliance (NASA) said in letter to FCC Chmn. Powell. As result, it said, NASA petition (CD March 9 p2) shouldn’t be treated as restricted proceeding because that would “deprive members of the public of the opportunity to comment” on it. “NASA did not seek to pursue… complaints against the networks or seek forfeitures,” NASA lawyers said. “Its goal was, and remains, a stronger, fairer, healthier network/affiliate relationship.” Affiliates want FCC to rule on questions such as whether terminating affiliate status upon station sale or requiring carriage of network programming violate FCC rules, they said. Letter said “procedural formalities” of enforcement process weren’t needed and “would inject a punitive element.”
Qwest is providing in-region interLATA services in violation of Sec. 271 of Telecom Act, AT&T charged in May 1 letter to FCC. AT&T said information was apparent in auditor’s report that Qwest filed under conditions of Qwest-U S West merger: “The auditor’s report finds that in-region private line services for 266 customers were billed and branded as Qwest services” with revenue in excess of $2.2 million for 8 months. AT&T said Qwest’s defense -- that it didn’t transport that traffic itself -- wasn’t sufficient because FCC had held that offering 3rd party long distance service under Bell company brand was considered part of prohibited provision of service. AT&T also complained that report was “incomplete” because certain contracts weren’t made available to auditors, including Qwest’s teaming agreements with other carriers to provide long distance service to federal agencies. Qwest has acknowledged it offers long distance services to federal agencies in conjunction with Touch America, AT&T said. “Although these contracts raise obvious and significant Section 271 concerns, there is no mention of them in the auditor’s report.” FCC should “act promptly to impose appropriate sanctions on Qwest,” AT&T said. Letter went to Dorothy Attwood, chief of Common Carrier Bureau, and David Solomon, chief of Enforcement Bureau.
Bill for tenfold increase in penalties FCC can levy was to be introduced as soon as last night by House Telecom Subcommittee Chmn. Upton (R-Mich.), his spokesman told us. Upton offered similar measure as amendment to Bell company data deregulation bill (HR-1542), but withdrew it. At Subcommittee markup of HR- 1542, other members told Upton his idea would be popular and he should consider introducing it on its own, rather than as part of controversial larger bill. Amendment would have increased FCC’s fine limit to $1 million per violation from $100,000, capped at $10 million, up from $1 million. It also would have doubled those fines for repeat offenders and given FCC additional cease-and- desist authority.
FCC is attempting to decide spectrum-sharing plan for nongeostationary satellite orbit (NGSO) and fixed satellite service (FSS) and to determine intraservice rules for new services. Commission in notice of proposed rulemaking Thurs. said new rules were expected to promote competition between existing satellite and terrestrial services through opportunities for new entrants, quicker licensing process, incentives for faster rollout of services using state-of-the-art technology. As expected (CD May 3 p3), FCC said it would license all 5 companies with NGSO FSS applications -- Boeing, Denali, Hughes, Skybridge, Teledesic and Virtual GEO -- to provide high-speed Internet, online access, data, video and telephony services in Ku-band. Hughes has filed 2 applications for licenses and spectrum. Comments are due by June 18, reply comments July 19.
FCC should reconsider its tentative decision that cable doesn’t have to carry all channels multicast by DTV station, 15 members of Congress said in letter to Commission. Letter said must-carry decision would have disproportionate impact on Hispanic and smaller stations not affiliated with major networks: “These emerging network and independent broadcasters are vital to the diversity of programming and digital television.” Letter also said Congress “may need additional time to fully contemplate the intent of the statute and consider input from the broadcast television and cable industries.” It was signed by Reps. Baca (D- Cal.), Brown (D-Fla.), Deutsch (D-Fla.), Foley (R-Fla.), Frost (D- Tex.), Hilliard (D-Ala.), Hutchinson (R-Ark.), Meek (D-Fla.), Ortiz (D-Tex.), Reyes (D-Tex.), Ros-Lehtinen (R-Fla.), Serrano (D- N.Y.), Shaw (R-Fla.), Stearns (R-Fla.), Wexler (D-Fla.).
FCC Mass Media Bureau’s controversial policy of “flagging” or deliberately delaying action on some license transfer applications still is going on under Chmn. Powell, FCC Comr. Furchtgott-Roth told reporters Thurs. Practice, which surfaced under then-Chmn. William Kennard, involved holding back certain transfers, often related to mergers or acquisitions, because they would result in increased market concentration. Furchtgott-Roth has been critical of flagging in past, saying it gives bureau too much power that should be exercised by full Commission. He told reporters Thurs. that bureau personnel confirmed they still were flagging transfers. “It may not be illegal but it definitely isn’t right,” he said, because it treats some applications differently from others. There are thousands of license transfers and most are treated quickly and routinely, Furchtgott-Roth said. However, in previous administration, some were held up for months, he said. They would be put out for public comment but then not acted upon. When asked whether bureau was doing this under orders from Powell, Furchtgott-Roth said such action had to involve “tacit approval by someone higher up.” Furchtgott-Roth also said: (1) He expects Congress to approve new FCC commissioners by Memorial Day or, at latest, before July 4th recess. He plans to leave to join think tank as soon as new commissioners take their seats. He hasn’t said which think tank. (2) Proposal for FCC action on News Corp.- Chris-Craft merger is expected to be circulated on 8th floor next week. Commissioners haven’t voted on issue yet.
FCC released further modifications in existing narrowband PCS rules. Under order adopted April 19, FCC will: (1) Channelize and license 1 MHz of narrowband PCS spectrum that has been held in reserve. (2) Rechannelize 712.5 kHz of previously channelized spectrum for which licenses haven’t been auctioned. (3) Adopt narrowband PCS channel band plan that includes both nationwide and Major Trading Area (MTA) licenses. FCC said new rules resolve remaining issues in preparation for auctioning licenses for remaining narrowband PCS spectrum in near future. Commission in 1993 allocated 3 MHz spectrum for narrowband PCS with only 2 MHz divided into specific channels and made available for licensing. Commission said licensing 1 MHz reserve spectrum would serve public interest “by facilitating competition, opening market to new entrants and allowing existing narrowband PCS licensees to expand their systems through access to additional spectrum.” Reserve spectrum also will help narrowband PCS licensees remain competitive with other CMRS providers, FCC said.