Verizon Wireless emphasized to FCC why it thought Commission should postpone granting licenses won in $17 billion Jan. PCS auction, with carrier laying out alternative payment proposal if agency decided to ignore its advice. Verizon has been asking Commission to consider deferring grant of C-block licenses until U.S. Court of Appeals, D.C., makes decision in NextWave case. Most licenses up for bid in auction had been reclaimed from NextWave after FCC cancelled its licenses for nonpayment. Verizon Wireless won largest single block of licenses in auction, purchasing nearly $8.8 billion (CD Jan 29 p1). Last month, NextWave also asked FCC to delay spectrum awards until D.C. Circuit issued opinion (CD March 13 p4). “Requiring payment now would be premature because the money would have to be held in reserve for possible return to the high bidders,” Verizon wrote in supplemental comments filed with Commission this week. “It would create significant problems without any countervailing benefits.” Verizon said that in past auctions, bidders were able to make final payments and immediately start building out spectrum. “Here, however, some bidders may determine that it is financially imprudent to invest still more funds until the cloud on the licenses they won are removed,” carrier said. “Lenders who are already committed to fund a bidder’s payment may balk at supplying still more funding without any certainty that they are secured by unconditioned licenses.” Verizon also argued that “litigation uncertainties” could increase borrowing costs. Without clear signal from FCC on repayment date, auction participants could have to secure financing arrangements that were more expensive or impose breakage costs for early repayment. If Commission decides to move ahead on granting licenses, Verizon proposed plan that would allow high bidders to either pay for NextWave spectrum immediately or defer payment but agree to pay interest on final payments. Under proposal, applicants would have to make final payments for all licenses that weren’t tied up in NextWave litigation within 10 days of public notice granting licenses. Applicants that won NextWave licenses could also make entire final payment within 10 business days or wait until 10 days after D.C. Circuit issued decision affirming cancellation of licenses. In latter case, applicants would be required to pay interest. NextWave spokesman said: “Verizon is absolutely right to say that requiring companies to pay billions of dollars for those contested licenses before the court rules is contrary to the public interest and violates basic, common sense.”
Cal. resident Derek Law filed rare individual petition with FCC Wed. to oppose proposed Northpoint service in 12.2-12.7 GHz spectrum. Law said he owned 3 satellite dishes set up at various locations on his property. Relocation, if interference occurred, would be “large problem” because of cost and lack of alternate locations at house with clear line of sight to satellites.
Telecom Industry Assn. (TIA) Pres. Matthew Flanigan recommended to FCC Chmn. Powell that agency change processes for developing technical requirements and granting equipment approval. Flanigan said recommendations were made April 24 in context of Commission’s biennial review: “TIA believes the FCC’s processes for developing technical requirements and authorizing equipment drain the resources of both the FCC and industry… The inherent inefficiencies in the current FCC procedures for equipment approval lead to time-to-market delays for new products that have consequences for consumers’ access to the latest technology and industry’s ability to compete in a global market.” TIA recommended that FCC: (1) Leave development of detailed technical requirements for products to private sector. Group cited recent change allowing industry to maintain Part 68 rules and said similar step should be taken for radio frequency products and equipment. (2) No longer be only mechanism for approval of products. “The current process of equipment authorization does not meet industry demands in a timely manner,” resulting in delays that cost industry revenue. (3) Expand authority of telecom certification bodies to provide complete and final approval of products, rather than having to send some applications to FCC lab for completion. (4) Allow supplier’s declaration of conformity as alternative means to demonstrate compliance with technical regulatory requirements. (5) Review its system of postmarket surveillance and enforce compliance with its rules. “The above recommendations will reduce costs for both industry and government and will bring the FCC rules in line with trends in global systems for the approval of telecommunications products,” Flanigan wrote.
Bill to deregulate Bell company provision of data services (HR-1542) seemed primed to move at this morning’s House Telecom Subcommittee, both sides of issue agreed following contentious, all-day Commerce Committee hearing that didn’t end until 5 p.m. Several changes were in works at our deadline, apparently pacifying some wavering members but not of sufficient magnitude to bring on hard-core opponents or dissuade bill’s backers.
FCC unanimously approved Deutsche Telekom’s (DT) merger with VoiceStream and Powertel, imposing no special conditions on $34 billion deal and provoking renewed commitment from Sen. Hollings (D-S.C.) to seek restrictions on foreign govt. ownership in U.S. telecom companies. FCC adopted order 4-0, with Comr. Furchtgott- Roth dissenting in part on separate deal on national security issues between federal agencies and companies. Order, approved Tues., is expected to be released as early as today (Thurs.) Commission said in news release it found DT would “have neither the incentive nor the ability to engage in unfair competition, specifically predatory pricing, in the U.S. domestic mobile telephony market.”
FCC should heed Mitre study released Tues. (CD April 25 p5), Rep. Oxley (R-O.) said Wed. after study showed land-based communications system proposed by Northpoint posed significant interference threat to satellite TV signals (CD April 25 p5) without safeguards. Northpoint seeks access to 12.2-12.7 GHz band used by DBS services, but satellite providers say Northpoint service would interfere with their signals. Study didn’t give clear-cut answer to FCC on whether it should grant license, but recommended steps Commission could take to prevent interference. “People pay good money for a clear satellite signal,” Oxley said. “If they wanted snow, they could go back to rabbit ears.”
Wireless carriers lined up at FCC to oppose petition by Richardson, Tex., which wants agency to clarify process by which requests for Phase 2 Enhanced 911 service are made by public safety answering points (PSAPs). Richardson, in petition filed earlier this month, wants Commission to confirm that PSAP makes valid request for such service by informing carrier that necessary equipment upgrades for Phase 2 service will be finalized before delivery of E911 data by carrier and by having adequate cost- recovery mechanism in place to upgrade equipment. Echoing comments of other carriers, Verizon Wireless urged FCC this week to deny petition. PSAPs must be able to receive and use E911 data as condition of valid request, Verizon argued. PSAP must have capability to receive this enhanced location information at time that it makes request to carrier, Verizon told FCC. In part, Verizon said Richardson’s petition doesn’t acknowledge that FCC requirements “balanced the objective of rapid E911 deployment with that of mitigating carrier’s costs and ensuring that PSAPs timely upgrade their own networks.” CTIA also urged Commission to reject Richardson request. “Richardson’s request should be denied because it is bad public policy, it conflicts with the Commission’s rules and the Commission already has addressed the matter.” CTIA argues in comments that policy based on PSAPs’ intention to upgrade their equipment would be faulty, because sometimes such plans don’t materialize and carriers are left sorting through requests from agencies that both have and haven’t completed upgrades.
LAS VEGAS -- Whether to begin producing programming in HDTV is “bet-the-business decision” but it “has to happen,” CBS Vp- Operations Barry Zegel said. CBS realizes that “content had to come first” in DTV transition, he told NATPE-sponsored panel here Wed. on DTV programming, indicating that content would drive other parts of DTV transition.
AOL’s claim of security and privacy concerns for its refusal to make its instant messaging (IM) services interoperable with competitors gained “sympathetic ear” at FCC but company provided “zero evidence” to support that claim, FCC Chief Economist Gerald Faulhaber told American Enterprise Institute seminar on “Instant Messaging and the AOL-Time Warner Merger” Wed. All that Commission heard from AOL on issue was that “you don’t want dirty pictures coming up before your kids.” FCC would have liked to have seen more evidence on switching costs and concerns about spamming and viruses, but AOL didn’t submit such material in record, he said. In absence of evidence to support claims of security and privacy risks to customers and switching costs, Commission concluded that IM market had tipped toward AOL. AOL’s argument that its competitors’ market share had grown was compelling, he said, but that argument against tipping was relevant only in mature market. Although IM has seen rapid growth, market was far from mature, Faulhaber said. Remedy FCC had adopted in requiring interoperability before AOL offered advanced IM services wasn’t focused on existing IM but on underlying Names and Presence Database (NPD) input and its use in advanced IM, Faulhaber said. Company could have dealt with security and privacy issues by having 2 services -- one that was interoperable and other that wasn’t, he said.
FCC defended efforts to seek specific information from cable operators about their current system capacity, plans for future capacity and retransmission consent deals covering digital programming while it conducts more general DTV survey of broadcasters. In response to recent letter from NCTA, Cable Bureau Chief Deborah Lathen said Commission sent detailed DTV survey only to MSOs because “we believe broadcasters that advocate dual carriage have an incentive to provide us with information in an effort to justify such a requirement.” Noting that agency tentatively decided against imposing dual-carriage obligations in Jan., Lathen said that “the onus is on those who favor mandatory dual carriage to provide the necessary information to overcome this existing presumption.” Moreover, she wrote, questions posed to cable operators in survey “are more objective and suitable for tabulation than the questions we might pose to individual broadcast stations.” She said questions in DTV must-carry further notice of proposed rulemaking that seek specific information about broadcasters’ DTV programming and formats should “help to focus commenters on the Commission’s need for specificity in the record.”