American Cellular, venture owned equally by Dobson Communications and AT&T Wireless, plans private offering of $450 million in senior subordinated notes due 2009. Dobson said American Cellular would use proceeds to pay down debt and to fund first 4 interest payments due on notes. In recent FCC filings, Dobson subsidiary said it had signed agreement with AT&T Wireless to transfer certain PCS licenses it won in recent C-block auction to joint venture (CD March 5 p6).
Aspen Law & Business published 2001 supplement to Federal Telecommunications Law, authored by Peter Huber, Michael Kellogg and John Thorne. Supplement updates 1999 reference book on Telecom Act implementation with more current information on issues such as unbundling of network elements, Bell competition in long distance markets, CALLS plan. Supplement is very comprehensive and clearly written although it has slightly pro-Bell slant, for example referring to FCC unbundling rules as going beyond Act’s intent. Kellogg and Huber are partners in law firm that represents Bells; Thorne works for Verizon -- 800-638-8437.
Head of National Telephone Co-op Assn. (NTCA) urged President Bush to appoint FCC members who would take rural interests into consideration. In March 2 letter, NTCA CEO Michael Brunner said it was not enough “to designate a ‘rural commissioner’ in name only as has been the case in the past.” There’s been no shortage of qualified commissioners and staff dedicated to Telecom Act’s competitive principles, he said. “Unfortunately, the same cannot be said with regard to their commitment to the Act’s dual mandates of ensuring sufficient universal service support and comparable services available to both rural and urban America.” There needs to be balance between competitive principles and rural needs, he said.
Sirius Satellite Radio last week rebutted concerns raised by AT&T Wireless (ATTW) that Project Angel could be hampered by interference from high-powered repeaters that satellite digital audio radio (DARS) operators plan to use. Sirius disputed ATTW claim in earlier ex parte filing (CD Feb 28 p1) that “mandating multiple 2 kw repeaters to mimic the coverage of 40 kw repeaters would reduce interference.” AT&T, which is using Wireless Communications Services (WCS) licenses to deploy fixed wireless broadband Project Angel, said it didn’t object to low-power repeaters at or below 2 kw. Company and other WCS licensees have raised concerns about interference on 40 kw terrestrial repeaters that satellite DARS operators could use to fill in gaps in satellite coverage. “ATTW has known since the time it acquired its WCS spectrum that it would have to operate without causing interference to satellite DARS,” Sirius told FCC. “ATTW conveniently forgets that its service rules were changed to protect satellite DARS transmissions and that these restrictions reflected the fact that the Commission designed WCS to protect satellite DARS, not the other way around.” Sirius contended ATTW misrepresented record by telling FCC plans for high-power repeaters were new “and justify late intervention in this proceeding.”
Twelve key lawmakers backed owners of broadcast programming in letter to FCC on copyright protection technology required in cable set-top boxes. They criticized “5C” standard proposed by Digital Transmission Licensing Administrator (DTLA), saying it wouldn’t protect rights of broadcast program owners enough to give them incentive to make programming available on digital channels. “The digital transition will slow considerably if the technology proposed by the DTLA is implemented,” group warned. They said cable and other subscription programming would be protected against copies being distributed over Internet, but over-air programming wouldn’t get same level of protection: “Program producers will be reluctant to license their programs for digital broadcast distribution in the face of widespread acts of infringement over the Internet… These producers will inevitably move their programming over to such channels where protections are clearly stronger… This is bad for both localism and consumers who depend on free, over-the-air television.” Signatories included House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.), Telecom Subcommittee Chmn. Upton (R- Mich.) and ranking Democrat Markey (Mass.), Consumer Protection Subcommittee Chmn. Stearns (R-Fla.) and ranking Democrat Towns (N.Y.), Rep. Pickering (R-Miss.), Senate Commerce Committee ranking Democrat Hollings (D-S.C.), Communications Subcommittee Chmn. Burns (R-Mont.) and Sens. Breaux (D-La.) and Boxer (D-Cal.).
FCC action on ILEC-CLEC reciprocal compensation could have positive effect on wireless providers as well, Legg Mason said in report released Fri. Report said wireless providers such as VoiceStream, AT&T Wireless and Sprint PCS would see most benefit. Nextel, which is more business-customer oriented, might experience more neutral outcome because its outbound-to-inbound ratio of calls was only about 3-2 and more than 40% of its traffic was wireless-to-wireless, which isn’t subject to reciprocal compensation. Paging companies might have negative impact because more of their traffic flows inbound. Report by Research Analyst Blair Levin said wireless companies paid wireline carriers $400- $500 million per year because more wireless calls were terminated by wireline carriers than other way around. Report said FCC appeared to be leaning toward 2-part plan to ease ILEC-CLEC reciprocal compensation problems that would (1) Set caps on outbound-to-inbound traffic ratio eligible for reciprocal compensation and (2) bill above-cap traffic at 0.1 cent per min. Levin estimated that traffic imbalance was about 4-1, meaning typical ILEC sent 4 calls to CLEC for every call it received. Report said FCC could set 6-1 cap on payment eligibility in first year, 2-1 cap next year. That would mean CLEC revenue would decline only about 7% first year but 40-50% in 2nd year. Such changes probably would set precedent for wireless carriers, “given the FCC’s desire to harmonize regulation in a convergent world,” Levin said.
FCC Chmn. Powell is uncomfortable with ownership caps when their primary purpose is to guard against anticompetitive behavior, he said at Precursor Group dinner in Washington late Thurs. Cap used for that purpose can “catch some it shouldn’t and let some go it shouldn’t,” he said in answer to question. Furthermore, “once it’s on the books, it takes forever to get it off” even if it’s obviously outdated. He said, for example, that 35% national ownership cap for broadcasters was 30 years old and conditions had changed since it was adopted. Antitrust process is better deterrent for anticompetitive behavior, he said. In answer to another question, Powell said that in general he believed “if you can’t prove a reason to continue a rule, it shouldn’t stay.” He said he didn’t buy “it does no harm” argument. In speech to institutional investors and others attending dinner, Powell said he was tired of “hand-wringing” over success of Telecom Act, still firmly believed in market over regulation to stimulate new services and wondered whether oligopolies were as bad as monopolies. He said he thought concern about effectiveness of Telecom Act was based on “exaggerated expectations.” When “bottom fell out” recently in CLEC business, blame was placed on Act instead of looking at fallacy of “Field of Dreams approach” taken by new entrants and investors, he said. They assumed that if they built something, “they will come” and threw money at startups, Powell said. But sometimes people “sniff it and go home.” Regulatory intervention isn’t answer, he said. “Way too many companies seek regulatory changes rather than using that same energy in the market.” He said he believed there was role for enforcement but “only where there’s clear evidence of abusive control.” There’s no such thing as natural monopoly, “but I'm not sure there’s not a natural oligopoly,” Powell said. If there’s heavy concentration of 3 or 4 companies, “is that okay or does there have to be a place for the small guy?” He said “my sympathies say yes” but then he looked at what happened when Wal- Mart came to rural America: “We lost something when we couldn’t go to the corner drug store but it wasn’t prices or choice.”
FCC’s limits on cable horizontal and vertical ownership don’t meet the requirement of burdening speech as little as necessary, unanimous U.S. Appeals Court, D.C., said in reversing and remanding limits to Commission. FCC rules say no MSO can own cable systems with more than 30% of national cable subscribers, and programming in which MSO has attributable interest can fill no more than 40% of channels on cable system. Appeals court also said FCC should consider growth of DBS in setting ownership limits.
KAME-TV Reno faces $50,000 fine for repeated violations of ad limits in children’s TV, FCC said in notice of apparent liability. Station admitted violating limits 301 times in 1997 and 1998. Commission said station also failed to establish effective program to ensure compliance.
FCC Enforcement Bureau fined 2 telecom carriers for not contributing to universal service program: (1) It issued final order telling N. American Telephone Network to pay $55,000. Agency said it wasn’t convinced by company’s response to notice of apparent liability (NAL) issued earlier. (2) It proposed $46,700 fine against Advanced Telecom Network.