Hughes Electronics Chmn. Michael Smith steadfastly declined comment Wed. on possible merger of Hughes with News Corp.’s Sky Global Networks, deferring to parent General Motors (GM) board that earlier authorized negotiations to continue. Smith, speaking at SG Cowen Securities conference in N.Y., stuck with statements in GM news release and focused on highlighting Hughes’ DirecTV, Hughes Network Systems and PanAmSat units. Negotiations are expected to continue for several weeks with need to resolve tax and governance issues. GM has wanted deal to be tax-free and Smith has bridled at ceding day-to-day management of Hughes to News Corp.
Verizon Wireless in filing at FCC balked at request by New ICO (CD April 4 p1) seeking flexibility to offer terrestrial mobile services using mobile satellite service (MSS) spectrum. New ICO sent letter to FCC Chmn. Powell last month suggesting that it would have to fold unless it received approval for new spectrum from domestic and international regulators. Verizon said request would violate Sec. 309(j) of Communications Act, which requires that spectrum used to provide commercial terrestrial services be auctioned. “New ICO received its MSS licenses for free,” Verizon said: “Given the enormous sums that Verizon Wireless and other mobile operators have paid for licenses, this would yield a tremendous windfall to New ICO and confer on them an unfair competitive advantage.” Verizon said New ICO’s suggestion that “MSS is no longer viable” should mean that spectrum be reallocated for advanced mobile services. Carrier said 1990-2025 MHz and 2165-2200 MHz have been identified internationally for 3G services. “Given the difficulty that the Commission is having in identifying spectrum for 3G, it should not overlook this obvious opportunity,” Verizon Wireless wrote. On other 3G issues, Verizon cited “flawed assumptions” in recent FCC report on use of 2.5 GHz band for advanced wireless services such as 3G. It said band segmentation was possible without harming Multichannel Multipoint Distribution Service (MMDS). “Importantly, MDS operators have no long-term ownership rights to leased ITFS [Instructional TV Fixed Service] spectrum,” carrier said. “Thus, a reallocation of some ITFS spectrum would not undermine their spectrum rights. Moreover, if MDS operators believe that they need additional spectrum to deploy broadband fixed services, they can bid in the auction.”
New Skies said profit increased 38% to $8 million on revenue of $51.2 million in first quarter, up from $37 million in same 2000 period. Company said improved performance was result of increase of fill rates for satellites to 64% while maintaining transponder yields, resulting in significant growth. New Skies said its position was “significantly strengthened” when FCC granted it full authority to serve U.S. market. CEO Robert Ross said company had reached goal of expanding customer base and service offerings through “integration of terrestrial facilities working in conjunction with our satellite fleet.”
Rural Task Force (RTF) proposal to reform universal service is expected to be on FCC agenda at open meeting May 10, USTA officials and other sources said Wed. USTA Interim Pres. Gary Lytle said association is pleased with what it thinks FCC plans to do: (1) Approve RTF proposal with little change, meaning it will continue to base universal service support on embedded costs rather than Total Element Long-Run Incremental Cost (TELRIC). (2) Not combine RTF plan with one proposed by Multi-Assn. Group (MAG) that targets both universal service and access charges for reform. MAG group has urged FCC not to consider access charge reform as part of RTF. USTA is part of MAG group, which also includes National Telephone Co-op Assn, National Rural Telecom Assn., OPASTCO. In wide-ranging news briefing, Lytle said FCC was expected to approve “largely what the [Federal-State] Joint Board [on Universal Service] recommended.” Both plans are aimed at rural telephony. RTF proposal would increase size of universal service system for rural carriers and make funding portable.
Municipal govt. deployment of communications networks is catching attention of “high-ranking members” of Congress and USTA Interim Pres. Gary Lytle said he was “hopeful and confident” that legislation addressing govt. competition would be introduced in near future. More than 200 municipalities are competitive service providers, some of which have applied for universal service funding, he said Wed. in news briefing at USTA hq in Washington. Congressional leaders, whom he declined to identify, are interested in possible legislative remedy to unfair advantage some govt. providers may have over USTA members, Lytle said. Meanwhile, he expressed concern with move by House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) to get shot at review of broadband deregulatory bill recently introduced by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.). Sensenbrenner urged House Speaker Hastert (R-Ill.) Tues. to give Judiciary Committee partial jurisdiction over bill, since it could provide competitive advantage to Bell companies and therefore fell within committee oversight of antitrust issues. Lytle reiterated USTA’s support of Tauzin-Dingell bill and said group was “hopeful it will not be referred to the Judiciary Committee.” On other issues, Lytle said: (1) USTA “search committee” is close to decision on new pres. to replace Roy Neel. Lytle, head of Ameritech’s Washington office before its merger with SBC, said he was candidate but he had “no idea” who else was being interviewed or when decision would be made. (2) He expected Bells to gain Sec. 271 authority in 10-15 more states this year. (3) Assn. will play “active role” in FCC proceeding to standardize intercarrier compensation. “This is as big as it gets for our members.”
FCC proposed changing way it allocates e-rate funds when there isn’t enough money to support all requests for internal connections. Agency asked for comments on idea of giving priority to requests by schools and libraries that didn’t get funding in previous year. Commission said requests for telecom services still would get top priority. Change would apply to next step, known as Priority 2 -- requests for internal connections. FCC said demand for funding in year beginning July 1 was $5.2 billion, more than double $2.25 billion cap. Once requests for telecom service are fulfilled, there only $900 million will be left for Priority 2 internal connections. Under current rules, neediest schools and libraries -- those eligible for 90% discounts -- will get first crack at remaining funds. However, those institutions alone seek more than $900 million available, FCC said. That means agency can ask for comment on 2 options: (1) Give out remaining $900 million to all 90% institutions on pro rata basis, meaning each would get only portion of amount requested. That could mean applicants “might not receive sufficient funding to permit completion of a useful system of internal connections,” Commission said. (2) Give funding priority to those that didn’t receive funding in past year. Institutions would be funded in order of their discount level. FCC said that would ease its concern “that applicants eligible for 90% discounts could receive funding… for 2 years in a row while other schools that are also economically disadvantaged, albeit not to the same degree, could receive no discounts at all.” E-rate funds offer discounts to schools and libraries that are installing telecom services or internal connections, with discounts on sliding scale, largest going to neediest institutions.
Speakers for upcoming lunches of Federal Communications Bar Assn. in Washington: May 11 -- House Telecom Subcommittee Chmn. Upton (R-Mich.), Hyatt Hotel; June 21 -- FCC Chmn. Powell, Capitol Hilton, during which Margaret Tobey of Morrison & Foerster is to succeed Anne Swanson of Dow, Lohnes & Albertson as FCBA pres.
Large group of small cable operators descended upon Congress Wed., pushing for various broadband deployment bills now under consideration to aid cable as much as telecom. About 50 members of American Cable Assn. (ACA), which represents 900 smaller MSOs, spent day on Capitol Hill, hoping to sway lawmakers to put technology-neutral provisions into any measures they passed. They argued that without such provisions, legislators would be favoring phone companies over cable operators even though they said latter had done better job of extending broadband services to rural and poor areas. “In smaller markets, regulatory restraint is working,” ACA said in position paper, contending that current balance shouldn’t be upset.
Nondiscriminatory access to multitenant dwellings by communications service providers was viewed as commonly shared impediment to competition Wed. at Senate Judiciary Antitrust Subcommittee hearing. Although witnesses offered divergent perspectives on extent of competition stemming from 1996 Telecom Act, incumbent, competitive and interexchange carriers all chimed in that restrictive landlord policies had stymied their market expansion efforts.
Boeing, Skybridge, Teledesic and Virtual GEO are expected to receive conditional licenses from FCC to operate nongeostationary systems in Ku-band pending final resolution of issues involving sharing with incumbent geostationary system, industry sources told us: “It was supposed to be out last Thursday or Friday, but we expect FCC to issue the order this week,” industry lawyer said. Conditional licenses are expected to allow companies such as Skybridge, which has been unable to attract investors, to move forward with financing plans while waiting for final ruling from FCC. However, attorney for one of applicants receiving conditional licenses called rulemaking “ridiculous and absurd.” He said conditional licenses was “worthless document,” saying it and $1.25 will “get you a cup of coffee at Starbucks.” Ruling could be issued as early as today (Thurs.) source said.