FCC at agenda meeting Wed. adopted agency’s annual report on wireless competition that indicated digital customers made up 62% of U.S. subscribers in 2000, compared with 51% year earlier. Meeting marked first attended by new Commissioners Copps and Abernathy. Report, approved unanimously, sounded now familiar theme of falling prices and increasing revenue and subscribership. While it contained few surprises, report that will be released in full in next few weeks documented accelerated growth in areas such as average monthly revenue and increased consumer interest in substituting wireless phone for 2nd or 3rd wireline phone. “Almost everything you want to see going up is going up, and what you want to see going down is going down,” Wireless Bureau Chief Thomas Sugrue said. Along with that growth is proportionate increase in consumer service complaints, issue that agency is working on tracking more closely, he said.
FCC officially opened its 8th annual video competition inquiry, once again asking cable operators, DBS providers and cable overbuilders to document their growth, spell out their new services and detail their costs. In notice of inquiry (NoI) approved unanimously Wed. and expected to be released in next few days, Commission said it also planned to seek such new information as cable and DBS provision of streaming video, interactive (ITV), other convergence services. Agency also said it would explore how many households “rely on over-the-air reception of local television stations on one or more of their television sets.” Finally, FCC said that for first time it would treat new breed of broadband service providers as separate category distinct from traditional cable overbuilders.
BellSouth (BS) advised Miss. PSC of its intent to seek FCC approval for its interLATA long distance entry and formally asked agency for its support. This is BellSouth’s 2nd try at long distance in Miss. since failure of its first effort 4 years ago despite PSC support. BellSouth asked PSC to reaffirm that carrier had met Telecom Act requirements for long distance entry and filed additional updated information on its Sec. 271 compliance. BellSouth said it had made “substantial progress” in opening Miss. local market since its 1997 long distance attempt. It said 56 CLECs collectively served 100,000 local access lines -- 7% of BS total. Business market has seen CLECs gain 12% share, BS said, while facilities-based CLEC lines have grown 38% since Nov. BellSouth said its Miss. operation support systems were identical to those in Ga. that recently passed 3rd party testing by KPMG Consulting. It said results in other states where Bell companies won long distance indicated its entry in Miss. would advance public interest through lower rates and more meaningful choices.
FCC affirmed requirement that manufacturers make scanning receivers more difficult to modify to receive cellular calls. In partial grant of petitions for partial reconsideration filed by Tandy Corp. and Uniden, agency also relaxed some warning label requirements and clarified compliance measurement rules. Based on Oct. 1992 Telephone Disclosure and Dispute Resolution Act, FCC rules prohibit manufacture and importation of scanning receivers capable of receiving, or readily being altered to receive, transmissions in frequencies allocated to cellular service. Devices must be certified by FCC before sale or importation. In memorandum opinion and order: (1) FCC declined to adopt requested exemptions of circuit inaccessibility and labeling requirements for scanning receivers that tune well below cellular frequencies (30- 512 MHz). “The fact that the scanner is intended to tune only below 512 MHz does not ensure that reception of cellular telephone frequencies will not occur,” it said. (2) FCC made exception to labeling requirement for small scanning products, instead requiring warning label to appear in owner manual and on product packaging. (3) FCC agreed that Uniden receivers designed solely for reception of broadcast weather band signals should continue to be exempt and said it would clarify rules. (4) FCC agreed wording of signal rejection rule wasn’t clear and said it would amend rules so it could be clearly understood that scanning receivers must reject cellular service signals that are 38 dB or lower based on 12 dB SINAD specification -- common sensitivity measurement that closely approximates signal-to-noise ratio of receiver.
Latin America satellite TV companies Sky Latin America and DirecTV could become profitable if they merged, analysts said. Merger also would be positive for Grupo Televisa in Mexico and Globo in Brazil, which control Sky units and tower above cable operators in home markets. Sky-DirecTV Latin America speculation has become focus as talks between General Motors and News Corp. for Hughes-DirecTV unit heat up (CD May 7 p2).
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.
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.”
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.
Cox Communications said its operating loss widened to $125.4 million in first quarter ended March 31, despite 22% surge in revenue to $947.9 million because of cable system acquisitions. Cox reported net income of $686.6 million, mainly because of $717.1 million gain from change in accounting method. Company, which plans to spend $2 billion to upgrade its cable systems this year, said it laid out 38% more on system upgrades in first quarter than it did year ago, spending $523.3 million. Cox said pro forma revenue rose 12% and pro forma operating cash flow 10% to $358.1 million, as it added 20,000 basic cable, 119,000 digital cable, 105,000 high-speed data and 47,000 cable telephony subscribers in quarter. With addition of 271,000 new revenue- generating units (RGUs), company said it was on track to meet its goal of picking up more than one million RGUs this year. Cox Pres. James Robbins projected that MSO would boost its operating cash flow 11%-12% in 2nd quarter and 12%-13% for year as its revenue increased 14% to 16% in 2001.
In its latest status report on nation’s DTV transition, FCC said broadcasters continued to make strides but many challenges remained. Mass Media Bureau Chief Roy Stewart said 38 of 40 stations in top 10 TV markets now were transmitting digital signals, leaving only 2 to go. In next group of markets, number 11 through 30, he said 67 of 79 stations were transmitting digital signals. Overall, he said, there are 190 DTV stations on air, covering 64% of U.S. TV households. He said some DTV markets are particularly flourishing, with 8 operating digital stations in L.A. and 5 in Washington. “We believe the DTV transition is going better than many people give it credit for, although not as fast as some hoped,” he said. “Sometimes, technology takes time.” Stewart said FCC had granted construction permits for 1,090 of 1,688 DTV station allotments, with 598 “nonroutine applications” still pending, largely because of interference or international coordination issues. He said Bureau would “expedite processing for applicants ready and willing to build DTV facilities.” Stewart also cited CEA statistics indicating that manufacturers sold 648,000 sets to dealers last year, up 400% from 1999. But he also mentioned several “caveats:” (1) Sales figures reflect set purchases by dealers, not consumers. (2) Even DTV sales to dealers amount to small fraction of overall TV set sales, which reached 25 million last year. (3) Most sales were of DTV display monitors, not sets with integrated digital tuners. (4) DTV set prices, while falling, continued to be high. Stewart also said that DTV-cable interoperability problems, lack of HDTV and other digital programming and digital copyright protection issues continued to hamper DTV rollout. Comr. Ness welcomed report but chided cable and satellite industries for not doing more to promote DTV transition. “I hope to see some voluntary progress by cable,” she said, noting “lot of reluctance” by industry to carry digital broadcast programming. Ness said she was “pleased” to see discussions between cable operators and public broadcasters about DTV carriage deals (CD April 18 p1). She said she hoped carriage deal between AOL Time Warner and PTV stations would serve as “template” for other carriage agreements.