Frontier Communications' planned April 1 takeover of some Verizon assets is going well, and it's undertaking a "strategically significant initiative" to expand multichannel video services, CEO Dan McCarthy said on a Q4 2015 investor call Tuesday. He said Frontier is in the "final stages" of its plans for converting the Verizon wireline systems in California, Florida and Texas. "All indications are very positive with less than 40 days to the scheduled cutover," he said. McCarthy is optimistic Frontier will avoid the transition problems it experienced when it took over AT&T's systems in Connecticut for two main reasons: This time, Frontier is adopting all the Verizon bundles and products in the three states rather than trying to convert its local pricing and marketing to "Frontier-like" structures from the get-go; it also scheduled the customer "cutovers" to happen in phases rather than all in one day. Frontier believes the deal will create $600 million in cost-reduction "synergies" on day one. McCarthy said Frontier launched its new pay-TV campaign in Durham, North Carolina, as it plans to upgrade video capabilities in 3 million households in 40 markets over three to four years, extending its video service to about half of its existing 8.5 million households. The video expansion's cost is just $150 million and has "low capital intensity" due to compression technology that allows Frontier to allocate bandwidth efficiently. He said the company already is seeing market gains in Durham because it can now offer bundled products to apartment and condo complexes that previously were uninterested. He said the closing of the Verizon deal will improve the company's product mix, reducing the company's exposure to voice revenue declines. Frontier had Q4 broadband net adds of 28,530, and plans to connect or upgrade 100,000 households to broadband under the FCC Connect America Fund subsidy program in 2016, said a company presentation. Frontier Q4 revenue rose 6.2 percent to $1.41 billion from the year-ago quarter and operating income of $182 million was up 5.2 percent. It had a net loss of $103 million, as it incurred interest and integration costs related to the Verizon deal, versus a year-ago $14 million profit, said a company release. "Solid report from [Frontier] as results were in line across the board," Wells Fargo analyst Jennifer Fritzsche wrote investors. Frontier stock rose more than 12 percent to $5.08 at market close Tuesday.
A USTelecom bid for ILEC relief was backed by incumbents but opposed by rivals and a state regulatory commission, as six parties responded to an FCC request to refresh the record by Monday in a proceeding that started three years ago. CenturyLink, USTelecom and Verizon said the FCC should grant the ILEC group's December 2012 petition asking the FCC for a declaratory ruling that incumbent telcos are nondominant in the provision of switched access services. CenturyLink called the petition's factual foundation "indisputable," given the "remarkable transformation" in "the competitive landscape, whereby almost 50% of U.S. households are 'wireless only'" and traditional ILEC phone service is being eclipsed by interconnected VoIP. "The record overwhelmingly demonstrates that ILECs are not dominant carriers in the provision of voice services and, therefore, dominant carrier regulation of ILEC switched access services is unnecessary," CenturyLink commented in docket 13-3. "There is no question that some relief here is warranted, and declaring ILECs to be non-dominant would be the cleanest approach," USTelecom said. "We do not seek blanket deregulation of ILEC switched access voice services; rather, we seek a narrow scope of relief that would result in the consistent treatment of all providers in this highly competitive marketplace as 'non-dominant' providers." Verizon agreed, saying the petition "seeks only regulatory parity" among local phone competitors. But General Communications Inc., the Michigan Public Service Commission and Sprint opposed the petition. The FCC should deny the petition "as vague, unsupported, and inconsistent with precedent," GCI said. "To the extent it grants any relief, the Commission should ensure that it does nothing to backpedal on the reforms of the [2011] USF/ICC Transformation Order and the subsequent implementing orders or to prejudice ongoing proceedings or other carriers." The Michigan PSC said ILECs remain dominant in the provision of switched access services. "The data provided in the petition is outdated and not applicable to every area. Although wireless and broadband technologies continue to experience growth, not every customer currently has access to these options. ILEC carriers remain the most reliable, and in many cases the only option for customers in rural and underserved areas," the PSC said. Sprint said that all the reasons it listed for opposing the bid three years ago remain valid.
Oklahoma officials asked a federal court to stay an FCC inmate calling service order, pending further judicial review of an underlying ICS challenge. The commission lacked the authority to cap intrastate ICS rates at levels that were below what the state negotiated and below provider costs, said Oklahoma Attorney General Scott Pruitt, Solicitor General Patrick Wyrick and Danny Honeycutt, general counsel of the Oklahoma County Sheriff's Office. They filed a motion Monday with the U.S. Court of Appeals for the D.C. Circuit in the consolidated case (Global Tel*Link v. FCC, No. 15-1461). The state officials said the FCC also lacked "relevant expertise" and disregarded evidence in writing a rule that not only was arbitrary and capricious but would harm Oklahoma's correctional facilities and inmates. The order will cause "dramatic" revenue reductions that force Oklahoma "to either abandon its inmate welfare programs, shift revenues away from other critical public safety programs, or eliminate inmate calling services if the State cannot satisfactorily renegotiate the contracts with its carriers," the officials said. Because Oklahoma is likely to win on the merits and would suffer irreparable harm, they said, the D.C. Circuit should stay the rule. The Oklahoma officials filed a separate motion asking the D.C. Circuit for leave to seek a stay, which came after the court's Feb. 5 deadline for such requests (see 1602040023). They said they originally had filed their legal challenge in the 10th Circuit, which didn't transfer the case to the D.C. Circuit until Feb. 16, at the FCC's request. "Oklahoma is the only party seeking a stay in this case that actually operates correctional facilities, has law enforcement interests, and receives rather than pays site commissions. Oklahoma thus has unique irreparable harms and a unique perspective on the public interest," the officials said. In an order Tuesday, the D.C. Circuit gave the FCC until noon, Friday to file a response to both Oklahoma motions. ICS providers CenturyLink, Global Tel*Link, Securus and Telmate also have sought stays, and recently filed reply briefs in support of their motions (see 1602190065), after the FCC and intervenors filed opposing briefs (see 1602120060).
NTCA “hopes” the forthcoming FCC policy statement that would adopt the Communications Security, Reliability and Interoperability Council’s (CSRIC) 2015 report on recommendations for communications sector cybersecurity risk management “will capture and sustain this need for flexible voluntary collaboration among stakeholders with shared goals,” Senior Vice President-Policy Michael Romano said in a statement Tuesday. The FCC said Friday that it's circulating the policy statement, which would adopt the nine recommendations CSRIC made in its report on how the agency should encourage communications sector use of the National Institute of Standards and Technology's Cybersecurity Framework and other cybersecurity best practices (see 1602220052). NTCA hopes that “all parties will continue to focus in particular on the substantial need for upfront education so that small businesses can be better equipped to identify and respond to cybersecurity challenges,” Romano said.
FCC Chairman Tom Wheeler will give the keynote speech at the Incompas Show April 11, the group announced Monday. The show is scheduled for April 10-13 at the Gaylord National Resort & Convention Center in National Harbor, Maryland, near Washington.
AT&T said it will work with others to develop an industry proposal for replacing Part 32 accounting rules with generally accepted accounting principles (GAAP). AT&T representatives discussed issues related to a potential accounting shift with FCC officials Wednesday, said a company filing posted Friday in docket 14-130. "AT&T agreed to do some analysis of the potential impacts and work with other industry members on a recommendation," the filing said. In another recent filing, CenturyLink asked FCC officials to rescind the existing accounting regime, emphasizing "the needless costs and administrative burdens imposed by Part 32 accounting across ILEC operating companies." CenturyLink discussed how such a change would affect "materiality and pole attachment costs," the same two areas discussed by AT&T, Verizon and FCC officials in a previous meeting (see 1601250051). The Wireline Bureau has been looking to craft a draft order on Part 32 rules, Bureau Chief Matt DelNero said in December (see 1512030060).
Inmate calling service providers asked a court to stay FCC ICS rate caps and other rules despite agency and intervenor arguments in defense of the rules (see 1602120060). CenturyLink, Global Tel*Link, Securus and Telmate filed replies Friday with the U.S. Court of Appeals for the D.C. Circuit, which is considering the providers' requests for a stay pending further review of their consolidated legal challenges to the FCC's order (Global Tel*Link v. FCC, No. 15-1461). "A stay is warranted because the FCC has no answer to CenturyLink’s core argument that the Order’s rate caps will prevent CenturyLink from recovering its cost of service in Texas and several other jurisdictions, in direct contravention of [Communications Act] section 276’s requirement that the FCC 'ensure that all [ICS] providers are fairly compensated for each and every ... call' they complete," CenturyLink said in its reply. "The FCC opposes Telmate’s stay motion by describing what the FCC did because it cannot explain why its decisions were authorized or reasonable. This does not overcome Telmate’s substantial case on the merits, which, coupled with the irreparable harm it will suffer and the balance of the equities, justifies a stay," Telmate said in its reply. GTL's reply is here and Securus' reply is here.
Global Tel*Link claimed a "capstone victory" in its patent litigation against fellow inmate calling service provider Securus after the Patent Trial and Appeals Board issued a "final decision" Thursday, ruling against the validity of Securus claims on its patent 7,805,457. "The PTAB found that the data analytics and gang-member tracking ideas claimed by Securus were not innovations at all, but a group of concepts and technologies patented or developed by GTL and others years before," GTL said in a release Friday. Securus issued a release that said it expects some of its patents to be invalidated, but said that would have "no impact" on the "quality, business operations, or scale advantage" of its "industry-leading patent portfolio and product set." Securus said GTL was taking advantage of PTAB rules changes.
New FCC pole-attachment rules take effect March 4, said a summary published Wednesday in the Federal Register that corrected an erroneous effective date and typographical errors in a previous summary (see 1602030006). The rules are intended to lower electric utility pole-attachment rates paid by telco broadband providers to the generally lower levels paid by cable broadband providers, and to keep the latter from paying higher telecom rates in the wake of the FCC's 2015 reclassification of broadband as a telecom service under Title II of the Communications Act.
The FCC opposed inmate calling service provider motions to stay ICS rate caps and other rules, pending further judicial review of an underlying order. "No petitioner has met this Court’s stringent test for stay pending appeal, and the Commission’s long-overdue reforms should be permitted to go into effect," the FCC said in its opposition Friday filed with the U.S. Court of Appeals for the D.C. Circuit in the consolidated case (Global Tel*Link v. FCC, No. 15-1461). The FCC opposition to a stay received support from the Wright Petitioners and various other groups backing the calling rights of inmates and their families. CenturyLink, GTL, Securus and Telmate have filed stay petitions.