FCC isn’t moving to return NextWave re-auction deposits as quickly as expected in new development that could tie up $3.1 billion in down payments for several more months, industry sources said. Commission now is said to be likely to return portion of down payments closer to time that U.S. Supreme Court makes decision on whether to grant FCC’s petition for review of U.S. Appeals Court, D.C., ruling that had overturned agency’s decision to cancel NextWave’s licenses for missed payment. NextWave’s opposition brief to Commission’s petition for certiorari is due Fri. at Supreme Court, which is expected to decide by spring whether to hear appeal, possibly by late Feb. or early March. Item on returning part of down payments had reached 8th floor at FCC and decision on return of at least most of deposits for Jan. 2001 re-auction winners had been expected as early as last week (CD Jan 25 p6).

Center for Digital Democracy (CDD) said it had filed Freedom of Information Act (FOIA) request to learn more about planned merger review clearance process involving FTC and Justice Dept. (DoJ). Proposed agreement, which was delayed after Sen. Hollings (D-S.C.) raised questions, would give DoJ review authority over all media mergers, including Internet, cable, telecom and software. FTC still would review computer hardware mergers. Many consumer advocacy groups, including CDD, were upset by proposed agreement because they felt FTC had more knowledge and experience with consumer and free speech issues associated with media mergers. Secretive manner in which agreement was reached -- at least 2 FTC commissioners said they didn’t know about negotiations between FTC and DoJ until shortly before FTC Chmn. Timothy Muris planned to announce agreement -- also was concern for many advocacy groups. “CDD has grave concerns about how such a decision was reached without public awareness, including Congressional oversight,” CDD said. In its FOIA request, CDD sought reports, letters, memoranda and e-mails related to the negotiation. It also named several private attorneys. CDD, along with other consumer groups, has raised questions about the influence of private attorneys in development of the agreement. The FOIA request includes any communication between FTC and DoJ staff and attorneys Joe Sims, Steven Sunshine, Kevin Arquit and Bill Baer. CDD Exec. Dir. Jeff Chester said his organization would “aggressively pursue” matter and continue to query govt. officials about proposed agreement. He also said he didn’t expect any redaction of information requested under FOIA. “Unless they were talking about the price of AOL or Enron stock, I don’t see what they would have to hide,” Chester said. “We want to ensure that the public understands how and why this plan was put together.” DoJ staff is expected to meet this week on agreement with Senate commerce and appropriations committee staffers. Hollings spokesman said 2 groups met last week, but follow-up session was needed because DoJ couldn’t answer several questions posed by congressional staff.

Dept. of Justice recommended Mon. that FCC approve Verizon’s application to provide long distance services in N.J., although it raised concerns about “certain changes in prices” charged to CLECs by Verizon there. “Conditions in [N.J.] local telecommunications markets now appear favorable to fostering competition,” DoJ Antitrust Chief Charles James said. However, he suggested that FCC keep eye on 2 facets of local competition in that state: (1) N.J. Board of Public Utilities recently reduced rates for unbundled network elements (UNEs), but it also instituted “significant increase” in Verizon’s one-time charges for “hot cuts.” Several CLECs have said those charges could impede their ability to compete, DoJ said. Hot cut is process in which Verizon physically disconnects customer’s phone line from Verizon’s switch and reconnects it to CLEC’s switch. (2) Department suggested that FCC exercise oversight of Verizon’s wholesale billing functions in N.J. “in view of the problems found last year with Verizon’s [Pa.] wholesale billing systems,” which are same as those used in N.J.

FCC denied motion by Litigation Recovery Trust (LRT) requesting stay of Commission’s authorization issued Dec. 18 that allowed Lockheed Martin Global Telecommunications and Comsat, together with Telenor, to assign various satellite earth, private land mobile radio and experimental licences and Sec. 214 authorizations held by Comsat to Telenor. Commission said LRT hadn’t met legal standards for stay based on 4-prong test that warrants stay. LRT said Commission exceeded its jurisdiction by: (1) Failing to present any interpretation of Act that would establish its authority to authorize assignment of licenses to company that is 79% owned and controlled by foreign govt. (2) Violated notice and comment requirements of Administrative Procedure Act (APA) by modifying existing rule. (3) Acted arbitrarily and capriciously by failing to present any rationale for its departure from established Commission policy. LRT also said it had new evidence on contract recently secured by Telenor to provide communications services to NATO. LRT said Telenor underbid incumbent carrier by $8 million and bid raised questions of subsidization of Telenor’s business operation by Norway. Commission said LRT didn’t provide sufficient evidence to warrant further investigation. It also said its decision was within its jurisdiction because Communications Act prohibits grant of licenses to any corporation directly or indirectly controlled by any other corporation of which more than 25% of capital stock was owned by foreign govt. FCC said it made no such finding. It said it found no merit in LRT’s claim that agency had violated notice and comment requirements of APA. Commission said allegation by LRT on contract that Telenor obtained through bidding process to provide NATO communications services wasn’t sufficient to indicate LRT would succeed in reconsideration proceeding. Commission also said LRT wouldn’t suffer irreparable harm in absence of stay, but grant of stay would cause harm to both Telenor and Comsat.

Senate Majority Leader Daschle (D-S.D.) told President Bush this week that he intended to introduce economic stimulus package containing “noncontroversial” provisions acceptable to both parties. One such item will involve 30% “bonus depreciation” provision for companies making capital investments in next few years, measure that Verizon Pres. Ivan Seidenberg recently said (CD Jan 17 p4) should be one of “top priorities” of Congress upon its return this week. Daschle told Bush in letter Jan. 22 that economic package would include “bonus depreciation provision to encourage new business investment, and fiscal relief for the states. This relief for the states will help avoid cutting critical services and/or raising taxes during a recession, and will help compensate states for the revenue loss from the bonus depreciation provision.” Economic stimulus legislation passed by House late last year contains similar depreciation measure. Meanwhile, Congressional Budget Office (CBO) Dir. Daniel Crippen said largest chunk of $4 trillion drop in CBO’s projected FY 2003-2012 budget surplus could be attributed to last year’s tax cut plan. He told Senate Budget Committee that $1.3 trillion, 10 year tax relief stemming from Economic Growth & Tax Relief Reconciliation Act of 2001 had “largest effect” on surplus projections, which were laid out in revised budget and economic outlook released Wed. Despite CBO’s saying that its surplus estimate “plunged” specifically from legislative actions such as President’s tax bill, Bush defended tax relief Tues. in speech in W.Va.: “There’s some weird economics going on in Washington. There are some saying that they don’t want the tax relief plan to go through… If you want to create jobs, let the American people have more of their own money so they can spend it.”

3DO Company announced completion of management restructuring and reorganization with hiring of William Dully, ex-Upper Deck COO, as COO and acting CFO. In latter capacity, Dully replaces Kathleen McElwee, who left 3DO, company said, “for personal reasons.” Game maker said Dully reorganized staff of more than 300 at trading card company Upper Deck “and improved profitability while growing revenue to hundreds of millions of dollars.” Company said its product development department now was being led by Senior Vp Paul Grace, who will continue to report directly to CEO William (Trip) Hawkins. But 3DO said “all other operational and administrative functions within 3DO will report to Dully.” 3DO said that in Dec. quarter it “undertook significant restructuring efforts that reduced headcount, overhead expenses, cash burn rates and overall business risk… Product direction for the coming year was redefined to conform to market conditions, reduce risk and increase sales success.” Company now has staff of 350 -- about 280 of them in product development. Hawkins said: “We've significantly reduced the breakeven point for the company by cutting monthly fixed costs to around $3 million. We also have a much more solid product plan going forward, with a dominant concentration on proven brands that have established consumer audiences, and development of projects that will have enough time and staffing to be first- rate. We are also beginning to see technology efficiencies now that we have built a strong in-house base of next-generation code and other assets. We are leveraging this foundation on all of our titles on any platforms as we move ahead.” Company said it “made progress toward its goals in the December quarter by delivering revenues that are expected to be in the range of $15 to $16 million and raising more than $25 million in additional working capital to support the company’s plans.”

Supreme Court ruled 6-2 Wed. that cable operators were entitled to low, regulated rates when they used utility or telephone poles to string fiber carrying data. Ruling in FCC v. Gulf Power and National Cable Telecom Assn. v. Gulf Power means Gulf Power and other utilities that own poles can’t charge what they describe as “market rates” for space on those poles -- as high as $50 per pole per year. That compares with yearly charges of $5-$6 at current regulated rates. Cable companies had said if they were charged higher rates they would have no choice but to pass through those costs to their customers, perhaps raising rates as much as $2 per month per subscriber. NCTA hailed decision, saying it would make Internet access more affordable and make broadband deployment more attractive to companies. American Cable Assn. (ACA) also praised decision, saying it would save many independent cable operators in rural areas from going out of business. FCC Chmn. Powell said if decision had gone other way it would have “derailed the broadband revolution.”

Competitors urged FCC to turn down Verizon’s request for Sec. 271 entry in N.J., saying company’s high rates for hot cuts and unbundled network elements (UNEs) had deterred competition. In comments filed late Mon., several competitors reminded agency that U.S. Appeals Court, D.C., recently remanded part of FCC’s decision permitting SBC entry in Kan. and Okla. on ground that Commission hadn’t properly considered such “price squeeze” issues (CD Dec 31 p2). Court “made clear” that FCC “must carefully consider whether the applicant’s UNE rates create an anticompetitive price squeeze that prevents local competition [and] that is precisely the case in New Jersey,” WorldCom said. Several competitors said high wholesale prices had stopped them from entering residential market in N.J.

Since Telecom Act, cable rates have risen 35.7% while consumer prices for all other goods and services as measured by Consumer Price Index have risen 14.5%, according to data from Bureau of Labor Statistics. Asked why prices have risen 21.2% more than inflation, industry representatives said programming costs have gotten out of control and consumers are getting more channels and choices for their money. That doesn’t appease consumer groups, especially as many people are seeing their prices for basic or expanded basic service rise roughly 5% this month. Jan. typically is time of year when MSOs institute any price increases.

Disney received temporary restraining order from U.S. Dist. Court, L.A., late Mon. that prevented EchoStar from dropping ABC Family Network while court case was pending (CD Jan 2 p2). Court will review Disney complaint Jan. 10. Decision came just hours before ABC Family was scheduled to be dropped from DISH network. Dispute highlights growing tensions between channel operators such as Disney and distributors such as EchoStar over programming fees that distributors pay, Disney Pres. Robert Iger said. In ruling, Judge Gary Feess said “the balance of hardships weighs heavily” in Disney’s “favor because of the nature of the harm ABC Family is likely to face” if EchoStar ended distribution. ABC has 84 million subscribers, including 6.4 million on EchoStar DISH network.