BOCA RATON, Fla. -- Proposal to use “bill-&-keep” system for intercarrier compensation could cause significant problems for rural carriers unless universal service was increased to cover shortfall in revenue, panelists said Wed., last day of USTA’s annual convention here. Idea of moving to bill & keep to replace access charges and other carrier compensation systems has been under study at FCC for at least 2 years. Commission has been looking at having one compensation system replace myriad of carrier-to-carrier payment plans, including access charges and reciprocal compensation. Carriers, especially Bells, support moving to bill & keep as that one payment system. As originally proposed in White Paper by FCC staffers, bill & keep would divide network into 2 parts, with caller’s phone company billing from caller to central point and call recipient’s network charging for completion of call. System is considered simpler than those used now.
Letter from Senate Majority Leader Daschle (D-S.D.) was praised by all sectors of telecom industry, but many said noncommittal letter from powerful senator represented loss for Bells’ lobbying effort. In letter sent Wed. to FCC Chmn. Powell, Daschle urged quick completion of triennial review of unbundled network elements (UNEs). He didn’t recommend action, and said clearly that letter wasn’t not intended to do so. Consumer advocates and CLEC representatives said Bells had mounted intense lobbying campaign in recent weeks to win support for changes in UNE regulations. Although SBC and USTA said they were pleased with letter, many suggested it fell far short of what Bells wanted. Some said it essentially signified that Senate had finished work on telecom issues in 107th Congress.
PCIA, now representing wireless communications tower companies, will try to convince govt. to simplify tower installment and operation processes, PCIA Pres. Jay Kitchen told press in Washington Tues. PCIA filed motion late Mon. asking FCC to dismiss Gulf of Mexico petition filed by Friends of the Earth (FoE), Forest Conservation Council and American Bird Conservancy (ABC) last month. PCIA also said it anticipated filing letter with FAA “within next couple of days” asking it to streamline rules and procedures affecting tower owners and managers. Former paging industry group, PCIA now will concentrate 90% of its attention on tower industry, splitting remaining 10% between Microwave Clearinghouse and frequency coordination, Kitchen said: “Wireless will always be a very strong part of our everyday life, and there is no wireless without towers.”
Senate Commerce Committee hearing on broadband Tues. stressed importance of wireless technology as 3rd pathway for broadband deployment, with telecom experts painting grim picture of “depression” that had beset sector. While he and others acknowledged that time was running out to take action on broadband legislation this year, Chmn. Hollings (D-S.C.) stressed importance of moving away from “finger-pointing” in Congress. “We need to move beyond the intramurals up here over Tauzin-Dingell and parity,” Hollings said. “If the market demonstrates anything, it is that competition, not deregulation, drives the Bells to invest in their networks and comply with Section 271 to open their markets,” Hollings said. While panelists, which didn’t include telecom company officials, emphasized need to “jump-start” funding for sector, another common theme was how to structure unlicensed wireless rules and spectrum to allow Wi-Fi and other technologies to compete with DSL and cable.
Antitrust statutes would be subjected to review under conference report on Dept. of Justice (DoJ) authorization bill (HR-2115) that House passed Sept. 26 by 400-4 margin. Bill, which would incorporate Antitrust Modernization Commission Act of 2001 (HR-2325) by House Judiciary Committee Chmn. Sensenbrenner (R-Wis.), would create blue ribbon commission designed to study effectiveness of antitrust laws on modern economy, committee spokesman said.
Against backdrop of new study that showed minorities hadn’t risen to senior levels of cable industry to degree that mirrored society, NCTA Pres. Robert Sachs told almost 200 cable executives here in N.Y. that cable must step up its efforts to rectify “underrepresentation of minorities and women on boards and in senior management.” Sachs’s comments came at opening of 2-day conference of National Assn. of Minorities in Communications (NAMIC).
Senate Commerce Committee approved granting FTC jurisdiction over common carriers, though measure was greeted with some scepticism from Republican senators who said it isn’t likely to pass full Senate. FTC official told us agency doesn’t anticipate House addressing issue this term, but said agency is pleased it moved this far in Senate because it bolsters common carrier case for next term.
City of Chicago is seeking to force cable operators to pay franchise fees on cable modem service by invoking state law that requires companies to honor contracts. In lawsuit filed in Circuit Court in Cook County, city said cable operators voluntarily had signed agreements to pay franchise fees on all revenue “regardless of what the Federal Communications Commission says.” City Cable Administrator Joyce Gallagher told us cable operators had notified city March 15 they would stop paying cable modem franchise fees following FCC decision to classify it as interstate information service. Fees on cable modem weren’t included in their quarterly payment, she said, and companies “would be in default as far as we are concerned on June 30.” Under contract law companies are obliged to honor conditions agreed to in their 15-year franchise agreements. Despite FCC ruling, condition that companies pay percentage of gross revenue as franchise fees hadn’t changed, she said: “We believe strongly that we are entitled to that [cable modem fees] by contract.” Companies operating in city are AT&T Broadband, RCN Corp. and Wide Open West. Chicago has joined National Assn. of Telecom Officers & Advisors (NATOA) challenge to FCC cable modem ruling in 9th U.S. Appeals Court, San Francisco, Gallagher said. Declining to comment on lawsuit until he had read it, RCN spokesman said cable operators now faced difficult situation because FCC took long time to resolve issue of cable modem classification. “We completely understand the need to generate revenue on the cities’ side,” he said, but given FCC ruling operators would face complaints from consumer groups and subscribers if they continued to collect and pay franchise fees on cable modems. “It’s a policy matter that we have to abide by,” he said: “The cities will have to fight this one out.”
Citing depressed capital markets for wireless carriers, FCC Thurs. floated alternatives for allowing NextWave re- auction bidders that now face potential payment obligations of $16 billion to opt out of all or part of payment commitments. Public notice said that even since Commission in March issued refund of all but 15% of down payments to Jan. 2001 re-auction winners, economic outlook for sector “has continued to decline rapidly.” Move comes just weeks before U.S. Supreme Court is to hear oral argument in FCC challenge to U.S. Appeals Court, D.C., reversal of agency decision to cancel NextWave’s licenses for missed payment, leading to return of that spectrum to bankrupt C-block bidder.
Verizon Wireless asked U.S. Court of Federal Claims to grant summary judgment on issues it was raising in litigation against U.S. govt. on pending NextWave license payment obligations. Verizon Wireless has mounted parallel challenges in U.S. Appeals Court, D.C., and Court of Federal Claims involving FCC decision to retain small amount of deposits from Jan. 2001 NextWave re-auction and to hold carriers to their bid obligations until pending U.S. Supreme Court case plays out. One key difference in Court of Federal Claims suit is that Verizon Wireless is seeking damages against govt. for not releasing it from what it argues are now void contract obligations connected to NextWave re- auction bids. If Claims Court were to grant latest Verizon request, filed late Mon., that could pave way for case to be decided before Supreme Court ruled on FCC appeal. At high court, govt. is challenging D.C. Circuit ruling last year against agency’s decision to cancel NextWave’s licenses for missed payment. Verizon Wireless has been pushing for either congressional or court relief of its more than $8 billion in NextWave re-auction obligations. Some analysts have suggested that govt. ultimately would release re-auction winners from collective $16 billion in bidding commitments, in part because even Supreme Court ruling siding with govt. could result in several more years of litigation of outstanding issues before D.C. Circuit (CD Sept 5 p11). Summary judgment by Federal Claims Court, if granted, could lead to decision on auction overhang before Supreme Court rules after Oct. 8 oral argument, industry observer said. In motion for summary judgment, Verizon told court that “there are no genuine issues of material fact” and that carrier should be “entitled to judgment as a matter of law.” Following last year’s D.C. Circuit ruling, FCC returned PCS licenses to NextWave. Earlier this year, Commission agreed to return all but 3% of total winning bids and kept liability intact for outstanding auction obligations of winners, which would come due if FCC were to prevail in court cases that upheld Jan. 2001 re-auction. Verizon described auction process as constituting “contract that requires prompt delivery of the licenses at the close of the auction.” It told court that FCC’s failure to deliver licenses in timely way was “a material breach of the auction contract, entitling Verizon Wireless to recission of the contract and refund of its entire down payment.” FCC’s failure to deliver PCS licenses that it auctioned in Jan. 2001 in timely manner gives Verizon Wireless right to rescind its auction “contract” with Commission and receive full down payment for licenses, carrier said. Verizon cited auction public notice in arguing that FCC had committed to return down payments to bidders if licenses became unavailable. Separately, Verizon Wireless filed opposition to FCC motion to stay proceedings in Court of Federal Claims until D.C. Circuit and Supreme Court issued their rulings in case. Govt. had argued that suit that had yet to play out at D.C. Circuit and Supreme Court could moot issues that were before Federal Claims Court. Govt. also argued that lawsuits pending in other courts could produce conflicting decisions. In objecting to stay motion, Verizon Wireless said cases before Claims Court and Supreme Court were different. High court will not rule on whether licenses should be awarded to Verizon Wireless but will examine only whether Sec. 525 of U.S. Bankruptcy Code barred FCC from cancelling NextWave licenses as part of its regulatory obligations under Communications Act, Verizon said.