Ameritech local exchange competitors warned Ill. Commerce Commission (ICC) that Ameritech local customers could face another service quality meltdown this summer as result of what it charged was company’s systematic underspending on its infrastructure for last decade, a claim Ameritech disputed. CLEC-supported Ill. Coalition for Competitive Telecom Thurs. released AT&T- commissioned study by Chicago telecom consultant Gregory Busch that reviewed Ameritech’s ARMIS reports to FCC 1988-1999. Report said that for most of 1990s, after Ameritech moved to relaxed price cap regulation, company on average spent 25% less per line on capital improvements than Bell companies in other regions. Busch’s report said data indicated Ameritech management took advantage of lenient regulation by shortchanging network to bolster profit margins. “SBC bought a system with serious problems, and years of neglect cannot be corrected in a few months. The system will fail again once service demand increases,” Busch said. He said demand for new and relocated wholesale and retail phone service in Ill. rises in peak moving season in spring and summer months. Ameritech Pres. Edward Meuller, who came on board after SBC-Ameritech merger, said company had kept its promises to improve service and met ICC service standards in Jan. He didn’t comment on company’s investment history before acquisition by SBC, saying carrier was focused on continued improvements in customer service to ensure no repeat of last summer’s installation and repair delays. ICC Chmn. Richard Mathias said agency had concerns about Ameritech’s capacity to handle service orders and repairs and had sent questionnaire asking about role that condition of infrastructure played in company’s service performance. “We'll be watching their performance closely,” he said. ICC recently penalized Ameritech $34 million for its retail service failures in 2000 and Tues. fined company $1.2 million for failing to provide adequate wholesale service in last part of 2000, bringing total fines for wholesale service performance failures in 2000 to $6.3 million Sustained service quality improvement is critical for Ameritech now for 2 reasons: (1) Ill. legislature is considering bill (SB- 134) to replace expiring Ill. regulatory law with new statute that would deregulate Ameritech’s business services and minimally regulate residential service. (2) Ameritech recently advised ICC that it planned to ask this summer for agency’s endorsement of Sec. 271 interLATA long distance entry.
In busy week of developments, XM began $100 million offering in convertible notes and 5 million shares of Class A common stock. In SEC filing, XM said funds it raised through Dec. 31 would be sufficient to support operations through summer debut of commercial service. However, “substantial” additional funding may be needed if commercialization schedule is “materially delayed.” Company estimated it would need to raise additional $150-$175 million to cover funding needs through end of 2001, and additional $250-$300 million for operations through 2002. Already, XM has been beset by delay of Jan. satellite launch, which has been rescheduled for March, although company has said postponement would have little or no material effect on its financial viability.
Utah PSC approved inflation-indexing formula for Qwest price regulation program that will end 3-year rate freeze in favor of indexed price caps. Formula will base annual cap adjustments on gross domestic product price index (GDP-PI) plus or minus productivity factor to be calculated each year based on annual difference between local exchange industry productivity and national economy’s productivity. PSC said formula would be applied retroactively to each of last 3 years plus this year because Utah’s 1996 price regulation law required that rates reflect costs. Last time company’s rates were set to cost was 1997 at end of Qwest’s last rate case, when price freeze began. Financial impact on Qwest was unclear because retroactive indexing would apply primarily to revenues collected from basic exchange and access services. Revenue from most discretionary, optional and vertical business and residential services won’t be included in calculations. Qwest and PSC staff estimated productivity factor would run around 5% for each year, which would produce aggregate rate cut for past years in range of 9-12% for affected services. PSC staff next month will supply Qwest with revenue reduction figures for each year 1998-2001 and company is to respond in April with specific rate reductions.
Utah House defeated bill (HB-182) that would have made use of hand-held mobile phones by drivers of moving vehicles secondary motor vehicle infraction, with fine but no violation points on driver’s license. Offense would have been ticketed only if driver were stopped for primary moving violation such as speeding. Although mild, bill encountered opposition on House floor as intrusion on personal rights or for singling out mobile phones over other types of driver-distracting electronic devices.
CTIA filed challenge in U.S. Dist. Court, D.C., Fri. on scope of Advisory Council on Historic Preservation’s (ACHP) authority to promulgate rules that bind FCC. CTIA is challenging final rule that ACHP adopted Dec. 12 that implements Sec. 106 of National Historic Preservation Act (NHPA). Act covers regulations on siting and environmental impact designed to ensure that facilities, including wireless towers, have no adverse impact on historic properties. CTIA, in complaint that names ACHP, its Chmn. Cathryn Slater and Exec. Dir. John Fowler, wants court to review final rule. CTIA argued that regulation was beyond scope of ACHP’s rulemaking authority under NHPA. CTIA also challenged rule as arbitrary and capricious, unconstitutional and “otherwise not in accordance with law.” It said wireless carriers were adversely affected by rule because it favored “intensive government oversight and unwieldy bureaucratic procedures to ensure that the goals of the NHPA are satisfied.” Final rule is at odds with “statutory mission” of FCC and telecom industry, CTIA said. Assn. said final regulation threatened to undermine purpose of Communications Act, “particularly as it applies to fostering the rapid growth and development of wireless communications infrastructure.” Complaint argued that ACHP’s role was advisory under NHPA and that final rule had expanded its authority unlawfully. Federal agencies, not advisory councils, have authority to adopt regulations implementing siting requirements of Sec. 106, CTIA contended. Complaint apparently doesn’t alter agreement reached earlier this year between wireless industry and govt. policymakers, including ACHP, on how tower siting issues should be handled for colocation of equipment at existing sites.
Lucent obtained much-needed $6.5 billion in credit facilities after $2 billion line of credit expired at midnight Feb. 22. Lucent CFO Deborah Hopkins called financing “critical element” of company’s restructuring plan. Lucent obtained $4.5 billion of new credit facilities arranged by J.P. Morgan-Salomon Smith Barney, part of which replaces $2 billion credit line that expired Thurs. Remaining $2.5 billion will be assumed by Lucent spinoff Agere Systems when it floats its IPO. Lucent also amended existing $2 billion credit facility that’s due in 2003.
Va. legislature adopted 7 telecom bills and sent them to Gov. James Gillmore (R), whose approval is expected. They include: (1) HB-1902 to eliminate mandatory Corp. Commission public hearings on every local exchange certification application. Measure permits hearings at commission’s discretion. (2) HB-1767 to require that new telecom and energy facilities be installed within existing utility rights of way whenever feasible. (3) HB- 1914 to limit grounds on which utility pole owners can refuse to allow telecom or cable facility attachments. (4) HB-2640 exempting telephone cooperatives from filing local exchange tariffs and permitting them to take ownership interest in other telecom companies. (5) HB-2427 restricting telemarketing hours and requiring telemarketers to identify themselves in person and via caller ID. (6) SB-1349 to exempt wireless customers from local E911 taxes and change assessment basis for state’s 75-cent monthly wireless E911 surcharge to per customer basis from per- number. (7) SJR-336 to form special legislative subcommittee to study highway safety threat posed by car phone use and make recommendations by Nov. 30 for consideration in 2002 session.
Ill. House unanimously passed car phone bill (HB-10) to allow drivers to use single-sided headsets or earpieces with mobile telephones. State Rep. Robert Bugielski (D-Chicago) said his bill was intended to update 1970s driver-distraction law that prohibits drivers from using any kind of earphones or headsets while driving. He said old law was aimed at drivers who used headphones to listen to personal stereos or radios while driving, but it also effectively prohibited certain types of hands-free car phones. Bill now goes to Senate.
Qualcomm stock fell, then rose, Fri. on reports that sales would be delayed in Europe, but it said no delay in sales was expected. At issue was financial analyst’s prediction that 3G technology would be delayed 2-3 years in Europe, which Qualcomm said was incorrect. Technology already is deployed in S. Korea and will be in Japan, N. America and Latin America this year, it said. Qualcomm forecast demand for CDMA circuits in 2nd quarter 2001 would be consistent with previous forecast of 16 million units, increase of one million units over first quarter. However, Motorola, major Qualcomm customer, said Fri. it might post first- quarter loss if sales continued to slow. In midmorning trading Fri. Qualcomm stock price fell 17% to $50.13, but price rallied to close at $61.8125.
Kan. Senate Commerce Committee will hold hearing Feb. 27 on House-passed bill (HB-2099) that would amend state’s antislamming law to allow corporations and other organizations to take legal action against telephone slamming. Present law allows only individuals and state agencies to prosecute slamming complaints. Measure also would direct Kan. Corporation Commission and Attorney Gen.’s Office to share information and otherwise cooperate in prosecuting slammers.