Suit in Cal. State Superior Court charging Exec. Producer Mark Burnett, CBS and others with fraud in production of network’s reality program Survivor has been sent to FCC by plaintiff and former contestant Stacey Stillman. In suit, filed Feb. 5 in San Francisco, Stillman accused Burnett of violating Sec. 508 of Communications Act -- which was added to Act following rigged quiz shows in early 1960s. Section makes it crime “to engage in any artifice or scheme for the purpose of prearranging or predetermining in whole or in part the outcome of a purportedly bona fide contest.” Stillman claimed Burnett and others connected with program conspired to induce other contestants to vote her off program in early episode, saying: “Defendants violated the law by interfering in the voting decisions of the Survivor contestants, which determined, in whole or in part, the outcome… Defendants… supplied to certain contestants special and secret assistance whereby the outcome of the purportedly bona fide contest of the Survivor was in whole or part prearranged and predetermined.” Commission had no comment. Meanwhile, defendants in Stillman suit filed countersuit in L.A. court charging breach of contract, extortion, defamation and disparagement.
FCC Chmn. Powell would like to see changes in Commission’s operation so agency could react better to new technology and other developments, he told news media Thurs. after Commission’s open meeting. He wouldn’t outline his specific plans -- “stay tuned,” he said in answer to reporter’s request for more details. However, he endorsed calls by agency staff for hiring and retaining more engineers, beefing up technical expertise of agency, improving coordination among bureaus in areas such as spectrum management. Agency needs to be smarter and faster, Powell and others said. When reporter noted that many chairmen had pledged better operations, Powell responded: “It’s clear where we want to go. I'm going to die trying… You can judge me when we're finished. It’s not window dressing.”
S.D. House Taxation Committee may have tabled a telecom tax that critics said would have made it the most regressive telecom state. Committee voted 11-4 to postpone action on SB-214, which would have imposed a 3.5% excise tax on telecom, Information Technology Assn. of America (ITAA) spokeswoman Tinabeth Burton told us. S.D. currently has the nation’s 5th highest telecom taxes, but the new bill would have made it the country’s largest tax rate on intangible property, Burton said. Committee voted to postpone action on tax until 44th day of S.D. session. S.D. session has only 40 days, a legislature spokeswoman told us. Burton said it was her understanding that was means of tabling legislation. S.D. lawmakers didn’t return phone calls. “South Dakota would have been going against the trend,” Burton told us. “It was considering this tax at a time when 17 of 25 states that had this tax had dropped it.” She said tax would have created hostile business environment for telcos, ISPs and other high-tech businesses.
FCC should act quickly on point system to select among applicants for noncommercial educational broadcast licenses (MM 95-31), Media Access Project said in ex parte filing. Although participants may disagree on details of selection system, group said they all agreed decision was needed to allow Commission to begin eliminating backlog of mutually exclusive applications, some of which have been waiting nearly 6 years. Separate filing said freeze on new applications had added to problem, since many stations couldn’t apply for Commerce Dept. funding for upgrades.
Alliant Techsystems (ATK) delivered first flight structure composite for Atlas V rockets to Lockheed Martin Space Systems in Denver Thurs. Heat shield is first of 3 structures ATK will build for Lockheed in deal signed last year.
Texas Instruments (TI) CEO Tom Engibous outlined plans for company to invest up to $100 million in next 12-18 months to help software developers deploy wireless Internet applications. He announced plan at 3GSM World Congress in Cannes Thurs. Point of investment, Engibous said, is to accelerate deployment of multimedia mobile applications for its Omap architecture, software and hardware combination that uses digital signal processor. First standard Omap product will be in production later this year, he said. Investment program TI is starting will focus on software developers and technology companies. He said Omap could be used to deploy 3rd-generation wireless systems and has been chosen by Ericsson, Nokia and Sony for next-generation applications.
Discovery Communications announced series of senior management changes Thurs. to centralize its strategic planning and business development functions, create new structure to implement “cohesive content and branding strategies across all networks” and establish multiplatform consumer products unit. Changes include new companywide content board headed by Discovery Chmn. John Hendricks, expanded executive committee and creation of 2 new corporate offices -- Office of Strategy & Development and Office of Corporate Operations. Discovery Pres. Judith McHale, who announced changes, said company would set up new business development function, new content group and new consumer products unit. She also announced promotions or new responsibilities for top Discovery executives Jonathan Rodgers, Donald Baer, Michela English, John Ford, Mark Hollinger, Daniel Fischer, Dara Altman, Chris Miller.
Defense Dept. is developing plan to improve coordination of satellite purchases and ground terminals to avoid compatibility problems such as delays that hit Global Broadcast Service when Army found ground terminals defective, officials said. Pentagon currently doesn’t buy satellites and ground terminals at same time to avoid asking Congress for lump sum up front, but process may change if Defense Dept. adopts recommendations of space commission panel led by current Defense Secy. Donald Rumsfeld, as expected.
CLEC trade group ALTS, in its latest annual report on status of competitive local exchange industry, said CLEC industry continued to grow, albeit at slower pace, but was coming up against “enormous impediments.” ALTS said impediments included investor reluctance to continue putting money into CLECs that wouldn’t turn profit for years to come, and continuing “refusal or inability” of incumbent telcos to provide problem-free interconnection services to CLECs. ALTS said future CLEC growth would come mostly from broadband data and DSL services, projected to grow to $13 billion in 2004 from under $1 billion in 1999. ALTS report said that of 36 publicly held CLECs in 2000, only 4 (Intermedia, Ntelos, Pac-West and Time Warner Telecom) showed profit last year and only one, General Communications of Alaska, saw an equity value increase over last 52 weeks. Most publicly held CLECs (33 of 36) saw their equity values fall more than 50% in last 52 weeks, with some companies’ shares becoming nearly worthless, report said. Overall CLEC market capitalization fell more than 50%, to under $32 billion from 1999’s $86 billion. On good side, report said CLEC market share reached 8.2% of access lines (16.1 million in 2000 from one million in 1996), serving 1.15 million customer buildings. CLEC revenue share increased to 8% ($39.1 billion, including $7 billion from access) from 1% in 1996. CLEC industry employment jumped to 94,494 from 70,000 in 1998, but ALTS said it expected “sharp” cutbacks in CLEC industry employment this year. Report said data CLECs had colocated more than 8,000 pieces of equipment in incumbent central offices and had 2,071 data switches in service, while full-service CLECs had more than 1,000 voice switches in service. ALTS said 2000 was first year CLECs failed to double their market shares over previous year, amid increased bankruptcies, maturing services and general economic slowdown. ALTS reported CLECs were split about evenly among facilities-based service, local resale and unbundled network elements (UNE). Facility-based and UNE entry accounted for 69% of CLEC services. ALTS said CLECs got $3.4 billion of $6 billion that venture capitalists directed at telecom service providers in 2000, with top 15 receiving $2.7 billion of that $3.4 billion. But strategic mainstream investment in CLEC industry last year plummeted to just $1.63 billion from $7.43 billion in 1999, ALTS said. CLEC industry also saw 14 major mergers in 2000 with combined asset value of $19.6 billion. Report said CLEC capital expenditures, which had increased about 50% each year since 1996, were projected to decline slightly in 2001, from $24.9 billion in 2000 to $23 billion this year.
Former FCC Chmn. William Kennard was honored for “diversity agenda” at private Black History Month Reception hosted by civil rights leaders, industry lawyers and former FCC colleagues Tues. in Washington Event was organized by Black Entertainment & Telecom Assn. (BETA). FCC Chmn. Powell attended briefly and praised Kennard for his “commitment and outstanding work” during tenure at Commission. BETA Pres. Talib Karim, who was hired by Kennard at FCC before beginning private practice, said policies of Kennard “not only benefitted blacks, Latinos, Native Americans and other historically disadvantaged groups,” but he “opened up opportunities for small business owners and ordinary consumers by encouraging and promoting competition” in telecom, broadcasting and cable industries. “A lot of us have rested upon his shoulders and it’s now up to us who follow to continue his legacy.” Kennard said he was humbled and “touched by expressions of love” demonstrated at event that attracted overflow crowd of 200, including FCC’s Tom Tycz, NTIA Dir. Greg Rohde, NAB Vp Dwight Ellis, civil rights leader Dick Gregory, lobbyist Tom Hart, Northpoint Vp Toni Cook-Bush, Minority Media Telecom Council Exec. Dir. David Honig, representatives of Black Entertainment TV, AOL, NCTA, Black Entertainment TV, National Assn. of Minorities in Communications (NAMIC), National Bar Assn. and TV commentator Maureen Bunyon. As first African-American chmn. of FCC, Kennard said it was “significant” that he “won’t be last” with ascension of Chmn. Powell.