Deadline for DirecTV’s threat to terminate programming distribution agreement with Pegasus Communications passed last week despite former’s claim that it was owed $6.2 million for subscribers gained outside latter’s exclusive sales territories. DirecTV, which had set Feb. 15 deadline for resolution of dispute covering 7,188 subscribers, said it was owed revenue collected from customers before they were transferred to its service area. Subscribers were split between Pegasus and Golden Sky, which Pegasus acquired in last year. DirecTV notified Pegasus of disputed revenue Jan. 15, Pegasus said in SEC filing.
FCC International Bureau plans to hold March 14 public forum on issues related to U.S. companies’ entry into telecom markets in foreign countries. Forum will be at FCC hq, 10:30 a.m.-noon. Bureau said information provided at forum will be used to supplement 2000 edition of FCC’s International Markets Report.
As broadcasting industry waited to see whether News Corp.’s bid to take control of DirecTV (CD Feb 15 p8) was successful, industry analysts and officials speculated on whether placing control of largest U.S. DBS company in hands of big media company would help or hurt U.S. consumers. News Corp., Microsoft and Liberty Media Chmn. John Malone were launching joint bid for DirecTV that would create $75 billion global satellite giant. Final details of complicated transaction still were being worked out and final decision was “days away,” said attorney familiar with proceedings. Many of same issues that “cropped up” in AOL- Time Warner “are certain to be revisited” if sale goes through and company attempts to gain regulatory approval, satellite analyst said: “There are definitely some antitrust issues involved” in this deal.
N.J. Assemblyman Anthony Impreveduto (D-Hudson) said he would introduce legislation to cap intrastate operator assistance surcharges at all payphones, regardless of operator service provider. He said he wanted to close what he saw as loophole in current regulations that allow nation’s largest interexchange carriers to charge exorbitant rates for calls billed to telephone credit cards. He said current regulations capped surcharges by alternative operator service (AOS) providers, interexchange resellers who handle only collect, 3rd party and credit card calls. Caps are $2.75 for automated service and $5.25 for live operator service. But lawmaker said facilities-based carriers such as AT&T, Sprint and WorldCom weren’t included in the caps because state regulators assumed their rates would continue indefinitely to be cost based. N.J. Deputy Ratepayer Advocate Heikki Leesment, whose office supports Impreveduto’s idea, said situation changed last May when AT&T raised surcharge on automated credit card calls to $4.99 from $2.71 and other major carriers quickly followed suit. Result, she said, is consumers finding themselves billed $6 or more for payphone calls that would have been under $1 if paid with coins. Verizon is trying out special calling card that allows unlimited number of intraLATA/local calls to home phone number for flat $3.25 monthly, but customers would have to call Verizon’s 800 access number. If they dialed widely advertised access numbers of major interexchange carriers and gave their Verizon card number, they would be billed extra charge, up to $4.99, for handling competitor’s calling card. Leesment said consumers had no ready way to determine toll-call costs at payphones or from room phones provided by hospitals and hotels, other than calling carrier and requesting rate quote. Customers have been complaining to state officials that they used to look for phones served by big national carriers, but now those companies’ surcharges are reaching levels that used to be seen only from AOS companies.
Verizon Wireless was among telecom carriers filing petitions for reconsideration last week on FCC’s building access order that lets building owners require relocation of network demarcation without getting approval of subscribers. Verizon Wireless contended order shouldn’t apply to commercial mobile radio service (CMRS) operators because their location of transmitters in multitenant environments didn’t raise same type of anticompetitive concerns that order addressed. “Because CMRS providers cannot affect competition by entering into exclusive access arrangements with building owners,” it said, there’s no credible reason to extend provisions of order to CMRS operators. CMRS providers generally don’t require access to building space or wiring to provide wireless service to tenants in building, Verizon said. Real Access Alliance contended FCC decision was mistaken on: (1) Role of building owners in development of facilities-based competition. (2) Scope of FCC’s authority to expand Over-the-Air- Reception Devices (OTARD) rule to include antennas used to receive and transmit data and voice communications. (3) Agency’s authority to interpret Sec. 224 of Communications Act to apply to facilities and rights inside buildings. “Building owners fall outside the Commission’s jurisdiction,” Alliance said. “The Commission concedes as much in the further notice of proposed rulemaking released with the orders, which seeks to achieve the CLECs’ goals by regulating carriers rather than property owners.” On narrower grounds, Wireless Communications Assn. (WCA) filed petition for partial reconsideration, asking FCC to clarify that safety exception of rule applied “to any professional installation requirements adopted by nonfederal authorities for subscriber premises fixed wireless transceivers that are protected by the rule.” WCA said exception prohibited “safety-related” antenna restrictions that would impair installation of subscriber premises fixed wireless antennas unless they met certain caveats, such as being nondiscriminatory. Triton Network Systems said that although it believed FCC properly expanded OTARD rule, it appeared “to have unintentionally excluded certain fixed wireless devices that should be appropriately covered.” Triton asked agency to clarify that restrictions weren’t designed to exclude certain fixed wireless devices deployed in consecutive point networks. Smart Buildings Policy Project also asked limited reconsideration.
AT&T isn’t “obligated to pay” overly high switched access charges to Eschelon Telecom, spokesman said in response to complaint Eschelon filed at FCC for nonpayment (CD Feb 16 p6). He said AT&T had asked Eschelon not to provide AT&T with access services because “Eschelon is seeking to charge access rates that are several times higher than incumbent local exchange carriers’ rates.” He said AT&T had talked to Eschelon about reaching “commercial agreement under which AT&T would order access services at competitive rates” but hadn’t been able to reach any agreement.
WorldCom’s acquisition of controlling interest in Digex assures latter will be “leader in managed hosting services to enterprise customers,” Lehman Bros. said Fri. Research report by analyst Harry Blount said he was reassured by WorldCom announcement to analysts that it would fund Digex through 2002 and commit up to $500 million in sales of Digex services over 3 years. Report said WorldCom’s funding appeared to be under terms that “will be significantly more attractive than could be achieved by Digex alone in the capital markets.” Lehman maintained strong buy for Digex. WorldCom on Thurs. proposed settlement designed to ease concerns of Digex’s minority shareholders about WorldCom’s acquisition and ward off suit they had filed. WorldCom plans to acquire Digex control through merger with Intermedia, which then will be spun off under consent decree with Dept. of Justice. Settlement with shareholders calls for paying more than $180 million in cash and stock in return for resolution of claims in lawsuit. Among other things, settlement would reduce exchange ratio of WorldCom-Intermedia shares to one WorldCom share for each Intermedia share. Current ratio calls for 1.18 WorldCom shares for one Intermedia. Digex shareholders also would get settlement fund of $165 million in WorldCom stock plus 2nd fund of $15 million to cover expenses incurred by Digex in connection with settlement.
FCC granted complaints by AT&T and WorldCom Fri., ruling that U S West calling service -- 1-800-4USWest -- violated Sec. 271 of Telecom Act because it permitted long distance calling by U S West’s local customers. Complaints were filed 3 years ago, before Qwest acquired U S West. Commission said case was similar to one last year in which FCC found Ameritech’s calling platform in violation of Telecom Act. “The evidence… demonstrates that U S West’s service is, in all material respects, the same as Ameritech’s unlawful service,” FCC Enforcement Bureau said in order. Among problems, agency said: (1) Calling plan was designed as combined service offering long distance component. (2) U S West relied on its brand name to market combined offering. (3) It used bill inserts and other mailings to promote service to its subscriber base. (4) It “maintained control and ownership of the customer relationship in connection with the combined services offering.” (5) It had “exclusive control” over marketing service. (6) It selected long distance provider that would carry interLATA calls and dictated certain terms. AT&T said case offered “clear- cut violation of Congress’s mandate that a Bell company not enjoy the benefits of being in the long distance business without first complying with the requirement that it open its local markets to competitors.” AT&T said case had been pending for several years and it hoped action “signals a resolve by the new FCC to act promptly to rule on complaints that Bell companies are violating their duties under the Act and the FCC’s rules.”
Changes at DigiPlex: Byrne Murphy, ex-McArthur Glen, named pres.; Keith Chamberlain, ex-Orange, appointed chief engineer; John Weston, ex-Sulzer, named vp-operations; Geir Ramleth resigns as chmn.-CEO, remains on board… Chris Curtin promoted to Disney vp-corp. synergy and special projects, replacing Jody Dreyer, who moves to senior vp-corp. service… Chris Hardy, Comsearch, named pres.-National Spectrum Mgrs. Assn… Pierre Loubet, ex-Sonopress, appointed vp-sales, advanced media, Warner Media Services… Michael Woolf, ex-WNPA, Jeanette, Pa., named vp-broadcast operations, Pegasus Communications… Ric Campbell, ex-dir., Utah PSC Utilities Div., appointed to succeed Utah PSC Comr. Clark Jones, whose term expires March 1… James Howard, ex-Common Cause, named policy dir., Ill. Coalition for Competitive Telecom.
Nextel reported operating revenue of $5.7 billion in 2000, up 50% from 1999, with loss attributable to common stockholders narrowing to $1.02 billion from $1.5 billion. Nextel said it now has 7.63 million global subscribers, including its shares in subsidiaries and ventures. In U.S., Nextel added 2 million subscribers for year, up 48%. In 2001, carrier said it expects domestic revenue to top $7 billion and cash flow growth of 50-65%. Separately, Nextel said Chmn. Daniel Akerson, who also is CEO of XO Communications, was stepping down but would remain as nonexecutive chairman of Nextel International. William Conway, founding partner of private merchant bank Carlyle Group, is new Nextel chairman.