Utah House Public Utilities Committee unanimously passed bill (HB-149) that would impose financing restrictions on municipally owned telecom and cable ventures. Bill cleared committee with amendment to require that City of Provo divest its municipal cable company and repay its power fund for costs of system before it could proceed with its plans to become wholesale telecom infrastructure provider. Bill would prohibit municipalities using taxing and eminent domain powers to disadvantage or undercut Internet, phone or cable competitors and would restrict municipal telecom/cable services only to municipal citizens. Some municipalities opposed bill, saying it would deny phone and cable customers price and service benefits from competition, while rural incumbent telco and competitor interests said it would level playing field by ensuring municipalities didn’t take unfair advantage of their governmental authority.
Responding to request for information from FCC International Bureau, Deutsche Telekom (DT) and VoiceStream emphasized there’s “no substantial possibility” that Germany’s competitive or regulatory environment “could harm competition” in U.S. “There is nothing in the record to demonstrate that the merged company could engage in anticompetitive cross-subsidization or predation.” In connection with proposed merger of Germany’s DT, VoiceStream and Powertel, International Bureau Chief Donald Abelson sent list of 23 questions to DT and VoiceStream earlier this month. Questions included percentage of business and residential loops in Germany controlled by DT, how foreign holdings of DT were treated for regulatory purposes and whether govt. shareholders were bound to vote with majority of other owners. Bureau also asked about separate $5 billion investment that DT made in VoiceStream in advance of merger’s closing. Companies replied Germany doesn’t regulate DT’s foreign operations, including U.S. affiliates. They said carriers had several options for bypassing DT facilities when bringing traffic into Germany from European countries where there are landing stations for U.S.-Europe undersea cables: Carriers can route traffic to any point in Germany without using DT facilities. Variety of alternatives “makes clear that no bottleneck exists for international services in Germany,” companies said. Answers also addressed concerns raised by Sen. Hollings (D-S.C.) that $5 billion investment by DT amounted to 39% of VoiceStream’s capital stock. Hollings has contended DT’s current stake in VoiceStream should be assessed, based on Commission precedent, by comparing DT’s investment with VoiceStream’s total “paid-in capital.” Companies said: “This argument is simply wrong.” They said Hollings misinterpreted past decisions of FCC in determining amount of “alien beneficial ownership.” One of cases cited as precedent is FCC order granting Fox TV stations permanent waiver of 25% limit on alien ownership of stations based on ownership of Australia-based News Corp. Unlike transactions at stake in Fox and NextWave cases, companies told bureau “share ownership is the only accurate means to evaluate alien beneficial ownership of VoiceStream.” Paid-in capital analysis would “greatly overstate” actual amount of alien beneficial ownership, companies said.
In his first meeting with reporters as FCC chmn., Michael Powell was very upfront on several issues -- such as consumer protection, cable rates and 35% TV station ownership cap -- which has lead to both praise and criticism for positions he took (CD Feb 7 p2). On plus side, NBC Washington Vp Robert Okun predicted Powell would be “an assertive chairman with a market-oriented agenda, which is very refreshing.” Washington attorney Richard Wiley, who chaired FCC 1974-1977, called Powell’s statements “very learned, very erudite… He laid out his philosophy in very candid terms.”
Alan Wurtzel adds leadership of NBC broadcast content policy div. to role as pres.-research and media development… John Crowley, ex-Open Support Systems, named chief information officer, Broadview Networks, succeeding Colm Kelly, retiring… Neal McEwen, ex-VerticalOne, appointed CFO, Pathfire… Gary Stone moves up to senior vp-COO, Hispnic Bcstg., replacing David Lykes, who takes over as exec. vp-corporate affairs… Steve Nagy, ex- Enron, named vp-Latin America, Convergys… Michael Sternberg, ex- KMC Telecom Holdings, appointed pres.-CEO, Global Broadband… Jody Dreyer, moves to senior vp-corporate public service from senior vp-corporate synergy and special projects at Disney.
FCC Comr. Tristani is expected to announce plans soon to leave agency so she can run for office in her home state of N.M. She wasn’t available for comment Thurs. because she was traveling, but one of her aides said Tristani didn’t dispute Albuquerque Tribune report that she planned to return to N.M. by end of year so she could campaign for political office. Tristani told Tribune she hadn’t decided whether to run for Senate, governorship or House seat of Rep. Wilson (R-N.M.). One source said he expected her to make announcement in 2-3 weeks. Her term ends in June 2003, although she has said she would like to leave sooner. If she leaves, Chmn. Powell will be only holdover from previous Commission. Chmn. Kennard has left and Comrs. Ness and Furchtgott-Roth have said they will depart as soon as President Bush names replacements.
ACTV said it signed deal to buy Intellocity Inc., interactive TV design and development company, for $32 million in common stock and possibly additional stock payment. ACTV said purchase would allow it to offer broader range of interactive TV tools, products and services to its clients.
Not content to sue its rivals for alleged patent infringement in U.S. courts, Gemstar-TV Guide International also is filing complaints against them internationally. Gemstar and its subsidiary Starsight Telecast brought legal claims against Pioneer, Scientific-Atlanta (S-A), EchoStar and SCI Systems to International Trade Commission (ITC) Thurs., charging they illegally imported set-top boxes featuring interactive program guides that infringed on Gemstar’s U.S. patents. Gemstar and Starsight said they were seeking exclusion orders from ITC that would ban importation of offending boxes and stop them from being sold in U.S. immediately. Gemstar also is seeking injunctive relief and other damages from Pioneer, S-A and EchoStar in patent infringement suits filed earlier in separate federal courts. S-A spokesman said company hadn’t seen Gemstar’s ITC complaint but didn’t believe it had infringed on “any valid Gemstar or Starsight patents.” Spokesman also said S-A “will vigorously defend this new action and continue to pursue our patent and antitrust actions against the Gemstar companies here in Atlanta.”
Senate Judiciary Committee will be involved in telecom issues this year, Chmn. Hatch (R-Utah) said in floor statement this week. He said committee would look at “the countervailing rights and duties of local phone companies and cable companies,” asking questions about “what rights of access to broadband lines should competitors have, and what right to content should competitive distribution services have.” Hatch expressed willingness to look at content rules on Internet and, by extension, on other media, asking “how do we cope with different media competing toward largely the same goal, but with differing rules?” Ranking Democrat Leahy (Vt.) said Committee would pay close attention to implementation of last year’s satellite loan bill, to which he added provision allowing use of loans for Internet access: “We want to make sure that gets done and done right.” As usual, Committee also expects to hold hearings on variety of intellectual property and copyright issues, including Napster case aftermath. Hatch said U.S. needed to join international efforts to increase intellectual property protection online, specifically calling on govt. to accede to Madrid Protocol. Clinton Administration sent accession request last year to Senate, which didn’t act. Leahy said he hoped President Bush would urge action this year because U.S. ratification “would help create a one-stop international trademark registration process.”
State regulators won their first victory in federal appeals court on 11th Amendment immunity claim involving Telecom Act. Three-judge panel of 4th U.S. Appeals Court, Richmond, ruled 2-1 that Md. state regulators had 11th Amendment immunity from federal court review of their interconnection contract interpretations and resulting enforcement actions. Court in Doc. 99-2626 ruled Wed. on case arising out of Verizon’s appeal of 1999 Md. PSC decision that terms of the local interconnection agreement in force between Verizon and WorldCom required Verizon to pay WorldCom reciprocal compensation on calls to local numbers of Internet service providers. Court majority said Md. regulators didn’t waive their sovereign immunity by deciding dispute over meaning of contract’s language, and ex parte Young exception to 11th Amendment immunity didn’t apply to this case because decision “was based on state contract law and arguably did not involve an ongoing violation of federal law.” Court said WorldCom’s petitions to Md. PSC seeking declaratory judgment interpreting contract language and injunction to enforce terms of an already-approved interconnection agreement “do not fall into the category of actions identified [in Telecom Act Sec. 252] for resolution in federal court… Such petitions are left by the 1996 Act for resolution by state commissions and for review by state courts.” Verizon can seek en banc rehearing by full appeals court. Case is significant for states, which up to now have lost all 11th Amendment cases they brought to federal appeals courts. U.S. Supreme Court twice has refused to address 11th Amendment Telecom Act immunity issue since appeals courts had been unanimous in ruling against states. State legal experts said that if request for en banc rehearing were denied, or if rehearing went against Verizon, conflict would exist among federal appeals courts, and U.S. Supreme Court would have to address issue on the merits.
Arianespace signed contract with European Space Agency (ESA) Feb. 15 to launch Artemis satellite on Ariane 5 between June and Aug. 2001 at 21.5 degrees E over Central Africa. Satellite will carry 3 payloads: Laser, S- and Ka-band and L-band for mobile communications including global positioning systems in Europe, N. Africa, Middle East. They will establish laser link with Spot 4 observation satellite and Ka-band links with International Space Station and Envisat observation satellite scheduled to launch this summer on Ariane 5.