Electronic Industries Alliance (EIA) had deficit of nearly $2.38 million in 1999 tax year, according to latest tax return, with $46.5 million revenue and $48.9 million expenses. Group spent $608,759 on legal fees for year. Most of revenue, $32 million, came from CES, EIA said. Salaries included EIA Pres. Dave McCurdy, $413,000; CEA Pres. Gary Shapiro, $435,000; Exec. Vp John Kelly, $225,000.
Minn. House Regulated Industries Committee opened hearings Mon. on telecom reform plan proposed by Gov. Jesse Ventura (Ind.). Panel heard administration’s description of legislation that would be required to carry out his plan. Centerpiece of plan is imposition of state telecom excise tax to support new Minn. fund that would subsidize universal service in high-cost areas, support deployment of high-speed digital services, start $100 million revolving loan fund to encourage competitive local-carrier entry and service rollouts. Meanwhile, rural incumbent telco interests said they opposed Ventura’s plan, saying it would reduce their revenue from intrastate access charges with only partial offset from subsidies. Net effect, said Minn. Assn. for Rural Telecommunications, would be rural rate shock and stalled network improvements that would lead to “economic havoc” in rural communities. Rural telcos said they wanted reforms that would benefit rural and urban areas alike.
Lehman Bros. said Verizon Wireless paid average of $70.09 per pop for 113 licenses it bought in FCC’s C-block auction for $8.8 billion (CD Jan 29 p1). Research note said it was “very interesting” that company with “one of the strongest spectrum positions” before auction was most aggressive bidder. Strong stance Verizon Wireless took to acquire spectrum could be due to “bullishness” of venture partner Vodafone when it came to spectrum acquisitions, analysts said. Lehman said AT&T Wireless, investor in designated entity Alaska Native Wireless, focused on 30 markets where it needed to bolster spectrum position as it looked toward 3rd generation build-out. By adding 10 MHz in N.Y.C. and L.A., Lehman said, AT&T Wireless reached FCC’s 45 MHz spectrum cap in each of those markets through previous holdings of 10 MHz PCS license and 25 MHz cellular block.
FCC must-carry rules are filled with “legal and factual errors,” EchoStar said in letter signed by Vp-Gen. Counsel David Moskowitz. EchoStar joined rival DirecTV and Satellite Bcstg. & Communications Assn. in challenging constitutionality of must- carry rules in federal lawsuit. Under FCC rules, DBS companies must carry all stations in each market they serve. Satellite companies say those rules eat up valuable capacity and constrain their business. Moskowitz said Commission made “flatly mistaken observation” that Fla. federal court found Satellite Home Viewer Act that mandated must-carry rules to be constitutional. The court “never made such a finding and indeed it could not have, as it concerned a complaint relating to distant, not local signals.” EchoStar also criticized FCC for relying on “unsubstantiated comments” from NAB “without any empirical or other support” and treating them as facts. Finally, EchoStar said, satellite carriers in general, and EchoStar in particular, had devoted substantial resources to ensuring that all local TV broadcast signals carried on satellite systems enjoy superior signal quality.
House Commerce Committee will meet Wed. at 1 p.m. to adopt Committee’s new rules, including revised jurisdictions of its subcommittees and Republican/Democratic ratios. Republicans are scheduled to tap vice chmn. of full committee and appoint their members on subcommittees. Democrats also have time reserved to appoint subcommittee members, but it’s expected that they won’t be ready to do so, since Democratic Leader Gephardt (Mo.) reportedly won’t have finished organizing by then.
FCC Common Carrier Bureau granted petitions by Cox and AT&T and preempted Va. State Corp. Commission’s (VSCC) authority to arbitrate interconnection disputes companies are having with Verizon. VSCC has refused to arbitrate interconnection disputes because of uncertainty about state immunity under U.S. Constitution’s 11th Amendment. Under Telecom Act, companies first go to states for arbitration of disputes and if they disagree with decision they can challenge state-arbitrated interconnection agreements in federal court. States say that process places them in awkward position because 11th Amendment gives states immunity from being sued in federal court. Issue is topic of challenges in several U.S. Appeals Courts, and U.S. Supreme Court recently chose not to hear it. FCC stepped in under its authority to preempt states that don’t act. FCC said Cox and AT&T now could formally petition FCC for arbitration and Common Carrier Bureau will issue comment schedules. Agency said it would decide later whether to combine AT&T and Cox cases with pending WorldCom arbitration proceeding, as requested by AT&T.
Shaw Communications had net loss of $33.1 million (Canadian) in first quarter ended Nov. 30, vs. $39.9 million profit year earlier, despite big jump in revenue to $345.6 million. Canadian MSO blamed earnings decline on $70 million gain from sale of investments year ago and increase in amortization costs this year from its Cancom and cable acquisitions. Shaw said it signed up 17,000 more customers for digital cable service to end quarter with 148,000. It said it signed up 38,000 more cable modem subscribers and picked up another 26,000 from Rogers to reach total of 372,000. MSO also added 73,500 customers for its DBS service, Star Choice, boosting its total to 508,800. Shaw said it added another 15,705 high-speed data and 22,000 DBS subscribers in Dec.
European Commission (EC) urged State Dept. Fri. to be mindful of U.S. obligations under General Agreement on Trade in Services (GATS) when reviewing proposed merger transactions of Deutsche Telekom (DT), VoiceStream and Powertel. EC stipulated its concerns in communique to State Dept. Citing U.S. commitments under World Trade Organization (WTO) basic telecom agreement, communique said EC had “serious concerns” on some comments received by FCC concerning companies’ license transfer applications of companies. In particular, EC referred to concerns raised by Sen. Hollings (D-S.C.). It urged FCC not to heed requests that it should consider German govt.’s ownership in DT or DT’s market-opening activities in Germany. “The European Union reserves its right to take any appropriate course of action should the FCC adopt such requests, and would oppose any action that would undermine the U.S. WTO commitments,” EC warned State Dept. It said market access “cannot be conditioned on the level of commitments in the originating country of the supplier or on the way these commitments are implemented.”
Although federal law allows cable operators to itemize franchise fees as well as payments for support of public access programming, itemization doesn’t serve to “convert the franchise fee into a tax on the subscriber,” said Mt. Hood (Ore.) Cable Regulatory Commission (MHCRC) Dir. David Olson, rejecting AT&T’s request for waiver of franchise fee on cable modem service. AT&T had sought waiver in wake of 9th U.S. Appeals Court ruling that cable-delivered Internet service was telecom service (CD Jan 3 p3). Commission handles cable franchising and regulatory matters on behalf of 6 Ore. local govts., including Portland. Olson said relevant facts and applicable law as construed by courts had established that burden of franchise fee, like any other operating expense, was on AT&T, not on company’s subscribers, he said. AT&T’s position appears to be based on “erroneous” premise that MHCRC is requiring that franchise fees be passed through to subscribers or that AT&T is collecting fee on behalf of jurisdictions, he said, charging that it was attempt by company to portray franchise fee, which compensates local govts. for value of use of public rights-of-way, as “a sales tax” on subscribers. Concerns raised by AT&T about potential class action lawsuits seeking refund of fees are “unwarranted,” he said. MHCRC offered 2 options to AT&T to allay its concerns about litigation: (1) AT&T can choose simply not to itemize franchise fees on cable modem service as there is no such requirement in federal law. Moreover, refraining from itemizing franchise fees wouldn’t reduce amount that company collected from subscribers because AT&T essentially could set rates at any level it chose. (2) MHCRC is willing to negotiate agreement whereby jurisdictions won’t collect “cable franchise fee” on cable modem service. Instead, AT&T can provide noncable services in exchange for 5% fee on such services.
As promised by Mo. state Rep. Dennis Bonner (D-Independence) and state Sen. Ronnie DePasco (D-Kansas City), measure was introduced in Mo. legislature Thurs. to oust Mo. PSC Chmn. Sheila Lumpe and Comrs. Connie Murray and Dianne Drainer (CD Jan 26 p5). Legislation (HCR-9) would declare 3 regulators violated state law by approving 44% gas rate increase for Kansas City area customers without holding public hearing, and their positions therefore were vacant. “No-confidence” resolution requires 2/3 majority approval by each chamber to be legally effective. No action has been scheduled.