Mich. PSC said it received more than 100 complaints from Ameritech customers alleging company was reneging on Dec. 20 deal to compensate those who suffered long service outages last year. Under $14 million settlement with PSC, Ameritech was supposed to compensate customers for each outage day they suffered, meaning some could get credits worth hundreds of dollars. Customers complained they were told by Ameritech service representatives that all they were entitled to was credit for one month’s local dial-tone charge, around $14. Ameritech said it had been explaining settlement to employees but apparently some hadn’t yet gotten word. Ameritech said customers would receive full credits they were entitled to under agreement.
Financial problems of Globalstar accelerated Tues. with its announcement that it had “indefinitely suspended” principal and interest payments on all of its debt to give it enough cash to fund its operations into 2002. Globalstar, whose “shaky position” in industry may have been hurt by re-entry of Iridium into market, according to analysts, said it would save $400 million cash this year by withholding payments on its bank, debt, senior notes, vendor financing agreements and dividend payments on its preferred stock. Analyst suggested move “pushed the company one step closer to bankruptcy.” Decision will enable Globalstar to preserve “sufficient cash” to fund operations into next year. Earlier, it had said it had enough money to last until 4th quarter 2001. Company said move would give its partners additional time to implement new marketing strategy. Some analysts have predicted Globalstar would end up in bankruptcy within 6 months.
FCC’s C- and F-block auction hit $16.07 billion Tues., with Verizon Wireless now accounting for more than half of bids with $8.38 billion. Aggressive bidding for N.Y.C. spectrum flirted with $2 billion mark, with Verizon submitting separate bids of $1.8 billion for 2 licenses there and Cingular Wireless-backed Salmon PCS $1.2 billion for 3rd. Salmon PCS, in which Cingular has 85%, noncontrolling stake, bid $3.1 billion, followed by AT&T Wireless-backed Alaska Native Wireless with $1.3 billion, DCC PCS with $960.8 million and VoiceStream with $960.8 million. Bidding for 422 PCS licenses began Dec. 12 and completed 55th round Tues. Bidding for N.Y.C. licenses so far has outstripped that for next largest wireless market of L.A., where Verizon and DCC PCS have bid closer to $515 million.
Several communications companies and associations donated maximum $100,000 to incoming President Bush’s Inaugural Committee, according to lists released by committee. Limit, imposed by Bush, far exceeds $1,000 legal cap on contributions to last year’s Presidential campaign. Jan. 20 Inaugural is expected to cost more than $20 million. Among those giving maximum: AOL, AT&T, CTIA, NBC parent GE, broadcaster Tom Hicks, Microsoft, Net2Phone, SBC.
FCC’s compromise approval of AOL takeover of Time Warner (CD Jan 16 p1) received generally good early reviews among Hill staffers. While instant messaging (IM) conditions won’t have immediate impact, said one, at least “FCC has put its imprimatur on IM interconnection.” Less pleased was economist Rick Warren-Boulton of Microeconomic Consulting Research & Assoc. (MiCRA), which submitted report to FCC detailing dangers of allowing AOL not to interconnect to IM competitors. Warren-Boulton told us FCC’s conditioning its IM interconnection requirements on AOL-Time Warner’s (TW) offering new broadband IM services wasn’t “the kind of thing that an economist would construct.” He said there were 2 possible outcomes, and FCC’s order wasn’t ideal either way: (1) AOL-TW offers new services quickly, in which case FCC “would be better off saying just do it.” (2) AOL-TW delays new offerings to avoid requirements, creating “problem for technical change in general.”
Motorola plans to stop cellphone manufacturing operations at its Harvard, Ill., plant, resulting in loss of 2,500 jobs from company’s total work force of 130,000. Motorola, which issued series of earnings warnings late last year, said move was part of its strategy to consolidate manufacturing and bolster financial performance. Harvard campus, which will continue to have 2,500 employees, will focus on order fulfillment and new product sourcing. “We cannot competitively manufacture products when there is surplus global capacity at Motorola’s lower cost sites,” Motorola PCS Pres. Mike Zafirovski said. Company said it planned to halt manufacturing at Ill. site by June 30.
FCC Chmn. Kennard made it official Fri.: He’s leaving Commission Jan. 19 “with great pride in the accomplishments of the Commission” and “deep gratitude” for opportunity to serve, he said in resignation letter sent to President Clinton Fri. Kennard said that for “next few months” he will be senior fellow of Aspen Institute’s Communications and Society Program in Washington. He also will be first chairman of program’s new advisory board. However, his immediate plans are to “get some rest and spend some time with my 10-month-old,” he told reporters after news conference on AOL-Time Warner vote. He said he hadn’t decided what he would do after Aspen Institute. Asked if he wanted to stay in telecom policy, he responded: “Sure, I love it.” Asked to name his top 3 accomplishments, he listed (1) implementation of Telecom Act, (2) e-rate, (3) expanding telecom service to disabled community, native Americans, small and minority businesses. Ex- FCC Chmn. Reed Hundt said Kennard “has done more to include minorities and disadvantaged groups in the communications revolution than all previous FCC chairs combined.” NARUC Gen. Counsel Brad Ramsay said he “will hate to see him go” because Kennard made effort to include state regulators in development of issues. “He always made time to come to NARUC and discuss things one-on-one,” he said. Announcement of new chairman isn’t expected until after President-elect George Bush is sworn in Jan. 20.
FCC seemed to please no one with its compromise instant messaging (IM) conditions on its approval of AOL takeover of Time Warner (TW) last week (see separate story). Despite pleas of Democratic Comr. Tristani, agency chose not to require AOL-TW to provide immediate interoperability for competing IM providers, even when IM services were provided over TW’s cable platform. Instead, it mandated interoperability on hypothetical future IM services such as streaming video, which it labeled “advanced, IM- based high-speed services (AIHS).” AOL-TW also must file progress report with FCC every 180 days on steps it has taken toward IM interoperability. Competing IM providers immediately criticized conditions as ineffective, while many said FCC should have imposed no conditions at all.
Sirius Radio said it conducted first test of satellite radio system from orbiting satellite to mobile car radios. Ford Telematics Dir. Russ Minick said “difference between Sirius and regular radio is really impressive.” Tweeter Home Entertainment Group Buyer Marc Spatz said listening to service live “exciting.” Testing includes end-to-end testing and integration of Sirius receiver, studio, broadcast, transaction management and customer service systems, as well as feedback from listeners on programming, company said.
FCC’s C- and F-block PCS auction, which appeared to be entering home stretch, reached $15.3 billion in net high bids late Fri. Verizon Wireless and 2 designated entities with backing from Cingular Wireless and AT&T Wireless accounted for nearly 3/4 of all bids, led by Verizon with $6.2 billion. Cingular-backed Salmon PCS bid $3.1 billion and Alaska Native Wireless, which has nearly 39% AT&T investment, $2.6 billion. Other top bidders include Dobson Communications subsidiary DCC PCS with $960.8 million, VoiceStream with $558.3 million and Cook Inlet with $498.1 million. AirGate PCS, Sprint PCS Network partner, withdrew from bidding last week, following Alltel, Sprint PCS and Nextel. “The prices in our territory have increased beyond a reasonable threshold,” AirGate CEO Thomas Dougherty said. “We believe that investing in our network is a better use of corporate funds.” In all, 39 bidders remain of 87 at Dec. 12 start of auction. Only 33 new bids were placed in 51st round Fri. Bidding also has entered 3rd and final stage, meaning that under auction rules, participants must use at least 98% of eligibility credits to retain eligibility level without using waiver. Initial stage of auction requires bidders to remain active in more than 80% of bidding units on which they placed upfront payments, with threshold increasing at later stages to keep pace of bids moving. Competition still remains most fierce for N.Y.C. licenses, with bids of $1.6 billion, $1.3 billion and $1.2 billion from, respectively, Verizon, Alaska Native and Salmon PCS.