Telecommunications Reports -- 01/22/01

=20
=20

Telecommunications Reports - January 22, 2001

Bush Expected To Act Soon To Fill FCC Chair; Transition Team Discusses Agen=
cy=20
Changes
FCC Focuses on International Detariffing, Intercarrier Compensation in=20
Biennial Review
Furchtgott-Roth Says Departure Of Kennard Won=0F't Bring Deadlock
Time Warner Telecom, Inc., intends to raise as much as $700 million...
UWB Operations Feasible In 3=0F-6 GHz Band, NTIA Says
Angelos Amends Lawsuit Against Wireless Industry
NTIA Proposes Reimbursement Procedures For Relocated Government Spectrum Us=
ers
Antenna-Rule Violations Prompt Proposed Forfeitures of $327K
Fifth Circuit Joins Chorus On State Immunity Issue
AeA Seeking Federal Preemption Of Multiple State Privacy Laws
Libraries Mull Legal Challenge To New Internet-Filtering Law
Think Tank Slams City Telecom Efforts
Verizon Adds Data To Boost Massachusetts InterLATA Bid
Bureau Proposes SBC Pay $94K For Violating Collocation Rules
FCC Gets =0F`Ahead of the Curve=0F' With Inquiry on Interactive TV
Analysts See Shifting Alliance As BellSouth Sells Qwest Stock
Blaming Verizon for Bankruptcy, NorthPoint Plans Asset Auction
Qwest Touts Line-Sharing Pacts, Improved Service
WorldCom To Pay Users $88M To End Overcharging Lawsuit
Court Rejects AT&T=0F's Appeal In Reseller Discrimination Case
One Step from Bankruptcy, Globalstar Stops Debt Payments
=0F`Creative Financing=0F' Seen As Asian Network Necessity=20
Three Carriers Join Forces On European Wireless Data
Portugal Telecom Eyes Brazil As Fertile Ground for Expansion
Intelsat Plans Technical, Regional =0F`Flexibility=0F'=20
WorldCom, Intermedia Need State OKs, Face Digex Lawsuit
Rhythms Trims Workforce, Operations To Reduce Losses
Level 3, SBC Reach Agreement On =0F`Recip Comp=0F' Rate Scheme
TMI, Motient To Unite Assets, Focus On Wholesale Services
New Entrants Will Prolong IXC Price Wars, Analysts Say
Report Offers Road Map To E-government Security
Motorola, Inc., says it will stop making mobile phones at its Harvard, Ill.=
,=20
facility...
FCC Suggests Streamlining Carrier-Change Process
Verizon Wireless Asks FCC To Delay 700 MHz Band Auction
Ex-RSA Cellular Licensee Meets Judicial Skepticism
The Broadband Wireless Internet Forum has released two technical papers...
Viatel To Cut Workforce, Phase Out Most Voice Service
CLECs Seek Cautious Approach to Regulating Their Access Fees; AT&T, WorldCo=
m=20
Want Caps
U.S. Telecom Revenues
Proposal To Streamline Service-Quality Reporting Gets Booed from All Sides;=
=20
Some Question Timing
Time Warner Telecom, Inc., will be the first carrier...
NECA DSL Tariff
Rohde: Spectrum Management Holds Key Challenge for Future
=0F`Datacasting=0F' License Caps To Be Imposed in Australia
Nigerian Sale Yields $855M For Three Cellular Licenses
BT To Prioritize Local Loop Unbundling in Top Exchanges
Court Allows Mobile Phone Lawsuit To Continue
Notes on the News. . .
Regulatory & Government Affairs
Industry News
FCC Reauction
Infostrada Acquisition
Interconnection Dispute
What's Ahead. . .
NTCA Makes Push for MAG Plan, Lifting Caps on Universal Service
Executive Briefings

Bush Expected To Act Soon To Fill FCC Chair; Transition Team Discusses Agen=
cy=20
Changes

With most of his decisions regarding top cabinet-level positions out of the=
=20
way, President Bush is expected to begin shifting his attention to selectin=
g=20
lower-level political appointees, including the FCC chairman and the=20
administrator of the National Telecommunications and Information=20
Administration (NTIA).

Late last week speculation was rife that a decision on the FCC top spot was=
=20
imminent, with a handful of insiders even predicting that a new chairman=20
could be appointed over the inaugural weekend or at the beginning of this=
=20
week.

One factor that several GOP insiders say could spur quick action from the=
=20
White House is the prospect of having Democratic Commissioner Susan Ness=20
assume the chairman=0F's duties. As the most senior Commissioner at the FC=
C,=20
Ms. Ness would slide into that role absent an interim appointment by the=20
president, notes one longtime FCC observer. =0F"And that just doesn=0F't s=
it too=20
well with a Republican administration,=0F" the source said.

Most Washington insiders expect Commissioner Michael K. Powell to be named=
=20
interim chairman, as no Senate confirmation is needed for a sitting=20
Commissioner to assume that post. =0F"Mr. Powell is viewed by many as some=
one=20
who can get the FCC up and running without a learning curve,=0F" an industr=
y=20
source told TR.

But the question of who gets the permanent FCC job has been the topic du jo=
ur=20
for most telecom industry watchers. Sources say Texas Public Utility=20
Commission Chairman Patrick H. Wood III has been positioning himself for th=
at=20
role, but Mr. Powell also is considered a front-runner for the position if =
he=20
wants it.

Under one scenario floated by a GOP insider, President Bush would name Mr.=
=20
Powell interim chairman and then, later on, nominate Mr. Wood as permanent=
=20
chairman and a new Democrat to replace Ms. Ness. Ms. Ness=0F' term expired=
in=20
June 1999; she currently is serving under a recess appointment that=20
then-President Clinton made late last month (TR, Dec. 25, 2000). She may=
=20
continue in her position until a replacement is nominated by President Bush=
=20
and confirmed by the Senate, or until the end of the current congressional=
=20
session.

L. Ari Fleischer, a Bush transition team spokesman who was slated to become=
=20
White House spokesman after the inauguration, gave few clues during a Jan. =
19=20
press briefing about where the incoming administration stood on naming new=
=20
agency heads. Asked by TR whether a timetable had been developed for=20
appointing a new FCC chairman, Mr. Fleischer replied, =0F"That will happen=
in=20
due order as those announcements are ready.=0F"

A spokesman at the Commerce Department=0F's NTIA said former Administrator=
=20
Gregory L. Rohde hadn=0F't made any decisions about his future plans. As a=
=20
political appointee under former President Clinton, Mr. Rohde stepped down=
=20
from his post last Friday.

=0F"The wireless community wanted him to stay on at NTIA to help oversee th=
e =0F`
3G=0F' [third generation] initiative, but so far there=0F's been no indicat=
ion=0F"=20
that President Bush plans to renominate Mr. Rohde to be NTIA administrator,=
=20
the NTIA spokesman told TR.=20

Mentioned as possible candidates to succeed Mr. Rohde at NTIA are Earl=20
Comstock, a partner at the Washington law firm of Sher & Blackwell and a=20
former aide to Sen. Ted Stevens (R., Alaska); James Derderian, former House=
=20
Commerce Committee staff director and a member of the NTIA transition team;=
=20
and Kevin Martin, who oversaw communications policy issues for the Bush=20
transition team.

FCC Transition Team Gathers

A Jan. 17 meeting of the Bush administration=0F's FCC transition team may h=
ave=20
failed to produce a name and a timetable for replacing Mr. Kennard. But=20
numerous industry participants described the meeting as a productive first=
=20
step in smoothing out some of the rough edges at the FCC=0F-particularly th=
e=20
pace at which the Commission makes decisions and its role in reviewing=20
mergers.

Participating in the Jan. 17 meeting, sources say, were nearly all of the F=
CC=20
=0F"transition advisory team=0F" members (TR, Jan. 15) and officials from t=
he Bush=20
administration=0F's =0F"in-house=0F" transition team: Mr. Martin; former R=
ep. Bill=20
Paxon (R., N.Y.), who is chairman of the transition advisory committee; and=
=20
Rebecca Armendariz, project director-FCC transition team.

Speaking briefly with TR last week, Ms. Armendariz described the meeting as=
=0F"
good=0F" and =0F"productive=0F" and said it was the =0F"first and last=0F" =
time that the FCC=20
advisory team would meet with Bush transition officials. Ms. Armendariz al=
so=20
reported that the FCC advisory team had grown to a total of about 42 member=
s,=20
which is =0F"six to eight=0F" more than was posted on the Bush-Cheney trans=
ition=20
Web site (http://www.bushcheneytransition.com) as of Jan. 19.

An advisory team member who didn=0F't want to be identified said the meetin=
g=20
lasted about one and a half hours and mostly focused on changes in general=
=20
FCC procedures. =0F"There wasn=0F't much time for a lengthy discussion on =
specific=20
points, and they didn=0F't mention any names=0F" of potential chairman nomi=
nees,=20
the source said. =0F"But there was a sense that things need to be speeded =
up at=20
the FCC, and [that] there ought to be less FCC involvement in the=20
merger-review context,=0F" the source reported.

Meanwhile, documents circulated among the FCC advisory team members show th=
e=20
Bush transition team sought feedback from the advisers on the following six=
=20
subjects: (1) the top five issues facing the FCC; (2) what rules and/or=20
policies are in most need of reform; (3) what management, administrative or=
=20
procedural issues need to be addressed; (4) what can be done to expedite th=
e=20
FCC=0F's decision-making process; (5) what significant challenges will the =
new=20
administration and FCC face with respect to Congress, public perceptions, o=
r=20
the press; and (6) what organizational changes should be considered early i=
n=20
the new administration.

Participants in last week=0F's meeting were given a chance to go over paper=
s=20
containing their FCC =0F"wish lists,=0F" sources report, and the Bush trans=
ition=20
team =0F"seemed to be interested and listening.=0F" Still, one source desc=
ribed=20
the meeting as =0F"light on substance=0F" and doubted whether =0F"anyone ha=
d even read=20
our paper yet.=0F"=20

Jay Kitchen, an FCC advisory team member and president and chief executive=
=20
officer of the Personal Communications Industry Association, told TR he was=
=20
encouraged that finding more spectrum for third-generation (3G) technology =
=0F"
was near the top of everybody=0F's list.=0F" =20

PCIA=0F's paper to the Bush team stressed the need to =0F"speed up the towe=
r-siting=20
process=0F" and ensure that wireless carriers =0F"receive all the interconn=
ection=20
rights they are due under=0F" the Telecommunications Act of 1996, Mr. Kitch=
en=20
said.

Progress & Freedom Foundation fellow Randolph J. May, also a member of the=
=20
FCC advisory team, called the Jan. 17 meeting =0F"productive=0F" and said i=
t gave=20
the Bush transition team a =0F"good chance to offer their views on what the=
y=20
thought were the most important and pressing=0F" issues at the FCC. =0F"At=
the top=20
of my list,=0F" Mr. May told TR, =0F"was changing the strategic focus of th=
e FCC=20
toward becoming a market deregulator.=0F"

SBC Communications, Inc., recently submitted a paper to the Bush team=20
recommending, among other things, =0F"closing the reciprocal compensation=
=20
loophole=0F" and =0F"ensuring that the marketplace regulates broadband Inte=
rnet=20
service,=0F" an SBC spokesman told TR.

SBC also proposed eliminating the =0F"duplicative review of mergers=0F" tha=
t=20
carriers face at the FCC and Department of Justice. But SBC didn=0F't spec=
ify=20
which review should be phased out. =0F"That=0F's the policy question that =
needs to=20
be answered by the new administration,=0F" he said.

Even telecom interests that weren=0F't represented on the FCC transition=20
advisory team have forwarded their telecom agendas to the Bush=20
administration. =20

In a letter sent to President-elect Bush on Jan. 18, the National Telephone=
=20
Cooperative Association advised him to appoint FCC commissioners who =0F"
understand rural America=0F" and give =0F"considerable thought to rural=20
representation=0F" at NTIA.

The Association for Local Telecommunications Services has submitted a paper=
=20
calling the =0F"the failure=0F" of incumbent local exchange carriers (ILECs=
) to=20
open their networks one of the =0F"three greatest market failures that stym=
ie=20
full, effective competition.=0F"

=0F"According to the FCC, after almost five years, the ILECs have opened th=
eir=20
networks to competitors in only two states,=0F" ALTS wrote. =0F"As a resul=
t,=20
[competitive local exchange carriers] have great difficulty interconnecting=
=20
with the Bell company networks to provide advanced services.=0F"

The Cellular Telecommunications & Internet Association has had =0F"extensiv=
e=20
conversations=0F" with the Bush team about spectrum management issues, wire=
less=20
location privacy principles, repealing the 3% federal excise tax on telepho=
ne=20
bills, and moving from intercarrier compensation for wireless calls to a =
=0F"
bill-and-keep=0F" regime, a CTIA spokesman told TR last week.

=0F-Ryan B. Oremland

FCC Focuses on International Detariffing, Intercarrier Compensation in=20
Biennial Review

The FCC has asked its staff to prepare proposals to eliminate or streamline=
a=20
broad range of Commission rules, including those governing intercarrier=20
compensation for terminating telecom traffic, wireless licensing terms and=
=20
renewals, and international service tariffs for nondominant interexchange=
=20
carriers.

The FCC issued its directives in a report released Jan. 17 in Common Carrie=
r=20
docket 00-175. The biennial regulatory review provisions of the=20
Communications Act of 1934 require the agency in even-numbered years to=20
decide whether given rules remain in the public interest, the FCC said. =20

The FCC doesn=0F't have to take final action repealing or modifying the rul=
es in=20
the even-numbered years, it said.

The latest FCC directives reflect staff recommendations outlined in a revis=
ed=20
version of the September 2000 staff report on the biennial regulatory revie=
w=20
(TR, Sept. 25, 2000). The FCC wants the Common Carrier Bureau to prepare=
=20
rulemaking notices on the following:

=0F=07 Identifying alternative approaches to inter-carrier compensation =
=0F"that=20
are more consistent with the long-term development of competition=0F";

=0F=07 Excluding rural telcos from the requirements that independent incu=
mbent=20
local exchange carriers provide interexchange service through separate=20
subsidiaries;

=0F=07 Simplifying FCC review of the =0F"average schedules=0F" used in det=
ermining=20
certain telcos=0F' costs and shares of the National Exchange Carrier=20
Association, Inc.=0F's revenue pools; and

=0F=07 Changing the schedule for NECA board elections to reduce the=20
administrative costs of the association, which was created by FCC directive=
=20
to maintain access charge tariffs for many local exchange carriers.

The International Bureau will prepare rulemaking notices to initiate the=20
following streamlining efforts:

=0F=07 Extending the detariffing regime adopted for domestic interexchange=
=20
services to the international services of nondominant interexchange carrier=
s,=20
=0F"including commercial mobile radio service providers and U.S. carriers=
=20
classified as dominant solely because of foreign affiliations=0F";

=0F=07 Further streamlining the earth station and space station licensing=
=20
processes;

=0F=07 Requiring electronic filing of applications for earth station licens=
es, to=20
save processing time;

=0F=07 Expanding the availability of pro forma transfers of control and=20
assignments of international facilities authorizations under section 214 of=
=20
the Communications Act of 1934; and=20

=0F=07 Reducing the reporting burdens for international telecom carriers.

The FCC asked the Wireless Telecommunications Bureau to prepare rulemaking=
=20
notices to pursue the following streamlining goals:

=0F=07 Considering whether to eliminate restrictions =0F"on the aggregate a=
mount of=20
broadband PCS (personal communications service), cellular, and specialized=
=20
mobile radio spectrum that an entity can hold in any market=0F";

=0F=07 Extending license terms beyond 10 years and implementing automatic o=
r=20
default renewal procedures to avoid late-filing problems;

=0F=07 Considering partially privatizing the site-by-site, frequency-by-fre=
quency=20
licensing process for the private and common carrier microwave services;

=0F=07 Bringing the technical and operational rules=0F-including radiated p=
ower=20
restrictions=0F-for cellular service, PCS, and general wireless communicati=
ons=20
service into conformity with each other;

=0F=07 Considering whether any of its part 22 (cellular) rules are obsolete=
as a=20
result of competitive or technological developments; and

=0F=07 Bringing its radio frequency emission regulations into compliance wi=
th the=20
International Telecommunication Union=0F's radio regulations.

And the Commission asked its Office of Engineering and Technology to prepar=
e=20
rulemaking notices to address the following issues:

=0F=07 Clarifying a variety of equipment authorization rules and eliminatin=
g=20
ambiguities in equipment test procedures, including authorization procedure=
s=20
for transmitters that operate both in the U.S. and overseas; and

=0F=07 Reviewing the emission limits on devices that operate in spectrum ab=
ove 2=20
gigahertz.

The FCC also agreed with a staff recommendation that when it evaluates new=
=20
rules, it should use criteria similar to that used in the biennial review t=
o=20
evaluate existing rules. It stopped short, however, of adopting any criter=
ia=20
in binding rules or procedures.

The FCC rejected a proposal the U.S. Telecom Association had offered in=20
comments on the September staff report (TR, Oct. 16, 2000). USTA had asked=
=20
the FCC to set a firm time limit for acting to eliminate rules identified a=
s=20
unnecessary during biennial reviews.

Citing the need to make the best use of its limited resources and to retain=
=20
flexibility, the FCC directed all bureaus and offices =0F"to prioritize=20
rulemaking proceedings stemming from this biennial review on the basis of=
=20
various public policy considerations and a comprehensive evaluation of=20
comments received=0F" in response to the planned rulemaking notices.

Issuing a separate statement, Commissioner Harold W. Furchtgott-Roth said t=
he=20
FCC shouldn=0F't view the biennial reviews as =0F"a burden to be endured or=
a hoop=20
through which we must dutifully jump every other year.=0F" He added, =0F"A=
s the=20
Commission moves forward, it is my sincere hope that we will devote=20
full-time, year-round staff to this endeavor.

Furchtgott-Roth Says Departure Of Kennard Won=0F't Bring Deadlock

Although the departure of FCC Chairman William E. Kennard leaves the agency=
=20
temporarily with four members=0F-two Republicans and two Democrats=0F-Commi=
ssioner=20
Harold W. Furchtgott-Roth doesn=0F't expect the agency to be deadlocked.

=0F"A lot is made about the political divisions=0F" at the FCC, he said Jan=
. 18=20
during his monthly briefing with reporters. =0F"But I really don=0F't see =
it at=20
all.=0F"

About 90% of the FCC=0F's votes over the past three years have been unanimo=
us,=20
Mr. Furchtgott-Roth said. Only about 2% or 3% have been 3=0F-2 votes, he=
=20
estimated. So it=0F's unlikely that many votes will be deadlocked with the=
two=20
Republicans=0F-Mr. Furchtgott-Roth and Michael Powell=0F-voting against Dem=
ocratic=20
Commissioners Susan Ness and Gloria Tristani, he said.

Mr. Furchtgott-Roth commended then-Chairman Kennard for not trying to push =
=0F"
11th-hour=0F" initiatives before leaving the agency. =0F"A lot of people w=
ere=20
worried that some things might be railroaded through,=0F" he said. =0F"Cha=
irman=20
Kennard has been very principled about this, not trying to do a lot of=20
11th-hour rules.=0F"

Meanwhile, Mr. Furchtgott-Roth said, the FCC had made =0F"significant progr=
ess=0F"=20
in its second =0F"biennial review=0F" of its regulations. The Telecommunic=
ations=20
Act of 1996 directs the FCC to review its regulations every two years and t=
o=20
eliminate or revise any rules that are no longer necessary or in the public=
=20
interest. =20

Last week, the FCC issued a report on what rule changes it would propose as=
a=20
result of its second biennial review (see separate story).

The report represents a =0F"substantial improvement over the really patheti=
c=20
effort that was done two years ago=0F" when the agency conducted its first=
=20
biennial review (TR, Jan. 4, 1999), Mr. Furchtgott-Roth said.

Mr. Furchtgott-Roth also reiterated his complaints about the FCC=0F's=20
coordination with other agencies in reviewing mergers and related license=
=20
transfers. Regarding the proposed Deutsche Telekom AG=0F-VoiceStream Wirel=
ess=20
Corp. merger, Mr. Furchtgott-Roth disagreed with the FCC=0F's decision to p=
ut=20
its review on hold while the U.S. Department of Justice and the Federal=20
Bureau of Investigation probe national security concerns (TR, Dec. 25,=20
2000). =20

He said it would be inappropriate for the FCC to impose conditions on the=
=20
merger that are requested by DoJ and FBI. That, however, has been the FCC=
=0F's=20
practice in past merger reviews, he said.

Time Warner Telecom, Inc., intends to raise as much as $700 million...

Time Warner Telecom, Inc., intends to raise as much as $700 million through=
=20
the sale of stock and debt securities to help pay for its acquisition of GS=
T=20
Telecommunications, Inc. Time Warner Telecom, of Littleton, Colo., reveale=
d=20
its plan in a filing with the Securities and Exchange Commission. The fund=
s=20
would be used to repay an unsecured bridge loan that was used to pay for GS=
T,=20
Time Warner Telecom said. Further details of the fundraising effort will b=
e=20
disclosed in future filings, it said. Time Warner Telecom recently complet=
ed=20
the $690 million acquisition of GST, a competitive local exchange carrier=
=20
that was in bankruptcy (TR, Sept. 18, 2000).

UWB Operations Feasible In 3=0F-6 GHz Band, NTIA Says

Ultrawideband (UWB) devices likely can operate in spectrum between 3 and 6=
=20
gigahertz without harming incumbent users, including fixed satellite servic=
e=20
(FSS) operators, according to test results released last week by the Nation=
al=20
Telecommunications and Information Administration. But NTIA said that step=
s=20
to mitigate interference probably would be necessary.

NTIA has been studying the interference potential of UWB devices since last=
=20
year as part of a rulemaking proceeding launched by the FCC to explore=20
allowing UWB devices to operate on an unlicensed basis under part 15 of its=
=20
rules (TR, Nov. 6, 2000).

Separate tests of UWB devices=0F' effect on Global Positioning System (GPS)=
=20
receivers are expected to be released next month. The test results release=
d=20
last week involved only non-GPS operations.

Results Will Aid Decision Making

NTIA Administrator Gregory L. Rohde said at a Jan. 18 news conference that=
=20
the test results =0F"will form the basis of negotiations between NTIA and t=
he=20
FCC to develop a final rule that will permit the development and availabili=
ty=20
of ultrawideband technologies.=0F"

UWB devices use precisely timed pulses of radio frequency (RF) energy sprea=
d=20
across a wide swath of spectrum at extremely low power. Proponents of the=
=20
technology have hailed its potential in myriad applications, including law=
=20
enforcement, fire and rescue services, the military, medicine, education, a=
nd=20
home and office local area networks (TR, Sept 18, 2000). They say it won=
=0F't=20
interfere with existing systems.

But aviation groups, the GPS and satellite industries, and others have=20
expressed concern that the devices could interfere with existing systems. =
=20
They=0F've asked the FCC to hold off approving their use until tests show t=
hey=20
won=0F't cause such interference.

In its tests, NTIA assessed the interference potential of five UWB devices =
on=20
federal air-route surveillance radar, airport surveillance radar, and air=
=20
traffic control beacon systems.

Based on the results of those tests, NTIA engineers developed mathematical=
=20
models to analyze the impact of UWB devices on nine other systems, includin=
g=20
those operating between 3100 and 5650 megahertz, or 3.1 and 5.65 GHz. The=
=20
tests indicated UWB devices could operate in that range, although limits=20
might need to be placed on power levels, distance, and pulse-repetition=20
frequency. However, there=0F's a question about whether UWB devices would =
have=20
a =0F"big enough window=0F" to operate if restrictions are imposed, Mr. Roh=
de said.

Among those operating in that spectrum are FSS users (3.7=0F-4.2 GHz), micr=
owave=20
landing services (5.03=0F-5.091 GHz), and Doppler weather radar (5.6=0F-5.6=
5 GHz). =20
For FSS systems, =0F"the worst-case situation=0F" with regard to interferen=
ce =0F"
would occur for receivers located at ground level with a low antenna=20
elevation angle of 5 degrees,=0F" NTIA=0F's report said. There would be m=
uch less=20
interference potential for FSS systems on tops of buildings or with higher=
=20
elevation angles, it said.

=0F"However, at this time uncertainty exists as to the effect of UWB signal=
duty=20
cycle on the performance of FSS earth stations which have digital signal=20
processing,=0F" the report said. =0F"This information would assist in esta=
blishing=20
the UWB signal peak power limit; NTIA study is continuing on this important=
=20
consideration.=0F"

Regarding microwave landing services, UWB operations at power limits=20
currently permitted for part 15 devices may exceed the receiver interferenc=
e=20
protection standard. More analysis of the effect on such systems is needed=
,=20
NTIA said.

Tests on systems operating between 900 and 1610 MHz and 1610=0F-3100 MHz=20
suggested there could be significant interference problems with incumbent=
=20
systems, NTIA officials said at the news conference.

But NTIA=0F's report indicated that UWB operations below 3.1 GHz were possi=
ble. =20
It said that while UWB operations in that spectrum =0F"will be quite=20
challenging,=0F" mitigating factors =0F"could relax restrictions=0F" on UWB=
devices.

It also said that UWB emission levels would have to be significantly reduce=
d=20
to guard against interference. And it concluded that further studies are=
=20
needed to assess degradation of existing systems, as well as relative level=
s=20
of noise, interference, and =0F"clutter signals.=0F"

Mr. Rohde said NTIA engineers used existing standards for determining the=
=20
potential interference of UWB devices. =0F"Obviously this is going to be a=
n=20
area that=0F'll be the subject of a lot of debate. . .as to what really is =
the=20
criteria that determines interference,=0F" he added.

Findings Draw Praise

NTIA=0F's test results drew praise from the UWB industry. Officials of Tim=
e=20
Domain Corp., a leading marketer of UWB technology, said they were still=20
reviewing NTIA=0F's findings. But they indicated they were happy the tests=
=20
showed the devices could share non-GPS spectrum.

=0F"While we have questions regarding some of the conclusions made by NTIA,=
we=20
are pleased that the test results confirm that compatible operation of UWB=
=20
devices with government services is possible,=0F" said Jeffrey L. Ross, Tim=
e=20
Domain=0F's vice president-corporate development and strategy. =0F"We have=
full=20
confidence that the FCC will impose appropriate regulations and power limit=
s,=20
and look forward to the FCC=0F's timely completion of its rulemaking,=0F" h=
e added.

Last year, Time Domain questioned NTIA=0F's testing methods, saying they mu=
st=20
reflect real-world conditions to be accurate (TR, Sept. 4, 2000).

Another developer of UWB devices, Fantasma Networks, Inc., also hailed the=
=20
test results. =0F"We are confident that our deployment of ultrawideband=20
[devices] does not pose a threat of harmful interference to public safety=
=20
agencies or to any other user of the radio spectrum,=0F" said Roberto Aiell=
o,=20
Fantasma=0F's chief technology officer.

Angelos Amends Lawsuit Against Wireless Industry

As expected, noted plaintiffs=0F' attorney Peter G. Angelos has entered the=
=20
legal fray against the wireless industry over the safety of mobile phones. =
=20
Mr. Angelos has filed an amended lawsuit on behalf of a Maryland doctor who=
=20
claims that using a mobile phone caused his brain tumor (TR, Aug. 7 and Dec=
.=20
25, 2000).

The lawsuit, filed last week in the U.S. District Court in Maryland, seeks=
=20
$375 million in compensatory damages and $750 million in punitive damages.

The lawsuit says the industry failed to conduct adequate testing on the=20
health effects of mobile phones and warn consumers about known risks. The=
=20
industry =0F"manipulated the results of other testing, concealed evidence t=
hat=20
[mobile phone] radiation is harmful and suppressed scientific and medical=
=20
research,=0F" the lawsuit alleges.

According to the lawsuit, the medical and scientific communities have been=
=20
aware of the biological effects of radio frequency (RF) exposure since the=
=20
1920s. The wireless industry was or should have been aware of evidence of=
=20
such health hazards, the lawsuit alleges.

Michael F. Altschul, vice president and general counsel of the Cellular=20
Telecommunications & Internet Association, which is named in the lawsuit,=
=20
said he hadn=0F't seen the amended complaint.

=0F"Regardless of who the lawyer is. . .the legal requirements remain the s=
ame,=0F"=20
Mr. Altschul said. The plaintiffs have to show a link between RF radiation=
=20
exposure and cancer, he said, and =0F"that science just isn=0F't there.=0F"=
Spokesmen=20
for Motorola, Inc., and Verizon Communications, Inc., which also are named =
as=20
defendants, have made similar points.

Last week=0F's amended lawsuit, Christopher J. Newman et al. v. Motorola, I=
nc.,=20
et al. (case no. CCB-00-2609) was filed after U.S. District Judge Catherine=
=20
C. Blake last month dismissed a number of the counts in the original filing=
=20
but gave the plaintiffs permission to amend their complaint. The wireless=
=20
industry had succeeded in moving the case from Baltimore City Circuit Court=
=20
to federal court.

Mr. Angelos, owner of the Baltimore Orioles, has won major cases against th=
e=20
asbestos industry and represented Maryland in litigation against the tobacc=
o=20
industry. John A. Pica, a lawyer in Mr. Angelos=0F' Baltimore firm, has be=
en=20
quoted saying Mr. Angelos plans to file 10 lawsuits this year against the=
=20
wireless industry. Messrs. Angelos and Pica could not be reached for comme=
nt.

Bob Gordon, a consultant to Baltimore attorney Joanne Lynch Suder, who file=
d=20
the original lawsuit on behalf of the Maryland doctor, said Mr. Angelos=20
agreed to be the co-counsel in a number of cases that Ms. Suder planned to=
=20
file against the phone industry. Lawyers around the country also are worki=
ng=20
on the planned litigation, he said.

Meanwhile last week, German researchers said there could be a link between=
=20
the use of mobile phones and cancer of the inner eye. The results were=20
published in the January issue of the research journal Epidemiology.

But the researchers, who interviewed 118 subjects with eye cancer and a=20
control group of 475 people, said their findings were inconclusive because =
of=20
the study=0F's limitations. In a statement, CTIA cited those limitations a=
nd=20
the small size of the study group.

NTIA Proposes Reimbursement Procedures For Relocated Government Spectrum Us=
ers

The National Telecommunications and Information Administration is proposing=
=20
procedures for relocating federal government spectrum incumbents to other=
=20
bands to make way for commercial users. Among the issues to be decided are=
=20
the circumstances under which incumbents will be required to relocate and=
=20
which relocation costs will be eligible for reimbursement.

NTIA Administrator Gregory L. Rohde said the rules could bolster a high-lev=
el=20
effort to identify and allocate spectrum for third-generation (3G) wireless=
=20
services. Then-President Clinton launched the initiative by executive=20
memorandum in October 2000 (TR, Oct. 16, Nov. 6, and Nov. 20, 2000; and Jan=
.=20
8).

As part of that effort, NTIA is studying the possible use of the 1755=0F-18=
50=20
megahertz band, which is used heavily by the Defense Department. The FCC i=
s=20
analyzing use of the 2500=0F-2690 MHz band, which is used mostly by multich=
annel=20
multipoint distribution service and instructional television fixed service=
=20
operators.

NTIA=0F's proposed rules would cover such future reallocations, Mr. Rohde s=
aid=20
at an industry-government meeting on the 3G plan last week. He said he hop=
ed=20
the final rules would be released this summer.

The National Defense Authorization Act for fiscal year 1999 required privat=
e=20
entities to reimburse federal spectrum users for the cost of relocating or=
=20
modifying their systems because of reallocation. The notice of proposed=20
rulemaking NTIA released Jan. 17 suggests ways to implement that mandate. =
=20
Comments are due March 19 with replies due April 18 in docket no.=20
001206341-0341-01.

In its rulemaking notice, NTIA seeks comments on whether federal government=
=20
spectrum incumbents should be required to relocate if sharing is technicall=
y=20
possible in their present bands.

If the incumbents are not required to relocate, under what conditions shoul=
d=20
they be permitted to remain in their current bands and who would pay for an=
y=20
system modifications that would improve spectrum sharing? NTIA asks. For=
=20
example, it asks, should the federal incumbent be allowed to stay in the ba=
nd=20
on a noninterference basis with 3G systems?

NTIA suggests that federal incumbents not be forced to relocate until a =0F=
"
comparable facility=0F" is available for a reasonable period of time. It=
=20
defines comparable facility as one that has the same or superior operationa=
l=20
capabilities as the original spectrum. NTIA suggests using four factors to=
=20
determine comparability: (1) communications throughput, (2) system=20
reliability, (3) operating costs, and (4) operational capability. It seeks=
=20
comments on its definition and whether the four factors are sufficient.

NTIA outlines which relocation costs should be eligible for reimbursement. =
=20
It also suggests a process for resolving differences over those costs,=20
including a mandatory negotiation period, third-party mediation, and=20
nonbinding arbitration.

NTIA seeks comments on what type of cost-sharing plan to adopt and asks=20
whether a =0F"band manager=0F" or some other entity should serve as a clear=
inghouse=20
to administer the plan. And it wants input on whether it should =0F"sunset=
=0F" a=20
cost-sharing plan five years after any auction of former government=20
spectrum. The rulemaking notice also seeks comment on how to treat spectru=
m=20
with classified frequency assignments.

At the direction of the Omnibus Budget Reconciliation Act of 1993 and the=
=20
Balanced Budget Act of 1997, NTIA identified 255 MHz of spectrum that can b=
e=20
reallocated from federal government to private use. The bands identified f=
or=20
which federal incumbents would qualify for reimbursement are 216=0F-220 MHz=
,=20
1432=0F-1435 MHz, 1710=0F-1755 MHz, and 2385=0F-2390 MHz.

The FCC has proposed allocating the 1710=0F-1755 MHz band for 3G services. =
In=20
addition, Mr. Rohde said the reimbursement rules would apply to the 1755=0F=
-1850=20
MHz band if federal incumbents there are relocated under the 3G initiative.

Rohde Uncertain of Effort=0F's Future

At last week=0F's 3G meeting, Mr. Rohde said he didn=0F't know if the Bush=
=20
administration would make any changes to the 3G effort, which is operating =
on=20
a tight schedule that calls for the FCC to issue licenses for 3G spectrum b=
y=20
Sept. 30, 2002. But he said he had stressed its importance in his dealings=
=20
with Bush transition team staff members. =0F"I can=0F't predict what=0F's =
going to=20
happen=0F" beyond Inauguration Day, Mr. Rohde told reporters.

The Bush transition team staff member responsible for NTIA, James Derderian=
,=20
a former Republican staff director of the House Commerce Committee, couldn=
=0F't=20
be reached for comment. But at his confirmation hearing for Commerce=20
secretary earlier this month, Donald L. Evans said the Bush administration=
=20
was committed to finding 3G spectrum (TR, Jan. 8).

Industry Expresses Frustration

At last week=0F's meeting, several industry representatives expressed=20
frustration that they didn=0F't have access to data they said they needed t=
o=20
make recommendations on use of the 1755=0F-1850 MHz and 2500=0F-2690 MHz ba=
nds in=20
time for NTIA and the FCC to consider. Industry representatives in=20
NTIA-established working groups are reviewing the bands.

The 3G initiative calls for final reports on the two bands to be released i=
n=20
March, with the FCC issuing an order allocating the selected spectrum in Ju=
ly.

Rick Kemper, director-wireless technology and security for the Cellular=20
Telecommunications & Internet Association, said determining the cost of=20
relocating incumbents or whether band sharing or segmentation was feasible=
=20
requires information on how many systems operate in the frequencies and how=
=20
they are being used. But he said that data wasn=0F't available.

Donald Brittingham, director-wireless policy for Verizon Wireless, said he=
=20
was concerned that the final band studies wouldn=0F't reflect all the indus=
try=0F's=20
input. He urged the regulators to delay releasing the reports.

=0F"One concern is we=0F're going to do a lot of work and in the end it wil=
l be too=20
late to be included in your final report,=0F" added Joanne C. Wilson,=20
director-global public affairs for Lucent Technologies, Inc.

Frederick R. Wentland, NTIA=0F's director-spectrum plans and policies, said=
some=20
information wouldn=0F't be available until the final band studies were=20
released. =0F"Unfortunately, time happens to be our enemy here,=0F" Mr. We=
ntland=20
added.

But he urged industry officials to continue participating in the process,=
=20
including filing comments in response to the FCC=0F's recent notice of prop=
osed=20
rulemaking on 3G spectrum (TR, Jan. 8).

Diane J. Cornell, associate chief of the FCC=0F's Wireless Telecommunicatio=
ns=20
Bureau, said the current process was designed =0F"to crystalize the issues,=
=0F" and=20
she urged industry engineers to focus on technical issues concerning band=
=20
sharing and segmentation.

Ms. Cornell also said industry should submit comments in response to NTIA=
=0F's=20
notice and an FCC rulemaking notice released in November 2000 suggesting=20
allocations for 27 MHz of spectrum transferred from government to private u=
se=20
(TR, Nov. 27, 2000).

After the final band studies are released in March, she said, =0F"I expect =
there=20
will be differences of perspectives.=0F" She said industry officials would=
get=20
another chance to submit comments after that.

Antenna-Rule Violations Prompt Proposed Forfeitures of $327K

The FCC and its Enforcement Bureau have proposed that two wireless carriers=
=20
and two tower companies pay $327,000 for violations of its antenna rules.

The largest proposed forfeiture was against American Tower Corp. for 36=20
violations in 14 states and Washington, D.C. The FCC has ordered the=20
Enforcement Bureau to conduct a more thorough investigation of American Tow=
er=0F'
s compliance with its rules.

Separately, the Enforcement Bureau proposed an $80,000 forfeiture against=
=20
Telecorp Communications, Inc.; an $18,000 forfeiture against AT&T Wireless=
=20
Services, Inc.; and an $17,000 forfeiture against SpectraSite Corp.

In a notice of apparent liability for forfeiture, the FCC said American Tow=
er=20
failed to (1) properly light an antenna during construction, (2) register t=
wo=20
existing antennas, (3) notify the agency of ownership changes involving 24=
=20
antennas, and (4) post registration numbers on nine antennas.

=0F"We are concerned that ATC continues to violate our rules despite both o=
ral=20
and written warnings regarding the Commission=0F's antenna structure=20
requirements,=0F" the FCC said in its Jan. 16 forfeiture notice. It said m=
ore=20
than half of American Tower=0F's 36 violations were uncovered after a July =
2000=20
meeting between FCC field agents and American Tower officials.

In separate notices released the same day, the Enforcement Bureau found tha=
t=20
Telecorp failed to light antennas properly on four occasions and that AT&T=
=20
Wireless failed to post antenna registration numbers on nine occasions. It=
=20
also found that SpectraSite failed to post antenna registration numbers on=
=20
four occasions and failed to notify the FCC of ownership changes on three=
=20
occasions. The violations were discovered by FCC field agents during routi=
ne=20
investigations and inspections.

Russell Wilkerson, director-corporate affairs for TeleCorp PCS, Inc., told =
TR
, =0F"We=0F're talking to our folks in the field. . .to compare the cases b=
y the=20
FCC and some of their findings and then we will respond to them.=0F" He ad=
ded, =0F"
We make it a practice to follow the FCC rules and regulations.=0F" Spokesm=
an=20
for the three other companies could not be reached for comment.

Fifth Circuit Joins Chorus On State Immunity Issue

The U.S. Court of Appeals for the Fifth Circuit (New Orleans), echoing thre=
e=20
other appellate circuits, has ruled that the U.S. Constitution doesn=0F't=
=20
protect state utility commissions from federal judicial review of their=20
decisions regarding carrier interconnection agreements.

In a two-to-one decision issued Jan. 16, the Fifth Circuit rejected 11th=20
Amendment immunity claims raised by the Louisiana Public Service Commission=
=20
during proceedings stemming from a lawsuit filed by AT&T Corp. AT&T was=20
challenging the PSC=0F's 1997 arbitration decision regarding its interconne=
ction=20
agreement with BellSouth Telecommunications, Inc.

Section 252 of the Telecommunications Act of 1996 directed state commission=
s=20
to review, approve, and, when necessary, arbitrate carrier interconnection=
=20
agreements. The Act also says that parties aggrieved by state commission=
=20
determinations in carrier interconnection proceedings can ask the appropria=
te=20
federal district court to the review the carrier agreement.

In AT&T Communications v. BellSouth Telecommunications, Inc., et al. (case=
=20
no. 99-30421), the Fifth Circuit reversed a ruling by the U.S. District Cou=
rt=20
in Baton Rouge. The lower court had held that the 11th Amendment to the U.=
S.=20
Constitution prohibited such lawsuits against state agencies or employees. =
=20
(AT&T had named the PSC and its individual commissioners in the lawsuit).

The 11th Amendment grants states immunity from being sued in federal courts=
. =20
But states may lose that immunity under an exception carved out by the U.S.=
=20
Supreme Court in its 1908 decision in Ex parte Young. The Ex parte Young=
=20
doctrine allows lawsuits against state employees in order to prevent ongoin=
g=20
violations of federal law.

The Fifth Circuit found that the PSC and the commissioners had waived their=
=20
constitutional sovereign immunity rights by agreeing to arbitrate the=20
interconnection dispute under the provisions of the 1996 Act. The court al=
so=20
ruled that the Ex parte Young doctrine applied to AT&T=0F's request for=20
prospective injunctive relief from PSC arbitration rulings that AT&T had=20
argued contravened the interconnection requirements of sections 251 and 252=
=20
of the Act.

The appeals court reversed the district court=0F's ruling and remanded the =
case=20
for further proceedings. Circuit Judge James L. Dennis wrote the opinion a=
nd=20
was joined by Judge Henry A. Politz. Judge Jerry E. Smith dissented from t=
he=20
majority=0F's opinion.

Finding Echoes Other Circuits

Appeals courts in the Sixth, Seventh, and 10th Circuits already have held=
=20
that the Ex parte Young exception applies to federal court challenges to=20
state commission decisions affecting carrier interconnection agreements (TR=
,=20
April 5 and Oct. 25, 1999; and Jan. 24, June 26, and July 31, 2000). Last=
=20
fall, the U.S. Supreme Court refused to review the issue in a case arising =
in=20
the Sixth Circuit (TR, Oct. 9, 2000).

In his dissent, Judge Smith cited the U.S. Supreme Court=0F's 1996 decision=
in=20
Seminole Tribe v. Florida. Under that ruling, he said, Congress=0F' referr=
al of=20
disputes surrounding state commission=0F-arbitrated interconnection agreeme=
nts =0F"
supplants=0F" a party=0F's ability to sue the state commission under the 19=
08=20
Supreme Court decision in Ex parte Young. But, he added, Congress=0F' refe=
rral=20
of such disputes to the federal courts violates the 11th Amendment to the=
=20
Constitution.

The Chicago-based Seventh Circuit rejected a similar argument last year in=
=20
which state utility commissioners had invoked Seminole Tribe (TR, July 31,=
=20
2000).

AeA Seeking Federal Preemption Of Multiple State Privacy Laws

Lawmakers in the 107th Congress should make federal preemption of multiple=
=20
state privacy laws =0F"one of the top legislative concerns=0F" for the comi=
ng=20
session, according to AeA, formerly the American Electronics Association. =
=20
Federal privacy legislation =0F"should play a crucial role=0F" in maintaini=
ng=20
consistency and certainty=0F" in the marketplace, said William T. Archer, A=
eA=0F's=20
president and chief executive officer.

Mr. Archer warned, however, that =0F"poorly crafted legislation=0F" could h=
ave the=20
unintended effect of =0F"imposing burdensome, impractical new requirements=
=0F" on=20
e-commerce and Internet businesses. =0F"Only the federal government is in =
a=20
position to create uniform U.S. privacy standards and work for internationa=
l=20
harmonization,=0F" he said. =0F"Otherwise, online business could face 50=
=20
conflicting sets of privacy rules. Consumers and businesses alike would=20
lose.=0F"

AeA urged lawmakers Jan. 18 to consider its =0F"privacy principles=0F" in d=
rafting=20
federal preemption legislation. The principles recommend creating uniform,=
=20
technology-neutral national standards to protect privacy. =20

AeA wants standards to require merchants to notify consumers of=20
information-collection practices, while allowing them to =0F"opt out of the=
use=20
or disclosure=0F" of information if it=0F's unrelated to the initial transa=
ctions=20
between consumers and merchants.

The AeA principles also urge lawmakers to build on private-sector privacy=
=20
seal programs and privacy codes while relying on the Federal Trade Commissi=
on=0F'
s existing authority to enforce data-collection notice requirements.=20

Libraries Mull Legal Challenge To New Internet-Filtering Law

The American Library Association (ALA) has been given the green light from=
=20
its executive board to launch a court challenge of the Children=0F's Intern=
et=20
Protection Act (CIPA) The law passed last year (TR, June 12, 2000) require=
s=20
schools and libraries to install Internet- filtering software if they use=
=20
federal funds=0F-such as universal service =0F"E-rate=0F" support=0F-to pur=
chase=20
computers or connect to the Internet.

ALA said its executive board had authorized the legal action =0F"after more=
than=20
a week of intense discussions among leaders and members during the=20
association=0F's annual midwinter meeting.=0F" =20

ALA announced Jan. 18 that it was =0F"researching and exploring its options=
in=20
preparation for litigation,=0F" as it believes the law infringes on freedom=
s=20
guaranteed by the First Amendment to the U.S. Constitution. =20

The First Amendment protects free exercise of religion, free speech, freedo=
m=20
of the press, freedom to assemble, and freedom to petition the government f=
or=20
redress of grievances.

The Internet-filtering requirements would affect three federal funding=20
streams that libraries frequently use to purchase computer equipment or=20
connect to the Internet, ALA said. They are the Elementary and Secondary=
=20
Education Act, the Library Services and Technology Act, and the E-rate=20
program.

=0F"All three programs help ensure schools and libraries provide access to =
the=20
resources communities need to thrive in the Information Age,=0F" ALA said. =
=0F"
CIPA runs counter to these federal efforts to close the digital divide for=
=20
all Americans.=0F" =20

Think Tank Slams City Telecom Efforts

Through government-owned telecom networks, some states and cities are tryin=
g=20
to make sure their constituents don=0F't have to wait for advanced telecom=
=20
services. But such efforts are counterproductive, according to a paper=20
released by the Progress & Freedom Foundation, a Washington, D.C., think ta=
nk.

=0F"Governments that have entered the telecom-munications business have bee=
n=20
saddled with financial losses and obsolete, legacy technologies. =20
Furthermore, government entry in the marketplace distorts incentives and=20
slows the development of private-sector competition,=0F" writes PFF Preside=
nt=20
Jeffrey A. Eisenach, author of Does Government Belong in the Telecom Busine=
ss?

He views the pace of state and local government entry into telecom and=20
Internet service businesses as =0F"rapid and increasing,=0F" citing efforts=
by=20
municipally owned utilities on Long Island, N.Y.; in Los Angeles; and in=20
Chicago. The paper lists 233 municipal utilities that were providing one o=
r=20
more of the following services in 1998:

=0F=07 Cable TV,

=0F=07 Internet access,

=0F=07 High-speed data,

=0F=07 Broadband data resale,

=0F=07 Local telephony,

=0F=07 Long distance services,

=0F=07 Leased fiber, and

=0F=07 Municipal data network services.

Of these services, the most commonly offered by municipalities is cable TV=
=20
service, according to the PFF findings. Eighty-seven cities offered cable =
TV=20
service, compared with 73 cities that run data networks and 61 that provide=
=20
Internet access. Only 18 cities were found to be offering local telephony,=
=20
and 10 cities offered long distance service.

Seven states had 11 or more cities offering telecom services: 22 cities in=
=20
Iowa, including Cedar Falls; 16 cities in Minnesota; 12 cities in Georgia; =
12=20
cities in Missouri, including Columbia and Springfield; 11 cities in Florid=
a,=20
including Gainesville and Tallahassee; 11 cities in Massachusetts; and 11=
=20
cities in Texas, including Brownsville and College Station.

Verizon Adds Data To Boost Massachusetts InterLATA Bid

Officials at Verizon New England are counting on new data to satisfy=20
regulators=0F' concerns about its application to provide interLATA (local a=
ccess=20
and transport area) services in Massachusetts. Early last week, Verizon=20
again asked the FCC to allow it to enter that market; late last month, the=
=20
company withdrew a similar pending application it had filed last fall.

The officials are hoping the new data will answer questions regulators rais=
ed=20
about last fall=0F's application, including whether the telco provides=20
nondiscriminatory access to DSL (digital subscriber line)- capable loops (T=
R,=20
Dec. 25, 2000).

Under section 271 of the Telecommunications Act of 1996, a Bell company mus=
t=20
obtain FCC approval before providing in-region interLATA services. The FCC=
=20
must determine whether the company has met a 14-point =0F"competitive check=
list=0F"=20
of market-opening mandates laid out in the Act.

Thomas J. Tauke, Verizon=0F's senior vice president-external affairs and pu=
blic=20
policy, said that the new filing =0F"demonstrates that we provide=20
nondiscriminatory access to lines other DSL providers lease from us, as wel=
l=20
as parity of service for installation and repair.=0F"

FCC Chairman William E. Kennard had focused on Verizon=0F's provisioning of=
=20
DSL-capable loops when the company withdrew its original Massachusetts=20
application. He cautioned Verizon that it should include in a new=20
application =0F"verified data reflecting acceptable levels of performance,=
=20
including an independent showing for loops used to provide advanced service=
s.=0F"

But competitors aren=0F't so sure that the new application addresses those=
=20
concerns=0F-and other concerns raised in comments to the FCC. Verizon =0F"=
still=20
didn=0F't get it right,=0F" AT&T Corp. Vice President-federal government af=
fairs=20
Len Cali said, adding that the =0F"refiled application has failed to adequa=
tely=20
address the shortcomings of the original application.=0F" AT&T particularl=
y=20
objected to Verizon=0F's prices for unbundled network elements, saying they=
=20
still weren=0F't cost-based, as required by the Act.

Verizon included in its application last week new rates for switched servic=
es=20
provided to competitors in Massachusetts. It had informed the FCC of the n=
ew=20
rates in ex parte filings regarding the earlier application. Competitors h=
ad=20
complained that the FCC shouldn=0F't consider those rates in reviewing the=
=20
earlier application because they were submitted after comment deadlines in=
=20
the proceeding. =0F"Refiling puts to rest any concerns that interested par=
ties=20
did not have the opportunity to comment on all the issues,=0F" Mr. Tauke sa=
id.

The FCC now has 90 days to consider the new application. Under section 271=
,=20
it must consult with Massachusetts regulators and the Department of Justice=
=20
before issuing a decision. Justice had given Verizon=0F's original applica=
tion=20
a thumbs-down (TR, Oct. 30, 2000). The Massachusetts Department of=20
Telecommunications and Energy had recommended that the FCC approve it (TR,=
=20
Oct. 23, 2000).

The DTE=0F's recommendation to the FCC is due Feb. 6; Justice must submit i=
ts=20
recommendation by Feb. 21. Comments and replies are due to the FCC by Jan.=
=20
30 and Feb. 28, respectively. Parties also are invited to meet with Common=
=20
Carrier Bureau staff for ex parte discussions about the proceeding between=
=20
Jan. 30 and Feb. 23.

Bureau Proposes SBC Pay $94K For Violating Collocation Rules

The FCC=0F's Enforcement Bureau has found SBC Communications, Inc., apparen=
tly=20
liable for violating Commission rules regarding competitors=0F' collocation=
of=20
equipment in incumbents=0F' central offices. Specifically, the bureau says=
SBC=20
failed to update its Web site to identify facilities that have run out of=
=20
physical collocation space.

In a Jan. 18 notice of apparent liability (file EB-00-IH-0326a), the bureau=
=20
proposed that SBC forfeit $94,500 for the alleged infraction, which the=20
bureau uncovered during an =0F"independent audit.=0F" The FCC made the aud=
it a=20
condition of its approval of license transfers related to the merger of SBC=
=20
Communications, Inc., and Ameritech Corp. (TR, Oct. 11, 1999).

The FCC=0F's =0F"posting rule=0F" requires incumbent local exchange carrier=
s to update=20
their Web sites to list premises that run out of space for competitors to=
=20
install facilities. They must provide those updates within 10 days of usin=
g=20
up the space. But information provided by SBC to the bureau indicates that=
=20
in =0F"numerous instances=0F" SBC failed to provide timely updates to its W=
eb site.

SBC has 30 days to pay the $94,500 or file a written statement showing why=
=20
the proposed forfeiture should be eliminated or reduced.

FCC Gets =0F`Ahead of the Curve=0F' With Inquiry on Interactive TV

Although the market for high-speed interactive TV (ITV) services is in the=
=20
early stages of development, the FCC hopes to get =0F"ahead of the curve=0F=
" by=20
collecting information on the status of the ITV market and whether it shoul=
d=20
regulate it.

The FCC issued the notice of inquiry in Cable Services docket 01-7 because=
=20
comments in its recently completed proceeding on the America Online, Inc.=
=0F-
Time Warner, Inc., merger (TR, Jan. 15) =0F"raised the possibility=0F" that=
a=20
vertically integrated cable TV and ITV service provider could discriminate=
=20
against alternative ITV service providers. It asked for comments in the=20
docket 01-7 proceeding by March 19 and replies by April 20.

The inquiry seeks comment on what services constitute ITV services, how the=
y=20
will be delivered, and other questions about the status of the ITV market. =
=20
The FCC acknowledged that it was =0F"difficult to specify a definition=0F" =
for ITV=20
services because of the technological and business changes in the new=20
industry. It sought comment on its initial characterization of ITV as a =
=0F"
service that supports subscriber-initiated choices or actions that are=20
related to one or more video programming streams..=0F"

The FCC asked about the technical resources or =0F"building blocks=0F" a=20
distribution system would require to support ITV. The FCC said it saw thre=
e=20
major building blocks: (1) a video stream, (2) a two-way high-speed Intern=
et=20
protocol connection, and (3) specialized customer premises equipment.

=0F"To assess the possibilities for discriminatory behavior and what enforc=
ement=20
procedures might be effective for any rules that might be proposed in the=
=20
future, it is important to understand clearly how ITV providers will delive=
r=20
their services to consumers, including what type of contractual arrangement=
s=20
will govern,=0F" the FCC said.

It also asked whether cable TV providers would have the =0F"superior platfo=
rm=0F"=20
for distribution of high-speed ITV service and sought comment on the ITV=20
capabilities of direct broadcast satellite providers and digital subscriber=
=20
line service providers. The FCC also sought comment on the legal=20
classifications of ITV services, what public and statutory objectives ITV=
=20
rules would promote, and what authority the FCC has over such services.

The notice states that the Cable Television Consumer Protection and=20
Competition Act of 1992 directed the FCC to adopt rules =0F"limiting the sh=
are=20
of cable capacity that could be used for commonly owned content and requiri=
ng=20
vertically integrated cable programmers to provide their content to rival=
=20
distribution platforms on nondiscriminatory terms.=0F" The FCC added that =
if=20
the =0F"same factual predicates that Congress cited in the 1992 Cable Act w=
ere=20
to apply to a distribution platform delivering ITV services, then some=20
regulation of those distribution facilities might be warranted.=0F"

The notice also asks for comment on how the FCC could implement rules to ba=
r=20
providers of multichannel video programming from discriminating against=20
unaffiliated ITV providers. It asked for comment on how nondiscrimination=
=20
rules should be enforced. It suggested that ITV providers and cable TV=20
operators =0F"rely on private enforcement arrangements=0F" or that aggrieve=
d=20
parties use the FCC=0F's complaint procedures.

Kennard Warns against Discrimination

Then=0F-FCC Chairman William E. Kennard acknow-ledged that ITV services wer=
e in=20
the =0F"early stages of development=0F" but said the FCC would =0F"do well =
to get=20
ahead of the curve.=0F" He said it was =0F"clear=0F" that cable TV would b=
e an =0F"
important platform for delivery of ITV services, at least in the near term,=
=20
and I am concerned that a vertically integrated ITV service provider might=
=20
have the incentive and ability to discriminate against unaffiliated ITV=20
service providers.=0F"

Commissioner Gloria Tristani supported the inquiry but =0F"regretted=0F" th=
at the=20
FCC issued an inquiry rather than a notice of proposed rulemaking. =0F"Thi=
s=20
Commission must move promptly to ascertain the public interest in nascent=
=20
industries to ensure appropriate measures are timely vetted and resolved,=
=0F"=20
she said.

Commissioner Harold W. Furchtgott-Roth dissented from the FCC=0F's decision=
,=20
saying it was =0F"premature=0F" to address the issue of cable interactive T=
V=20
services. =0F"While the item is framed as a notice of inquiry, it is no le=
ss=20
damaging to raise the specter of government regulation. . .for services tha=
t=20
are still in their gestational period.=0F" He said he had =0F"serious=20
reservations=0F" about the FCC=0F's legal authority to address ITV issues.=
=20

Robert Sachs, president and chief executive officer of the National Cable=
=20
Television Association, was =0F"pleased=0F" that the FCC was launching an i=
nquiry=20
rather than a =0F"rulemaking which presumes a regulatory outcome.=0F" But =
he added=20
that =0F"asking dozens of hypothetical questions about regulating a busines=
s=20
which has yet to take form still puts the cart before the horse, in=20
regulatory terms. . .There is no evidence to suggest that government=20
regulation is called for here.=0F"

Analysts See Shifting Alliance As BellSouth Sells Qwest Stock

It was the rumor du jour 21 months ago: BellSouth Corp.=0F's purchase of a=
10%=20
stake in Qwest Communications International, Inc., meant the companies migh=
t=20
merge. Times have changed, however, and BellSouth now is cashing in much o=
f=20
its Qwest investment to raise $1 billion for other projects.

=0F"The transaction underscores a change in the direction of the relationsh=
ip=20
between Qwest and BellSouth,=0F" said Marion Boucher Soper, a Bear, Stearns=
&=20
Co. analyst, in a Jan. 16 report. =0F"While both appear to be interested i=
n=20
strategic expansion, other opportunities are likely to be higher on the=20
priority list.=0F"

BellSouth=0F's 10% stake already has been diluted to about 5% by Qwest=0F's=
=20
acquisition of U S WEST, Inc., Merrill Lynch & Co. analyst Adam Quinton=20
noted. =0F"The gradual dilution and now sell down of the BellSouth stake s=
peaks=20
to the changing nature of the relationship between the two,=0F" Mr. Quinton=
said=20
in a report also issued Jan. 16.

=0F"BellSouth seems to be indicating it has other strategic priorities and =
that=20
securing a strong relationship with a leading =0F`next-gen=0F' long distanc=
e=20
provider can be done via commercial relationships, which do not need the=20
backing of any equity position,=0F" Mr. Quinton said.

=0F"Realistically, BellSouth=0F's investment in Qwest is not strategic to i=
ts=20
long-term growth strategy, and the $1 billion in proceeds will give it cash=
=20
on hand,=0F" said Goldman, Sachs & Co. analysts Kathryn D. Willing and Fran=
k J.=20
Governali.

=0F"We were a very different company two years ago when they invested in us=
,=0F"=20
said Joseph P. Nacchio, Qwest=0F's chairman and chief executive officer. I=
f=20
BellSouth now needs cash instead of Qwest stock, Mr. Nacchio said, =0F"I=0F=
'm glad=20
to be strong enough now to be able to help out.=0F"

The transaction satisfies both companies=0F' needs, analysts said. It give=
s=20
BellSouth a cash infusion to spend on deployment of digital subscriber line=
=20
service and on its wireless initiatives in the U.S. and Latin America.

Qwest, on the other hand, gains the opportunity to boost its stock value, M=
r.=20
Quinton said. =0F"Qwest=0F's management is clearly sending a signal to the=
market=20
that the company=0F's stock is undervalued at current levels,=0F" he said.

The sale of 22.22 million Qwest shares back to Qwest will leave BellSouth=