|
|
Enron Mail |
-------------------------------------------------- Telecommunications Reports presents.... TR DAILY Oct. 17, 2001 -------------------------------------------------- PLEASE NOTE: This electronic publication is copyrighted by Telecommunications Reports International. Redistribution or retransmission of any part of this electronic publication -- either internally or externally -- is strictly prohibited. Violation will be cause for immediate termination of your subscription and liability for damages. You may print out one hard copy for your personal use. If you are interested in having this publication sent to colleagues at your company, additional authorized recipients may be added to your subscription for a fee. Call Subscriber Services, at (800) 822-6338, or send an e-mail to customerservice@tr.com for more details. If you prefer not to receive TR Daily, please reply to customerservice@tr.com. -------------------------------------------------- Table Of Contents Click here for the full issue: http://www.tr.com/online/trd/2001/td101701/index.htm HOLLINGS GIVES THUMBS DOWN=20 TO 700 MHz BAND-CLEARING PLAN http://www.tr.com/online/trd/2001/td101701/Td101701.htm GILMORE STRESSES NEED FOR IMPROVED COORDINATION ON INFRASTRUCTURE PROTECTION http://www.tr.com/online/trd/2001/td101701/Td101701-01.htm CABLE MODEM `OPEN ACCESS' LOOKS LIKE FINANCIAL WINNER, AOL TIME WARNER SAYS http://www.tr.com/online/trd/2001/td101701/Td101701-02.htm HUGHES ELECTRONICS SAYS MERGER TALKS NEARING COMPLETION, STILL CUTTING COSTS http://www.tr.com/online/trd/2001/td101701/Td101701-03.htm AT HOME RESUMES CONNECTING NEW DATA CUSTOMERS AFTER CABLE TV PARTNERS ADDRESS `FINANCIAL ISSUES' http://www.tr.com/online/trd/2001/td101701/Td101701-04.htm FCC NARROWBAND PCS AUCTION NETS $8.2 MILLION IN BIDS http://www.tr.com/online/trd/2001/td101701/Td101701-05.htm TELECOM EARNINGS ROUNDUP=20 http://www.tr.com/online/trd/2001/td101701/Td101701-06.htm NEWS IN BRIEF=20 http://www.tr.com/online/trd/2001/td101701/Td101701-07.htm ***************************************************************** HOLLINGS GIVES THUMBS DOWN=20 TO 700 MHz BAND-CLEARING PLAN Senate Commerce, Science, and Transportation Committee Chairman Ernest F. Hollings (D., S.C.) today called "outrageous" the FCC's support for voluntary band-clearing agreements for the 700 megahertz band, saying "such action clearly violates the mandates and standards to which the FCC is required to adhere."=20 "Allowing industry to negotiate private marketplace deals that dictate the governance and the transfer of spectrum to earn profits on the spectrum through such arrangements is outrageous," he said in a letter today to FCC Chairman Michael Powell. Sen. Hollings noted that the FCC was required by law to reassign the 700 MHz spectrum (channels 60-69) through an auction. "When Congress enacted these statutory provisions, it did not envision that the FCC would hand over its authority to manage spectrum to industry and to the marketplace. The fact is that the FCC must refrain from bending the law to meet the excessive demands of industry," he wrote. "It must simply apply the law as was intended by Congress." The letter follows on the heels of the FCC's Wireless Telecommunications Bureau's decision earlier this week to hold the long-delayed 700 MHz band auction on June 19, 2002. The bureau delayed the sale in July -- the fifth such postponement -- to give officials more time to consider three petitions before the Commission related to the agency's attempts to facilitate the voluntary band-clearing agreements between incumbent TV broadcasters and wireless carriers (TR, July 16). The Commission acted on those requests last month, clearing the way for the sale to proceed (TR, Sept. 24). In its action last month, the FCC gave TV broadcasters operating in channels 60-69 additional flexibility to transition to digital TV (DTV). Some broadcasters say the rule changes will help spur band-clearing pacts that could result in them leaving the spectrum earlier than Congress requires. In exchange, the broadcasters would receive payments from wireless carriers. Broadcasters currently don't have to return their spectrum until 2006, at the earliest. But the wireless industry says it shouldn't be forced to pay broadcasters to vacate the spectrum early. "Even after the auction, the broadcasters will have to be paid extortion money to move. It's a sad state of affairs when broadcasters have to be bought off [for] what they promised to give back and Congress has directed to a higher public safety use," said Thomas E. Wheeler, president and chief executive officer of the Cellular Telecommunications & Internet Association. In related news, the DTV hearing that was planned for tomorrow in the House telecommunications and the Internet subcommittee has been postponed again. House leadership has closed all House office buildings until at least next Tuesday in the wake of an anthrax scare on Capitol Hill. -Paul Kirby, pkirby@tr.com -Ryan Oremland, roremland@tr.com ***************************************************************** GILMORE STRESSES NEED FOR IMPROVED COORDINATION ON INFRASTRUCTURE PROTECTION "Far greater" coordination between the government, private sector, and intelligence community is needed if efforts to shield the nation's critical infrastructure from physical threats or cyberattacks are to be successful, Virginia Gov. James Gilmore (R.) told a House panel today. Gov. Gilmore also serves as chairman of the Advisory Panel to Assess the Capabilities for Domestic Response to Terrorism Involving Weapons of Mass Destruction, which was established by Congress in 1999. Testifying this morning before the House Science Committee, Gov. Gilmore advised against making any major "structural changes" to the way federal agencies and state or local interests tackle critical infrastructure protection issues. "Rather, we need to marshal the efforts of millions of government workers, the intellectual power housed in our universities, and the entrepreneurial spirit of our private sector . . .to deter, prevent, detect, and should our vigilance falter, to respond when attacks occur," he said. Along with his call for stepping up coordination, Mr. Gilmore also recommended that Congress take the following actions: create an "independent advisory body" similar to his panel to review cybersecurity protection programs; set up a nonprofit organization "devoted solely to the task of" overseeing information sharing between the government and private sector; establish a "Cyber Court" to handle investigations of potential cyber-related crimes; and develop a comprehensive research and development plan for enhancing security. A "critical" first step to protecting cybersecurity, Mr. Gilmore said, was the executive order that President Bush signed yesterday to set up an interagency board to study critical infrastructure issues. The order also creates a "National Infrastructure Advisory Council," which will be comprised of representatives from the private sector, academia, and state and local governments. Chairing the "President's Critical Infrastructure Protection Board" will be Richard Clarke, who is the president's new special adviser on cyberspace security issues. Membership will consist of officials from federal departments and some agencies, including the FCC. =20 The board will "recommend policies and coordinate programs for protecting information systems for critical infrastructure, including emergency preparedness communications, and the physical assets that support such systems," the order says. The crux of the advisory council's focus will be on the banking, transportation, energy, manufacturing, and communications industries, as well as "emergency government services," the order says. Also today, representatives from the competitive local exchange carrier industry today called on all "facilities-based competitors and incumbents" to convene a forum to review various network security issues, including procedures for re-routing telecom traffic during emergency situations. "Because [incumbent local exchange carriers] and CLEC networks interconnect with each other, we have a mutual interest in preserving the reliability of these networks," Association for Local Telecommunications Services President John Windhausen Jr. said in a statement. "We need to work together to develop a common plan for security and restoration of service in the event of future attacks." The U.S. Telecom Association, without commenting directly about the ALTS's proposal, said it already had launched such a review.=20 "Since we represent all of the telecom industry. . .We are working now and will continue working in the future to address the issue of network security," a USTA spokesman told TRDaily.=20 -Ryan Oremland, roremland@tr.com ***************************************************************** CABLE MODEM `OPEN ACCESS' LOOKS LIKE FINANCIAL WINNER, AOL TIME WARNER SAYS AOL Time Warner, Inc., today touted the early results of its efforts to allow unaffiliated Internet service providers (ISPs) to use its cable modem platforms. The embrace of "open access" might prove to be a financial benefit, executives said during their quarterly conference call with analysts. "By giving our cable customers significant choice among high-speed Internet providers, we will accelerate mass-market adoption of broadband, which will have very important implications for all of our businesses," predicted Gerald M. Levin, AOL Time Warner's chief executive officer. Time Warner Cable recently opened its system to EarthLink, Inc., becoming one of the first cable TV operators to let cable modem customers choose their ISP. Time Warner Cable also offers two ISPs affiliated with AOL Time Warner -- AOL High-Speed Cable and Road Runner. The multiple ISP program has been costly, said J. Michael Kelly, the company's executive vice president and chief financial officer.=20 He didn't quantify the cost but said the company had to invest in new systems and change its business processes to launch the program. Nevertheless, Time Warner Cable intends to expand the program beyond its current 10 markets, he said. Robert W. Pittman, AOL Time Warner's co-chief executive officer, said the multiple ISP offering had not diverted revenue from the company's original ISP, Road Runner. "There's very little cannibalization of Road Runner," he said. "What that says is, these are incremental ISP [sales] for the cable company, which I think is a positive trend not only for our company, but for the cable industry." AOL Time Warner said its Road Runner service added 252,000 subscribers during the three-month period that ended Sept. 30. It didn't provide numbers for EarthLink or AOL High-Speed Cable. Road Runner's customer base is now 1.7 million. The cable TV business generated revenues of $1.8 billion in the quarter, 17% more than the year-ago figure. For all of AOL Time Warner, third quarter revenues were $9.3 billion, a 6.4% increase over a year ago. EBITDA (earnings before interest, taxes, depreciation, and amortization) was up 19.5% to $2.5 billion. Although AOL Tim Warner's third quarter results largely met Wall Street's expectations, Merrill Lynch & Co. downgraded its intermediate-term rating on the company's shares from "buy" to "neutral." Analyst Henry Blodget cited weaker-than-expected financial results at the company's America Online division. -- Tom Leithauser, tleithauser@tr.com ***************************************************************** HUGHES ELECTRONICS SAYS MERGER TALKS NEARING COMPLETION, STILL CUTTING COSTS Hughes Electronics Corp. officials today said negotiations regarding a potential acquisition of the company were nearing a conclusion, but they gave no indication as to the ultimate outcome of the discussions. Meanwhile, Hughes said it continued to gouge excess expenses out of its cost structure during the third quarter. "The good news is that News Corp. and EchoStar remain interested," commented Jack Shaw, Hughes' chief executive officer, during a conference call to discuss third quarter results. "Though I can't say how it will play out, we are nearing the home stretch," he said. Both suitors have been circling Hughes since this summer, and EchoStar Corp. underscored its desire with an unsolicited stock- merger bid in early August valued at $32 billion. So far, the merger talks have survived a stumbling stock market, the Sept. 11 terrorist attacks, and comments by Hughes parent company General Motors Corp. that declining stock prices of all firms concerned were a complicating factor in reaching an agreement. Since GM's warning to that effect last month, Hughes, Echostar and News Corp. share prices have bounced back by between 14% and 22%. For the third quarter, Hughes posted revenues of $2.10 billion, up 24% from the year-ago figure of $1.68 billion. Top-line growth was led by stronger-than-expected performance at the firm's DirecTV business, which generated 425,000 net new subscribers during the quarter. At Sept. 30, DirecTV counted a total of 10.3 million subscribers, up 14% from a year ago. Hughes results also benefited from consensus-beating numbers at its PanAmSat unit, where quarterly performance was bolstered by a major new contract, as well as heightened demand by TV news companies for satellite services.=20 At the bottom line, Hughes's third quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) sagged to $76.5 million under the weight of $65.3 million in employee severance charges. In the comparable quarter last year, Hughes generated $107.9 million of EBITDA. "The third quarter was very important for Hughes because we made key structural and management changes across the business," Mr. Shaw said. "As a result, we are now positioned to generate sub- stantially improved operating results." The firm's $65 million of severance charges during the quarter, Mr. Shaw said, will yield $110 million of annual savings beginning next year and will contribute to the firm's drive to become cash-flow positive by 2003. Headcount cuts in the past three months have reduced Hughes's workforce by 10% globally and by 20% at the DirecTV operations, Mr. Shaw said. As Hughes management is still "scrubbing the numbers and extracting more costs," the CEO said he would refrain from providing 2002 financial guidance and would furnish new projections in about a month. Michael Gaines, chief financial officer, expressed confidence that PanAmSat would succeed in repaying to Hughes a $1.7 billion term loan by year-end. As a result, the company will have sufficient funding to satisfy most of its spending requirements next year, he said. -- John Curran, jcurran@tr.com ***************************************************************** AT HOME RESUMES CONNECTING NEW DATA CUSTOMERS AFTER CABLE TV PARTNERS ADDRESS `FINANCIAL ISSUES' At Home Corp. has resumed connecting new cable modem customers for some cable TV operators after those operators apparently offered financial concessions. Agreements have been reached with AT&T Corp., Comcast Corp., Cox Communications, Inc., and Canada's Rogers Communications, Inc., an At Home spokeswoman said. The companies wouldn't disclose terms of the agreements, which the spokeswoman said "addressed certain outstanding financial issues."=20 Those issues apparently were the cause last week of At Home's decision to discontinue new cable modem hookups for its cable TV partners. At Home is in bankruptcy, and its creditors decided the firm could not afford to continue expanding the cable modem business. At Home had suggested it might resume operations if its cable TV partners offered more financial assistance. The cable TV operators had little choice; most of them would have been unable to fill the void left by At Home in time to avoid losing large numbers of customers (TRDaily, Oct. 11). -- Tom Leithauser, tleithauser@tr.com ***************************************************************** FCC NARROWBAND PCS AUCTION NETS $8.2 MILLION IN BIDS An FCC auction of 900 megahertz band narrowband PCS (personal communications service) licenses netted $8.2 million in bids. Five bidders won 317 of the 365 licenses offered at the sale, which ended Oct. 16 after eight days and the 48th round. Space Data Spectrum Holdings LLC led all bidders, offering $4.2 million for seven of the eight nationwide licenses on the block and $2.0 million for 197 of the 357 Major Trading Area (MTA) licenses being sold. Allegheny Communications, Inc., was second, offering $1.3 million for 100 MTA licenses and $378,750 for the remaining nationwide license. Narrowband PCS licenses have traditionally been used for paging services, including advanced two-way offerings, although other wireless telephony and data services are also permitted in the spectrum. Space Data Corp., which owns Space Data Spectrum Holdings, has received a limited waiver from the FCC's International Bureau to operate a high-altitude balloon-based communications system (TR, Sept. 17, notes). -- Paul Kirby, pkirby@tr.com ***************************************************************** TELECOM EARNINGS ROUNDUP=20 Sprint Corp. posted third quarter revenues of $6.72 billion, up 11% from the $6.04 billion generated in the comparable quarter last year. But Sprint's quarterly net loss widened to $134 million from $6 million a year ago. Sprint FON Group's earnings fell year-over- year because of lower yields in the long distance business and higher broadband development costs. Sprint PCS Group's net loss was greater than expected due to higher customer acquisition costs.=20 In addition, Sprint said it would discontinue its Integrated On- Demand Network (ION) consumer and business broadband product offerings, write off a substantial portion of assets connected with the business in the fourth quarter, and cut approximately 6,000 employees from the payroll.=20 Teradyne, Inc., a supplier of test equipment to the telecom and other industries, said third quarter revenues plummeted to $249 million from $859 million in the year-ago quarter, and below recent estimates of $275 million to $325 million. Net losses including charges for the most recent quarter totaled $103 million versus a $163 million profit last year. "It appears to us that we will be dealing with low shipments and unfavorable financial results for the next several quarters," commented George Chamillard, chief executive officer. Fourth quarter sales are expected to fall to the $200 million to $250 million range, with a loss of up to $0.50 per share before accounting for special charges. Tele2 AB posted third quarter operating revenues of $605 million versus $595 million in the second quarter. Third quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) increased to $68.5 million from $33.5 million in the second quar- ter. Tele2 AB, based in Stockholm, is a pan-European alternative telecom service provider.=20 Harris Corp. reported $443.4 million of revenues for its fiscal first quarter ended Sept. 28, down from $460.4 million in the year- ago quarter. The communications equipment maker's first quarter net income totaled $17.1 million versus a $34.8 million loss in the same quarter last year. Amphenol Corp., a maker of fiber-optic connectors and cable, said third quarter revenues slipped to $252.8 million versus $354.6 million in the comparable quarter last year. Net income for the most recent period declined to $16.6 million from $28.8 million last year. "For the remainder of this year it is expected that the well-chronicled slowdown in communication markets and the generally slowing economy will not markedly improve," the company said.=20 ROHN Industries, Inc., announced third quarter revenues of $53.4 million accompanied by net income of $1.1 million. In the comparable quarter last year, ROHN generated $67.6 million in revenues and an $8.4 million profit. Given uncertain economic conditions, ROHN officials refrained from giving financial guidance for the remainder of 2001 and next year. The telecom equipment maker also said it had violated financial covenants under its bank credit facility and was renegotiating certain aspects of the agree- ment.=20 Applied Innovation, a telecom hardware and software provider, reported third quarter revenues of $19.6 million, down from $31.2 million in the year-ago quarter. Net income for the quarter just ended totaled $1.8 million, versus $2.8 million a year ago.=20 Vodavi Technology, Inc., generated $9.7 million in revenues during the third quarter, up slightly from $9.6 million posted in the second quarter and off from the $13.1 million in revenues generated in the comparable quarter last year. Net income for the third quarter was $253,000 versus $497,000 a year ago. "In light of the current economic situation and other recent events, we are pleased with the third quarter results and the discipline upon which we are conducting our business," said David Husband, chief financial officer. Vodavi is a provider of telecom-related software products.=20 Pathus Technologies plc, a Dublin-based provider of mobile Internet platform solutions, reported that revenues for the third quarter grew to $10.4 million from $8.5 million in the comparable quarter last year. The firm's net loss widened to $3.2 million from $2.2 million last year. "Despite the current background of uncertainty and the steep down cycle in the semiconductor industry," Pathus said, it expects a modest increase in fourth quarter revenues and will break even on profit in mid-2002. ***************************************************************** NEWS IN BRIEF Matthew Petzold has been named chief financial officer and senior vice president-finance and business services for Verestar, Inc. He was VP and chief financial officer of UUNET Technologies, Inc., a division of WorldCom, Inc. Verestar, a wholly owned subsidiary of American Tower Corp., is an Internet communications company based in Fairfax, Va.... Gentner Communications Corp. has named Joseph Stockton vice president-business development. He was chief executive officer of Dublin-based Ivron Systems, which Gentner bought Oct. 4. Gentner, of Salt Lake City, is a provider of Internet and traditional audio and video conference services.... Chris Kremer has been named executive vice president-sales and marketing for High Speed Net Solutions, Inc., d/b/a Summus. He was VP-sales and marketing at Motorola Corp.'s transmission products division. Summus is a wireless and mobile multimedia developer in Raleigh, N.C.... The FBI is seeking comments on its proposal to make minor changes to its Communications Assistance to Law Enforcement Act (CALEA) of 1994 cost recovery regulations to harmonize the rule's language with the statute's language. The agency proposes to amend its rules to add definitions and examples for the terms "replaced" and "significantly upgraded or otherwise undergoes major modification."=20 The changes would clarify the rule provisions for reimbursing carriers for "modifications to equipment, facilities, or services installed or deployed" prior to Jan. 1, 1995, to bring it into compliance with the capability requirements of CALEA. Comments on the supplemental notice of proposed rulemaking (Regulation Identifier Number 1110-AA00, FBI 100P) are due Dec. 4.... A spokesman for SBC Communications, Inc., today said he couldn't comment on what disciplinary action, if any, the company would take against employee John Mileham, who the FCC said allegedly "misrepresented the facts or made willful material omissions" to the agency. Mr. Mileham was the prime target of FCC criticism in its order, released late yesterday, proposing to fine SBC $2.52 million. The FCC alleges SBC submitted inaccurate information to the Commission as it investigated whether SBC filed incorrect data in support of its bid to offer in-region interLATA (local access and transport area) services in Kansas and Oklahoma. The spokesman said he couldn't comment on "personnel matters" such as disciplinary actions but said SBC had instituted an "extra layer of review and scrutiny for filings and affidavits" to ensure their accuracy.... The FCC's Oct. 11 decision to streamline the system of accounts used by incumbent local exchange carriers (ILECs) to track and report their costs and revenues apparently eliminated data needed by state regulators to protect the public interest, according to the National Association of Regulatory Utility Commissioners.=20 Although the text of the order hasn't yet been released, NARUC today said it was concerned that the FCC hadn't adopted many of the new accounts supported by the association and more than a third of the states. "It is also difficult to see how the industry would be well-served by 50 states moving to numerous potentially different `base' uniform systems of account," since they would no longer be able to rely on the books the ILECs would keep for the FCC, NARUC said.... A former licensee has asked the U.S. Appeals Court in Washington to review two FCC decisions upholding the cancellation of the company's 19 "C" and "F" block PCS (personal communications service) licenses because it missed installment payments on its auction-related debt (TR, Dec. 25, 2000, and Sept. 24, notes).=20 21st Century Telesis Joint Venture and 21st Century Bidding Corp. filed the notice of appeal (case no. 01-1435).... Bartholdi Cable Co., Inc., has appealed the FCC's denial of 15 applications to operate private operational fixed microwave service (OFS) facilities in New York City. Bartholdi, formerly known as Liberty Cable Co., Inc., has asked the U.S. Court of Appeals in Washington (case no. 01-1423) to review the Commission's denial of the applications and a subsequent order upholding that decision (TR, Dec. 18, 2000, notes; and Sept. 3, notes). The FCC also imposed a $1.425 million forfeiture against the company for its "extensive record" of operating unlicensed OFS facilities in New York City and its "untruthfulness" concerning its 15 applications.... ONI Systems Corp. has reduced its workforce by 16% to cope with the downturn in the telecom equipment sector. ONI, of San Jose, Calif., makes systems for metro networks.... Three Canadian wireless carriers have signed agreements that will enable cost-effective roaming and resale, thereby preventing the carriers have having to build duplicate networks. The participants are Bell Canada, Telus Corp., and Aliant Telecom Wireless. Telus and Bell Canada said they would save $500 million in capital costs over the 10-year term of the agreement. The pact will expand Telus's coverage from 64% of Canada's population to 87%.... Verizon Communications now has 1 million digital subscriber line (DSL) lines in service, the company said today. The figure represents an 85% increase in DSL lines year-to-date; 70% of Verizon's DSL lines are retail and 30% have been sold through wholesalers. Keiko Harvey, Verizon's senior vice president- advanced services, attributed the growth to "dramatically improved equipment, customer care, and aggressive deployment" within Verizon's local service area. To reach its year-end target of 1.2 million lines, the company said it would offer discounts and launch a marketing push. More than half of Verizon's 63 million local access lines are now DSL-qualified.... Alcatel SA announced network development contracts from Taiwan- based Chunghwa Telecom worth $52 million. Deliveries will begin in December.... Allied Riser Communications Corp. has renegotiated its merger agreement with Cogent Communications Corp. to increase the number of Cogent shares to be received by Allied Riser shareholders in the merger and to designate an Allied Riser representative to Cogent's board of directors. Allied Riser also said it had paid $12.5 million in cash to settle $62.9 million of capital lease obliga- tions.... UTG Communications, a Swiss telecom service provider, closed on a sale of its 51% stake in MusicLine AG, to Brunswick International Ltd. for $10 million in stock. ******************************************************** TR DAILY Copyright 2001 Telecommunications Reports International, Inc., (ISSN 1082-9350) is transmitted weekdays, except for holidays. Visit us on the World Wide Web at http://www.tr.com.=20 Published by the Business & Finance Group of CCH INCORPORATED. Editor: John Curran Associate Editor: Tom Leithauser Associate Editor: Ryan Oremland Associate Editor: Ed Rovetto Publisher: Stephen P. Munro 1333 H Street, NW, 1st Floor-East Tower, Washington, DC 20005 Editorial Information: Telephone: (202) 312-6060 Fax: (202) 312-6111 Email: jcurran@tr.com tleithauser@tr.com Customer Service: Telephone: (202) 312-6050 (877) 874-8737 Fax: (202) 312-6116 Email: customerservice@tr.com Federal copyright law prohibits duplication or reproduction in any form, including electronic, without permission of the publisher.=1A
|