|
|
Enron Mail |
-------------------------------------------------- Telecommunications Reports presents.... TR DAILY Oct. 23, 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/td102301/index.htm POWELL: NextWave Settlement STILL AN `OPEN QUESTION' http://www.tr.com/online/trd/2001/td102301/Td102301.htm POWELL OUTLINES 5-POINT=20 AGENDA FOR COMMISSION http://www.tr.com/online/trd/2001/td102301/Td102301-01.htm AT&T EXITS FIXED WIRELESS BUSINESS; QUARTERLY RESULTS SURPASS EXPECTATIONS http://www.tr.com/online/trd/2001/td102301/Td102301-02.htm LUCENT STILL LOOKS TO 2002 FOR RETURN TO PROFITABILITY http://www.tr.com/online/trd/2001/td102301/Td102301-03.htm RURAL TELCOS EYE `ECONOMIC STIMULUS' PACKAGE FOR UNIVERSAL SERVICE CAP BILL http://www.tr.com/online/trd/2001/td102301/Td102301-04.htm VERIZON LAUNCHES InterLATA=20 SERVICE IN PENNSYLVANIA http://www.tr.com/online/trd/2001/td102301/Td102301-05.htm NEWS IN BRIEF=20 http://www.tr.com/online/trd/2001/td102301/Td102301-06.htm **************************************************************** POWELL: NextWave Settlement STILL AN `OPEN QUESTION' FCC Chairman Michael K. Powell said on Tuesday it was "a very open question" whether the agency and other parties can reach a settlement to end the 5-year-old dispute over NextWave Telecom, Inc.'s "C" and "F" block PCS (personal communications service) licenses. "There are a lot varied interests at the table and whether they can all be aligned in a way that everyone finds satisfactory is still a very open question," Mr. Powell told reporters during a briefing in Washington. "I'm an attorney and I've been in many discussions and negotiations. This thing has 450,000 moving parts and moving constituencies." Several wireless carriers that bid on NextWave's spectrum at an auction earlier this year are negotiating an agreement with NextWave and the FCC that could free up the valuable spectrum, sources have said. Asked to predict the chances of a successful outcome, Mr. Powell replied, "I learned a long time ago I don't express any odds on anything associated with NextWave." Mr. Powell stressed that the Commission wouldn't compromise its rules or policies just to reach a settlement. "It is important to recognize that from the Commission's standpoint, it has certain principles, certain commitments to auction integrity that it has defended throughout the extent of the NextWave litigation, and it has no intention of flushing them down the drain just in the name of getting a quick return," he said. On another spectrum-related issue, Mr. Powell said the FCC still plans on establishing procedures by the end of this year to allow Northpoint Technology Ltd. and other terrestrial wireless systems to share the Ku-band with direct broadcast satellite (DBS) operators. He defended the agency against criticism that it was taking too long to complete the proceeding, saying it had the "re- sponsibility to wade through a thicket of extremely complex legal and technical questions." Mr. Powell said "it's very important to recognize that this is one of the. . .most challenging set of issues that the Commission has faced in the context of a new service and it needs to tread carefully." In addition to technical issues about how terrestrial wireless operators can share the Ku-band without causing interference to DBS systems, Mr. Powell said, there are "very difficult legal questions about possible licensing and allocation as a consequence of a statutory regime that has different rules and obligations for terrestrial-delivered services than it does for satellite services." -- Paul Kirby, pkirby@tr.com **************************************************************** POWELL OUTLINES 5-POINT=20 AGENDA FOR COMMISSION FCC Chairman Michael K. Powell today said he would apply his deregulatory, market-based philosophy to address a host of issues, the most important of which will be spurring deployment of broadband services. "The widespread deployment of broadband infrastructure has probably become the central communications policy objective today," he said at a press briefing in Washington. He stressed the importance of the FCC taking actions to spur the "digital broadband migration." That could be an "arduous" process, he said, but is "essential to survival." He outlined five areas that he said would drive the FCC's agenda for the next several years: (1) broadband deployment, (2) competition policy, (3) spec- trum allocation policy, (4) a reexamination of the foundation of media regulations, and (5) homeland security measures. Shortly after he took over as chairman, Mr. Powell said he didn't have a list of specific regulatory objectives that he planned to pursue. But today he sounded a different note. "It really stresses me that we don't have a more coherent, cognizant vision of what we're doing here," he said. "We're just running around reacting to the latest" issues. The initial work to act on his agenda will be started within six months and will be "substantially underway" within a year, he said. Various proceedings will be used to address his agenda, he said.=20 "What we're going to try to do is create clearly identifiable vehicles where key policy issues will be debated." Otherwise, he said, "the agency gets machine-gunned" with petitions and other filings from companies, trade groups, and other interested parties trying to get action on particular issues. Regarding broadband services, Mr. Powell stressed the importance of limiting regulations that inhibit deployment. "It is clear that substantial investment is required to build out the new networks, and we should limit regulatory costs and regulatory uncertainty," he said. "Our focus should be on demonstrable and competitive risks and discriminatory provisioning." As it mulls broadband regulations, the FCC plans to continue studying the market and working with states, he said. The agency will "clarify regulatory classification and access obligations expeditiously," he said. He cited three proceedings that would focus on broadband services: (1) the ongoing new networks pro- ceeding, (2) the cable open-access proceeding, and (3) the third- generation (3G) wireless spectrum allocation proceeding. Regarding competition, Mr. Powell said the Commission needed "to make prudent course corrections in our policies" to spur competition. "Facilities-based competition is the ultimate objective," he said. He stressed the need for "simplified enforceable connection rules." More specifically, the chairman said the Commission would conclude outstanding "phase I" pricing flexibility proceedings and initiate a set of new proceedings over the next six months "that will pro- vide vehicles for rethinking our current framework." He said a "triennial review" would provide the principle docket for evaluating unbundled network elements policy. The Commission will initiate a proceeding focusing on performance measurement and enforcement in an "attempt to streamline the essential performance measures used for making judgments about compliance with the local competition provision," he added. He also said the agency would initiate a "dominance and non- dominance" proceeding to "ask how do we develop a framework that might be used to deregulate on a carrier-specific or service- specific basis, depending on the level of competition and market power." On spectrum allocation, Mr. Powell found plenty of fault with the way the government doles out valuable frequencies. "The nation's approach to spectrum allocation is seriously fractured," he said, adding it was "a politicized, reactive process." He called for a more comprehensive, market-driven policy that would allow spectrum users to decide the best uses of bands. The chairman said the Commission should encourage the development of secondary spectrum markets, improve interference protection standards, back the development of unlicensed frequencies, map out the uses and users of all spectrum, promote spectral efficiency, and protect frequencies used for public safety. -- Paul Kirby, pkirby@tr.com **************************************************************** AT&T EXITS FIXED WIRELESS BUSINESS; QUARTERLY RESULTS SURPASS EXPECTATIONS After tinkering for five years with fixed-wireless technology as a way to bypass incumbent local exchange carriers (ILECs) and reach consumers directly, AT&T Wireless Services, Inc., is killing the venture formerly known as "Project Angel." It took too much time, money, and effort to deploy the service, and the financial return was less than AT&T Wireless earns from other operations, executives said today. Fixed wireless antenna towers, for example, were expensive and time-consuming to build, and new subscribers often had to wait too long for ILECs to transfer their service to the fixed wireless system, said John Zeglis, AT&T Wireless's chairman and co-chief executive officer. "These challenges probably could have been met," he said during a conference call with financial analysts.=20 "But we don't have that much patience for a nonstrategic business." AT&T Wireless inherited the fixed wireless business from AT&T Corp. when the two companies began separating last year. AT&T essentially invented fixed wireless technology and began market tests in 1997. Despite setbacks, AT&T continued to invest in the venture, then known as Project Angel. Some skeptics surmised that the existence of the fixed wireless program gave AT&T ammunition in its negotiations with other network operators for access to consumers. AT&T Wireless's goal was to have 100,000 customers for the fixed wireless service, which competes against ILECs in the provision of voice telephony and high-speed Internet access to residential customers. But the fixed-wireless venture fell short of expectations, Mr. Zeglis said. "In the third quarter, the business went off track," he said. "This decision is as clear cut as it is bittersweet." AT&T Wireless is the second major service provider to pull back recently from the fixed wireless business. Last week, Sprint Corp. said it would stop taking new customers for its fixed-wireless service but would continue serving its existing base of 52,000 subscribers (TRDaily, Oct. 18). It wasn't clear whether WorldCom, Inc., would follow suit. Unlike AT&T Wireless, WorldCom's fixed wireless unit targets businesses rather than consumers. WorldCom is on target to launch service in 13 markets by year-end, a spokeswoman said. AT&T had more than 47,000 fixed wireless customers. Over the next several months, they will be transferred back to the ILECs that previously served them. AT&T Wireless will explore using its fixed-wireless spectrum to provide other wireless services. Having been unsuccessful in selling the business, AT&T Wireless will take a $1.3 billion charge against earnings in the fourth quarter to account for its shutdown. The announcement about the fixed wireless unit coincided with the release of AT&T Wireless's financial performance for the quarter that ended Sept. 30. Financial analysts seemed pleased by both.=20 "It was a solid quarter, which we believe is a positive in this environment," said Merrill Lynch & Co.'s Linda Mutschler. AT&T Wireless's third quarter revenue was $3.5 billion, a 25.1% increase over the same period a year ago. EBITDA (earnings before interest, taxes, depreciation, and amortization) was $718 million, a 52.3% increase over last year. The carrier added 748,000 subscribers, about the same as during the year-ago quarter. Its main weakness was churn, which was 3.1% versus 2.9% in the previous quarter and the year-ago quarter. Some of the churn was "involuntary" and resulted from extending service to too many customers with bad credit, said Mohan Gyani, president and co-CEO. AT&T Wireless has eliminated some of its less desirable distribution channels, he said. "We're out of the business of attracting customers with a propensity for bad debt." In the fourth quarter, AT&T Wireless expects to add another 900,000 to one million new subscribers. Full-year revenue growth is expected to be 30%-35%, and capital expenditures (capex) will be around $5 billion. About 20% of the capex will go toward the deployment of a GSM (Global System for Mobile communication) overlay and GPRS (general packet radio service) network over 40% of its footprint by year-end. The remaining 60% will be built next year. The upgrades will enable AT&T Wireless to offer so-called 2.5G data services. -- Tom Leithauser, tleithauser@tr.com **************************************************************** LUCENT STILL LOOKS TO 2002 FOR RETURN TO PROFITABILITY Lucent Technologies, Inc., today insisted it was still on track to begin generating profits again in the 2002 fiscal year, which for Lucent began Sept. 30. "Restructuring actions will drive our return to profitability and positive cash flow in fiscal year 2002," said Henry Schacht, Lucent's chairman and chief executive officer. Revenues in the current quarter, which ends Dec. 31, will be less than those generated in the previous quarter, Mr. Schacht said.=20 But sales will pick up in the March quarter, he predicted. "We are seeing early signs of increased customer spending in some segments of our business for that quarter," he said. For the quarter that just ended, Lucent today reported revenues of $5.2 billion, compared with $5.9 billion in the previous quarter.=20 Excluding $8 billion in one-time charges, Lucent's loss per share from continuing operations was $0.27, versus $0.35 in the previous quarter. Lucent is in the midst of a massive restructuring that will cut its workforce in half and eliminate many low-margin operations. In the most recent quarter, 18,500 jobs were eliminated, Lucent said, and annual expenses were cut by $400 million. -- Tom Leithauser, tleithauser@tr.com **************************************************************** RURAL TELCOS EYE `ECONOMIC STIMULUS' PACKAGE FOR UNIVERSAL SERVICE CAP BILL Several trade groups that represent rural telco interests have been pounding the pavement on Capitol Hill in a bid to get the Universal Service Support Act (S 500, HR 1171) attached to any "economic stimulus" package that moves through Congress over the next few weeks. The legislation would remove the caps on the overall size of the Universal Service Fund and on the amount that carriers are allowed to receive in universal service support. The FCC recently adopted an indexed cap that adjusts for inflation (TR, May 14), but rural telco interests still want policymakers to move forward with a full repeal of the cap. In a recent letter to members of the Senate Finance Committee, which has primary jurisdiction over the economic stimulus issue, the rural telco groups touted lifting of the caps as a way to stimulate investment in new telecom infrastructure and drive economic growth in rural areas. =20 The telecom industry "plays a critical role in ensuring the nation's economic and national security. . .[but] rural telephone companies are hamstrung by arbitrary federal rules," said the letter, which was signed by the Organization for the Promotion and Advancement of Small Telecommunications Companies, the National Telephone Cooperative Association, the National Rural Telecom Association, and the U.S. Telecom Association. Proponents of lifting the caps say they cause service providers in high-cost areas to miss out on about $100 million in annual universal service assistance and discourage upgrades and investment in newly acquired local exchange properties. "Congress can free these companies to make investments by including the Universal Service Support Act in the economic stimulus package," the telco groups wrote. "Additionally, because universal service support is privately funded through carrier-to-carrier transactions, repeal of the caps would not add to the cost of the stimulus package," the groups said in the Oct. 18 letter. "Finally, repealing the caps would facilitate another major policy objective of Congress and the president--investment in the platform need for full broadband deployment." Several telecom interests have been eyeing Congress's work on the fiscal stimulus package as a possible means for gaining some quick legislative relief (TR, Oct. 8). The House's main economic stimulus plan (HR 3090) has cleared the Ways and Means Committee and awaits consideration on the floor. In the Senate, where work on the economic stimulus bill is still in the early stages, a "Dear Colleague Letter" has been circulating urging Finance Committee leaders to consider approving S 500. -- Ryan Oremland, roremland@tr.com **************************************************************** VERIZON LAUNCHES InterLATA=20 SERVICE IN PENNSYLVANIA Verizon Pennsylvania, Inc., today said it began offering interLATA (local access and transport area) service to residential customers in the state. The FCC granted Verizon the authority to provide interLATA service in Pennsylvania on Sept. 19. Under section 271 of the federal Telecommunications Act of 1996, the FCC must determine whether a Bell company has sufficiently opened its markets to competition before authorizing it to provide in-region interLATA service. The flagship plan offered in the state is a flat-rate 10 cents-a- minute charge for all long distance calls. Maura Breen, Verizon's senior vice president-retail markets and chief marketing officer, said during a conference call today that customers who had premium local packages would qualify for a discount plan that offers long distance calls for 8 cents per minute. The telco is also offering an "e-values" calling plan that provides customers with discounts for signing up for service online. Under that plan, customers pay 5 cents per minute for weekend calls and 9 cents per minute for weekday calls. Ms. Breen said the long distance plans provided simple, one-bill, flat-rate service "tailored to fit our customers' lifestyles and calling preferences." Verizon business long distance service will begin Oct. 30. -- Victoria Curtis, vcurtis@tr.com **************************************************************** NEWS IN BRIEF Daniel E. Somers is retiring as AT&T Broadband's president and chief executive officer. He will be succeeded by William T. Schleyer, a principal in venture capital firm Pilot House Ventures LLC and former president and chief operating officer of MediaOne Group, Inc., a cable TV operator that was acquired by AT&T. Ron Cooper, president and COO of Web-hosting company Relera, Inc., will join AT&T Broadband as COO. David M. Fellows, a principal at Pilot House Ventures, will become AT&T Broadband's chief technology officer.... Christopher Rowe has joined satellite service provider Iridium Satellite LLC as chief financial officer. He was CFO at SpotCast, Inc., a provider of content-delivery technology to mobile networks.... MDS America, Inc., has asked Senate Appropriations Committee Chairman Robert C. Byrd (D., W.Va.) to keep the various spending bills clean of any language that would enable Northpoint Technology Ltd. to obtain spectrum in the Ku-band without buying it at auction (TR, Oct. 22). "As you know, Congress has recognized that the auction process is the best way to ensure that scarce spectrum resources are used most productively," MDS America said in a letter yesterday to Sen. Byrd. "Please oppose this last-minute attempt by Northpoint to use the appropriations process at the great expense of the American taxpayer".... BellSouth Corp. released a flurry of letters from the Louisiana and Georgia federal congressional delegations endorsing its bid to enter the in-region interLATA (local access and transport area) service market in those states. Also voicing support for the Georgia application was Gov. Roy E. Barnes (D.). The Louisiana and Georgia state commissions have already lent their support to BellSouth's application. The Department of Justice has until Nov. 6 to weigh in on the application, and a final FCC decision is expected before Dec. 31.... Billing issues top the complaint list for both wireline and wireless subscribers, according to a new report from the FCC's Consumer Information Bureau. In the first installment of what will be a quarterly report, the bureau compiled the most common complaints and inquiries received by the CIB's Consumer Centers during the third quarter on broadcast, cable TV, wireless, and wireline telecom issues. The report doesn't include complaints received by other FCC offices or those made to state agencies or to service providers. "The statistics in this report will allow CIB to play a pro-active role in alerting the Commission to potential problems that may require further consumer education efforts or policy changes," CIB Chief K. Dane Snowden said. ******************************************************** 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
|