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=20 Telecommunications Reports - February 5, 2001 Verizon Wireless=0F' Reauction Bids Create Buzz As Analysts Praise Carriers= =0F'=20 Activities in Sale U.S. Carriers See Progress in Opening Markets But Ask USTR To Keep Pressure= =20 on Laggards USTR Delays Plea for WTO Probe Of Mexico, Keeps Options Open Burns To Unveil =0F`Tech Seven=0F' Legislative Package; House, Senate Telec= om=20 Panels To Add Members Powell To Lead with Review Of FCC Operational Changes Tauzin Demands Report on Critical Infrastructure=20 AT&T Execs See Hope of Truce In Long Distance Price Wars Verizon Wireless is rolling out its two-way text messaging service,... Versatel Absorbs VersaPoint, Cuts Workers, Writes Off Assets E.spire Mulls Reverse Split To Meet Nasdaq=0F's Conditions Convergent To Cut Workforce, Close Offices Early Talks with WRC-03 Nations Seen As Key for U.S. Success Bureau OKs Satellite Operators For Intersatellite Communications DoJ, FBI Want Foreign Control Of DT Limited by FCC Conditions Intelsat Told To Disclose Privatization Info Don=0F't Exempt Foreign Agencies From Ex Parte Rules, Carriers Say Unlicensed International Carriers Given 90 Days To Come Forward FCC Delays 700 MHz Auction Again at Request of Industry QUALCOMM Creates Platform To Spur Wireless Internet Apps PCIA Drops Opposition To Lifting Spectrum Cap France, Brazil Have Troubles Awarding Wireless Licenses Telefon AB L.M. Ericsson has announced a $400 million network expansion=20 contract... FCC Sets Arbitration Schedule For Interconnection Disputes Pay-Per-Call Providers=0F' Case Should Go to FCC, Court Says Aerial v. Underground Facilities Is Topic of City-CLEC Debate AeA Advises against Regulating Competitive Broadband Markets Missouri PSC Faults SW Bell=0F's InterLATA Bid CLECs Tout Effect on Economy But Seek Help from Congress Furchtgott-Roth=0F's Departure Plan Sparks Speculation on Nominees Court Upholds FCC Rules Giving ILECs Road to Pricing Flexibility AT&T Corp. has won a multiyear $100 million broadband service contract... Utah Bill Takes Aim at Cities Entering Telecom Business Va. Regulators Tell Verizon Not To Cut Off CLEC=0F's Customers Oftel Extends BT Price Controls For Retail, Wholesale Services Loral Scraps $3.5 Billion Plan For Direct-to-Consumer Service European Commission Seeks Cybercrime Policy Harmonization Psion plc and Motorola, Inc., say they are discontinuing a joint agreement.= .. Personnel Regulatory & Government Affairs Financial Briefs Industry News Wireless Industry Says Agreement Could Streamline Antenna Siting What=0F's Ahead. . . Executive Briefings Verizon Wireless=0F' Reauction Bids Create Buzz As Analysts Praise Carriers= =0F'=20 Activities in Sale The buzz on Wall Street last week in the wake of the FCC=0F's reauction of = 422 =0F" C=0F" and =0F"F=0F" block PCS (personal commu-nications service) licenses f= ocused on=20 the aggressiveness of Verizon Wireless, the nation=0F's largest wireless ca= rrier. Industry observers also talked up the prices paid for three 10- megahertz= =20 licenses in New York City. Verizon Wireless agreed to shell out more than $4 billion=0F-or nearly a qu= arter=20 of the entire $16.8 billion the auction netted=0F-for just two New York Cit= y=20 licenses (TR, Jan. 29). The additional 20 MHz of spectrum will give it 45= =20 MHz in the nation=0F's largest market. Alaska Native Wireless LLC, which is 39.9%-owned by AT&T Wireless Services,= =20 Inc., won the third New York City license with a $1.4 billion bid. Verizon Wireless topped all bidding at the sale, which ended Jan. 26,=20 offering more than $8.7 billion for 113 licenses covering 150 million =0F"p= ops=0F"=20 (potential customers). =0F"It is very interesting that the company with one of the strongest spect= rum=20 positions before the auction. . .has felt the need to be so aggressive,=0F"= =20 Lehman Brothers, Inc., analyst John M. Bensche said in a note to investors= =20 last week. =0F"We commend Verizon for its boldness in the auction, where i= t=20 garnered spectrum over almost twice as many =0F`pops=0F' as the next-closes= t=20 bidder.=0F" Mr. Bensche noted that Verizon Wireless and its founding companies =0F"had = been=20 quite conservative in their acquisition philosophy. . .This prior=20 conservatism makes the aggressive bidding all the more remarkable, and we= =20 wonder how much of the =0F`new=0F' philosophy was transplanted into the ven= ture by=20 Vodafone, the world leader in spectrum bullishness.=0F" Verizon Wireless is a joint venture of Verizon Communications, Inc., and=20 Vodafone AirTouch plc. =0F"Verizon, with its voracious appetite, was the clear upset victor,=0F" s= aid=20 Michael I. Rollins, an analyst with Salomon Smith Barney, Inc. He had=20 predicted before the auction that the carrier would bid $3 billion to $5=20 billion on licenses. =0F"Although we understand that spectrum is an attractive resource, we were= a=20 bit surprised at how aggressive the company was relative to others in the= =20 auctions,=0F" Cynthia M. Motz, an analyst for Credit Suisse First Boston Co= rp.,=20 agreed in a note to investors. She had expected Verizon Wireless to bid le= ss=20 than $1.3 billion in the reauction. =0F"Based on their auction wins, we believe Verizon is unlikely to be an av= id=20 participant in subsequent auctions,=0F" including the 700 megahertz band sa= le,=20 Ms. Motz added. The FCC=0F's Wireless Telecommunications Bureau last week postponed the 700= MHz=20 band auction from March 6 to Sept. 12 (see separate story). Verizon Wireless officials have declined to comment on the reauction result= s,=20 citing the FCC=0F's anti-collusion rules. But Dennis F. Strigl, the carrie= r=0F's=20 president and chief executive officer, acknowledged at the Comnet Conferenc= e=20 & Expo in Washington last week (see separate story) that the overall prices= =20 paid at the sale were =0F"extremely high.=0F" Analysts speculated why Verizon Wireless had agreed to pay so much for the= =20 New York City spectrum. It could be that the carrier wanted to ensure=20 dominance in the wireless data market, or to guarantee that competitors=0F-= such=20 as Cingular Wireless LLC=0F-didn=0F't land the valuable frequencies, they t= heorized. Or perhaps Verizon Wireless is closer than analysts believe to being tapped= =20 out regarding its available spectrum in New York, they speculated. =0F"The company has been quite mum about exactly why it felt the need to bu= lk up=20 so much,=0F" Mr. Bensche said. =0F"Of course, it will be incumbent upon ma= nagement=20 to be much more forthcoming about their view of the revenue and EBITDA=20 (earnings before interest, taxes, depreciation, and amortization) potential= =20 around wireless data than they have been in the past as they seek to explai= n=20 the $8.8 billion increase in the debt load.=0F" Indeed, Credit Suisse First Boston last week downgraded Verizon=20 Communications=0F' stock from a strong buy to a buy, in part because of its= need=20 to raise cash to pay for the spectrum and the costs of building its wireles= s=20 network. The parent company has said it will lend the wireless unit the=20 money to pay for the licenses. Standard & Poor=0F's revised its outlook on= =20 Verizon Communications to stable from positive, citing the auction debt as= =20 one reason. Whatever Verizon Wireless=0F' reasons for snatching up the New York City=20 spectrum, analysts concede that licenses there are valuable for any carrier= . =20 =0F"In order to provide nationwide coverage in the United States, New York = is=20 mandatory,=0F" noted Knox Bricken, an analyst at the Yankee Group. Overall, Mr. Bensche said, the C and F block reauction proceeds equate to= =20 $4.18 per =0F"megahertz pop,=0F" just behind third-generation (3G) auctions= in the=20 United Kingdom ($4.29 per MHz pop) and Germany ($4.68 per MHz pop) last yea= r,=20 which raised more than $80 billion (TR, May 1, and Aug. 21 and 28, 2000). = =20 Verizon Wireless=0F' bidding worked out to $5.79 per MHz pop, Mr. Bensche s= aid. =0F"We believe that biding was rational, and that an average of $4.18/pop/M= Hz=20 was a reasonable amount for carriers to pay for the spectrum available,=0F"= Mr.=20 Rollins said. Analysts Scrutinize Other Strategies Here=0F's a look at analysts=0F' take on how the other largest carriers did= at the=20 auction: AT&T WIRELESS: It didn=0F't win any licenses separately but will benefit f= rom=20 those won by its =0F"designated entity=0F" (DE), or small-business, partner= Alaska=20 Native Wireless, which bid $2.8 billion for 44 licenses. Through that alliance, analysts note, AT&T Wireless gained spectrum in Los= =20 Angeles and New York, bringing its holdings to 45 MHz in those markets. It= =20 also added licenses in other major markets. AT&T Wireless told analysts last week that the additional spectrum would=20 allow it to roll out a 3G system in 16 additional markets. In all, the=20 carrier says, it will be able to deploy the 3G universal mobile=20 telecommunications system (UMTS) technology in 88 of the top 100 markets. In addition, Mr. Bensche noted that DE affiliates or subsidiaries of two=20 other carriers with close ties to AT&T Wireless=0F-Triton PCS Holdings, Inc= .,=20 and Dobson Communications Corp.=0F-also won a total of 28 licenses at the= =20 auction. CINGULAR WIRELESS: The carrier has 85% equity in DE Salmon PCS LLC, the=20 number-three bidder at the reauction with $2.3 billion in bids on 79=20 licenses. Analysts say Salmon won licenses in a number of markets where=20 Cingular needs to fill in holes in its footprint, including Minneapolis;=20 Denver; Portland, Ore.; Norfolk, Va.; Pittsburgh; and Richmond, Va. =20 It also won licenses that could shore up Cingular=0F's spectrum position in= =20 other key markets, including Los Angeles, Dallas, and Boston. But it failed to win any spectrum in New York City=0F-a key market. Cingul= ar=20 already has a 10 MHz block of spectrum in the Big Apple, thanks to a swap o= f=20 licenses with VoiceStream Wireless Corp. announced before the auction (TR,= =20 Nov. 6, 2000). Mr. Bensche said Cingular =0F"should be comfortable=0F" with that block unt= il it=20 can acquire more spectrum in New York City in the 700 MHz band auction. He= =20 called Cingular-backed Salmon=0F's decision not to remain in bidding for Ne= w=20 York City spectrum =0F"an act of bravery on behalf of [Cingular] shareholde= rs.=0F" Ms. Motz also commended Cingular for its =0F"disciplined=0F" bidding via Sa= lmon. =0F" While the pressure was on for Cingular to win a New York license, it was no= t=20 enough for the company to be pressured into paying more than it was willing= ,=0F"=20 she said. =20 Salmon officials have said they intend to use the licenses for their own=20 network, although they would have the right to use Cingular=0F's name and m= ight=20 establish roaming and operations agreements with the large carrier. VoiceStream: A VoiceStream subsidiary, Voice-Stream PCS BTA, bid $482=20 million for 19 licenses. Its DE affiliate, Cook Inlet/VS GSM V P, offered= =20 $506 million for 22 licenses. =20 The companies filled important VoiceStream footprint holes in the Carolinas= ,=20 including Charlotte and Greensboro in North Carolina and Charleston and=20 Columbia in South Carolina, analysts said. VoiceStream also picked up licenses in Texas, the Pacific Northwest, and th= e=20 Midwest. Its auction success, combined with its planned merger with=20 Powertel, Inc., and recent spectrum swap with Cingular, has helped it build= a=20 nationwide footprint, Mr. Bensche said. Ms. Motz said Cingular=0F's and VoiceStream=0F's auction results =0F"could = suggest=20 that the two intend to work closely together on favorable roaming=20 arrangements in the near future (since each has what the other needs alread= y=20 built out).=0F" SPRINT PCS: SprintCom, Inc., a Sprint PCS subsidiary, dropped out of the= =20 reauction. But SVC BidCo L.P., a DE that is 80%-owned by Sprint PCS, won= =20 five licenses for $281 million. The licenses are in areas where analysts s= ay=20 Sprint PCS had only 10 MHz of spectrum=0F-Tampa and Orlando in Florida,=20 Cincinnati and Dayton in Ohio, and Norfolk, Va. Analysts note that Sprint PCS also secured additional spectrum in a swap wi= th=20 AT&T Wireless announced before the auction. They say that because it has= =20 such a strong spectrum position (30 MHz of spectrum in the majority of its= =20 markets), they aren=0F't surprised it wasn=0F't more aggressive in the sale= . NEXTEL COMMUNICATIONS, INC.: Nextel Spectrum Acquisition Corp., a Nextel= =20 subsidiary, dropped out of the reauction when bidding got too high, as did= =20 Connectbid LLC, a Nextel DE bidding partner controlled by cellular industry= =20 pioneer Craig McCaw. Analysts were not surprised. They said the auction d= id=20 not afford Nextel a chance to secure a full national footprint. =0F"The prospect of holding only 10 MHz of PCS spectrum in a handful of mar= kets=20 at high prices is not an ideal remedy to Nextel=0F's current spectrum need,= =0F" Mr.=20 Bensche said. =20 =0F"With an average of 16 MHz of spectrum in the 800 MHz band to operate it= s=20 iDEN system, it would suit Nextel more to acquire a contiguous 10 MHz on a= =20 nationwide basis rather than a piecemeal collection of properties,=0F" he = said. Analysts expect Nextel to continue acquiring 800 MHz and 900 MHz band=20 spectrum and say it also could pursue licenses at the 700 MHz band auction.= =0F" Whatever the strategy, the completion of the auction puts Nextel=0F's=20 competition in a much stronger position to better compete in both the voice= =20 and data markets, leaving Nextel at a disadvantage for future services,=0F"= Mr.=20 Bensche said. Meanwhile last week, Dana Frix, an attorney for San Antonio=0F-based Allegh= eny=20 Communications, Inc., told TRthat company officials still were considering= =20 their options for contesting the auction results. Allegheny, which dropped out of the reauction before it was over when the= =20 prices got too high, says the DE rules permitted large carriers to=20 participate through =0F"shell entities=0F" for licenses reserved for=20 entrepreneurs. Allegheny failed to persuade the U.S. Court of Appeals in= =20 Washington to block the reauction the day before it began in December 2000= =20 (TR, Dec. 18, 2000). The 35 winning bidders in the reauction have until Feb. 12 to submit down= =20 payments, the FCC said in a public notice released last week. The bidders= =20 also must submit their =0F"long-form=0F" 601 applications, as well as form = 602,=20 which includes ownership information, by that date. The FCC has said it=20 would review ownership arrangements of winning auction bidders closely befo= re=20 granting licenses. Of the 422 licenses on the block in the reauction, 170 were reserved for=20 qualified DEs and 252 were open to all bidders. Mr. Bensche noted that the= =20 liberal capitalization rules for DEs allowed large companies to jump back a= nd=20 forth between bidding on =0F"open=0F" and =0F"closed=0F" licenses, using bi= dding credits=20 for the open licenses through the DEs. =0F"In reality, this drove up the prices in the closed blocks to the same l= evels=20 as the open licenses being chased by the designated entities,=0F" Mr. Bensc= he=20 concluded. =0F"In fact, analyzing all of the markets in which at the close= of=20 the auction one of the open licenses was won by a bidder with bidding=20 credits, we come to the conclusion that the closed blocks went for 9% more= =20 than the open blocks!=0F" Meanwhile, last week bankrupt NextWave Telecom, Inc., whose reclaimed=20 licenses were snatched up at the reauction, filed its reply brief with the= =20 U.S. Court of Appeals in Washington in its case against the FCC. In its brief, NextWave repeated its argument that the cancellation of its= =20 licenses was prohibited by the U.S. Bankruptcy Code. Oral arguments are=20 scheduled for March 15 in NextWave Personal Communications, Inc., v. FCC=20 (case nos. 00-1402 and 1403). =0F-Paul Kirby U.S. Carriers See Progress in Opening Markets But Ask USTR To Keep Pressure= =20 on Laggards Countries around the world are making progress in complying with open-trade= =20 agreements affecting telecom services, but much more work needs to be done,= =20 U.S. carriers have told the Office of the U.S. Trade Representative. The carriers=0F' statements about global telecom markets had familiar theme= s. =20 They raised issues similar to those that have dominated debates on opening= =20 U.S. service markets to competition=0F-disputes over pricing unbundled netw= ork=20 elements and policies on collocating competitors=0F' equipment in incumbent= s=0F'=20 facilities. USTR recently asked for comments on the effectiveness of the World Trade=20 Organization=0F's basic telecom trade agreement, the telecom trade provisio= ns of=20 the North American Free Trade Agreement, and other telecom trade pacts. It= =20 plans to complete its annual review of the agreements by March 31. Germany Germany was a primary target of competitors=0F' complaints about the progre= ss of=20 market-opening efforts. The Competitive Telecommunications Association sai= d=20 the market conditions for competitors had =0F"worsened=0F" in Germany over = the last=20 year. =0F"The intermingling of interests between the German federal government an= d=20 Deutsche Telekom [AG], which the German federal government controls in=20 numerous overt and subtle ways, remains a serious problem,=0F" CompTel said= . CompTel objected to =0F"exorbitant=0F" licensing fees that require an =0F"u= p-front=20 payment of administrative costs projected over a 30-year period.=0F" It ch= arged=20 that Deutsche Telekom had delayed delivering services to competitors=0F'=20 customers and imposed onerous conditions on collocating equipment in its=20 central offices. Covad Communications Group, Inc., also complained of market conditions in= =20 Germany, specifically the rates for unbundled local loops. It said Deutsch= e=20 Telekom had proposed charging 34 deutsche marks ($16.25) per month for a=20 local loop, an increase of 33%. Deutsche Telekom=0F's online service unit= =20 offers ADSL (asymmetric digital subscriber line) service for 49 deutsche=20 marks ($23.42) per month. =0F"In order to provide a comparable ADSL retail product in a sustainable= =20 competitive market, a new entrant would have to charge an end user 49=20 deutsche marks, while paying Deutsche Telekom 34 deutsche marks per month f= or=20 a loop (in addition to apportioned payments for collocation, transport, and= =20 OSS, as well as amortizing the increased nonrecurring loop charge of 357=20 deutsche marks [$170.69]),=0F" Covad said. In addition, the competitor would have to amortize its own investments in= =20 equipment and network infrastructure, as well as salaries and marketing=20 costs, it said. Mexico As USTR decided last week to wait on pursuing a complaint against Mexico at= =20 the World Trade Organization (see separate story), U.S. carriers continued = to=20 raise concerns about market conditions in Mexico. WorldCom, Inc., said Mexico =0F"unquestionably presents the most serious an= d=20 pressing concerns.=0F" USTR=0F's =0F"persistent efforts to improve competi= tive=20 conditions in Mexico have resulted in some progress,=0F" it said, but it ci= ted=20 some remaining problems: (1) The rule that gives the incumbent, Telefonos de Mexico SA de CV=20 (Telmex), sole authority to negotiate accounting rates with foreign=20 carriers. Competitive carriers can=0F't offer =0F"market-based rates=0F" f= or=20 international calls because Telmex has resisted reducing the =0F"huge subsi= dies=0F"=20 it receives from U.S. carriers and customers, WorldCom said. (2) The Mexican regulatory agency, the Comision Federal de=20 Telecomunicaciones (Cofetel), has refused to implement =0F"flexible and=20 cost-oriented international termination rates=0F" as an alternative to the= =20 current system. (3) Cofetel has failed to regulate Telmex as a =0F"dominant=0F" carrier. (4) Cofetel=0F's decision-making process lacks =0F"transparency,=0F" and T= elmex=0F's=20 competitors don=0F't have adequate input into the regulatory process. CompTel said that =0F"despite promises of real change, no real advances hav= e=20 been made=0F" in Mexico. Telmex, it added, is failing to meet its obligati= on to=20 provide timely, nondiscriminatory, and cost-based interconnection. CompTel viewed the decision to cut the rate for =0F"on-net interconnection= =0F" to=20 1.25 cents per minute as a =0F"positive step.=0F" Telmex has challenged th= e rate=20 in court. Telmex charges carriers a =0F"resale=0F" tariff rate of more tha= n 9=20 cents per minute to terminate traffic in cities where the competitive carri= er=20 doesn=0F't have a network, CompTel said. Spain Spain=0F's Ministry of Science and Technology has completed an initial revi= ew of=20 Telefonica S.A.=0F's =0F"reference interconnection offer,=0F" Covad reporte= d. It said=20 it had several concerns with the terms of the offer. Telefonica =0F"offers only discriminatory collocation,=0F" it said, explain= ing that=20 Telefonica requires competitors to install equipment in separate caged=20 collocation spaces and restricts the types of equipment that can be=20 installed. Covad also complained about Telefonica=0F's slow provisioning= =20 intervals for unbundled loops and lack of information on the condition or= =20 availability of loops. United Kingdom Although the U.K.=0F's Office of Telecommunications has completed a series = of=20 proceedings to open markets, the telecom environment there is =0F"neither= =20 stable, predictable, nor nondiscriminatory,=0F" Covad said. British Telecommunications plc has refused to offer cageless collocation an= d=20 has limited the central offices that new entrants can access, it said. Cov= ad=20 said other new entrants had accused British Telecom of allocating=20 insufficient resources to provisioning unbundled loops. France=20 Covad criticized France Telecom S.A.=0F's =0F"highly problematic=0F" practi= ce of=20 refusing to sign any interconnection/operations agreement with a new market= =20 entrant that doesn=0F't hold an =0F"L 33.1=0F" telecom infrastructure licen= se=20 already. But the new entrant, Covad said, needs information in the draft= =20 local loop access agreement to formulate the business plan required by the= =20 license application. Covad also faulted France Telecom=0F's =0F"discriminatory=0F" collocation p= olicies,=20 which forbid new entrants from collocating ATM (asynchronous transfer mode)= =20 equipment and IP (Internet protocol) routers. France Telecom also refuses = to=20 provision for new entrants =0F"spare=0F" copper pairs (those that currently= aren=0F't=20 in use), Covad said. France Telecom=0F's pricing structure for unbundled loops, collocation,=20 transport, and electronic bonding to operation support system (OSS) functio= ns=20 =0F"clearly puts new entrants in a price-squeeze situation when compared to= the=20 retail prices for DSL service offered by France Telecom=0F's ISP affiliates= ,=0F"=20 Covad concluded. Peru=20 BellSouth Corp. focused on Peru, commending USTR=0F's role in opening the= =20 country=0F's telecom markets to competition. But it expressed concern abou= t new=20 regulations under consideration in Peru. Peruvian regulators plan to reduce the interconnection rate for wireless=20 carriers connecting with Telefonica del Peru=0F's wireline network, BellSou= th=20 said. It voiced concern that new rates would be challenged and not put int= o=20 effect. It also complained about the regulators=0F' decision that the new= =20 interconnection rates wouldn=0F't apply to fixed-to-mobile calls. Because the amount of fixed-to-mobile traffic exceeds the amount of=20 mobile-to-fixed traffic, mobile carriers would be =0F"significantly harmed= =0F" if=20 the changes went into effect, BellSouth said. It said the new arrangement= =20 was =0F"inconsistent with Peru=0F's WTO commitments to prevent anticompetit= ive=20 practices=0F" because it would benefit Telefonica del Peru. AT&T Corp. raised similar concerns about Peru. =0F"Continued USTR involvem= ent=20 remains necessary to ensure that Telefonica, as Peru=0F's major supplier, i= s=20 required to provide =0F`rates for all services at all levels that are=20 comparable, cost-oriented, reasonable, and nondiscriminatory,=0F'=0F" it sa= id. South Africa AT&T objected to constraints on providers of value-added network services= =20 (VANS) in South Africa. Telkom South Africa Ltd., the incumbent telecom=20 operator, =0F"continues to deny new telecommunications facilities to AT&T a= nd=20 many other VANS suppliers,=0F" AT&T said. It said the South African regulatory agency, the Independent Communication= =20 Authority of South Africa, had proposed to require that at least 15% of=20 ownership and control of a VANS license be held by =0F"historically=20 disadvantaged persons.=0F" Such a requirement would =0F"clearly violate So= uth=20 Africa=0F's WTO commitments to provide market access and national treatment= to=20 foreign VANS suppliers,=0F" AT&T said. Japan To comply with the WTO=0F's basic telecommunications service agreement, Jap= an=20 still needs to create an independent regulatory authority, CompTel said. I= t=20 noted that the government still owns a =0F"significant stake=0F" in Nippon= =20 Telegraph and Telephone Corp. (NTT). CompTel complained that NTT employees often leave to work at the Ministry o= f=20 Posts and Telecommunications (MPT) for a few years and then return to NTT. = =20 Those employees don=0F't recuse themselves from par-ticipating in regulator= y=20 actions regarding NTT, it said. CompTel said MPT =0F"must establish a clear and detailed regulatory=20 environment.=0F" MPT needs to set guidelines on cross-subsidies and tests = for=20 predatory pricing, transparency of accounts, and misuse of customer=20 information, CompTel said. MPT oversaw splitting NTT into five companies in 1999, CompTel noted. But= =20 MPT doesn=0F't regulate those carriers as =0F"dominant,=0F" despite their s= ignificant=20 market shares, it added. For example, local telecom service providers NTT= =20 East and NTT West jointly control more than 90% of the nation=0F's lines,= =20 CompTel said. CompTel also raised concerns about compliance with other points in the=20 reference paper and a May 1998 U.S.-Japan deregulation joint statement. Th= e=20 criticisms include the following:=20 (1) NTT levies =0F"excessively high interconnect charges=0F"; (2) NTT fails to provide access to ducts, conduits, and rights-of-way; and= =20 (3) Japan imposes =0F"unnecessary and burdensome licensing conditions.=0F" Taiwan CompTel said Taiwan hadn=0F't met its commitments outlined in the U.S.-Taiw= an=20 1998 Accession Protocol.It faulted Taiwan for restrictive licensing=20 conditions and a lack of =0F"transparency=0F" in the regulatory process.=20 =0F"With just six months to go before the telecommunications services marke= t is=20 to be opened to all new entrants, [Taiwan=0F's wireline regulations] requir= ing=20 an extraordinary investment of $1.2 billion in the Taiwan market and a=20 build-out of 1 million exchange lines=0F-150,000 of which must be installed= =20 prior to any service offering=0F-remain in effect,=0F" CompTel said. USTR Delays Plea for WTO Probe Of Mexico, Keeps Options Open The Office of the U.S. Trade Representative still may ask the World Trade= =20 Organization to investigate Mexico=0F's compliance with a WTO agreement to = give=20 foreign carriers=0F' access to its telecom market. But first USTR wants to= give=20 Mexico more time to address U.S. concerns before pressing its case. USTR declined last week to ask the WTO to convene a =0F"dispute-settlement= =20 panel=0F" to address claims that Mexico has failed to implement its=20 market-opening commitments under the WTO=0F's basic telecom service agreeme= nt. USTR asked the WTO in December 2000 to convene such a panel. But Mexico=20 blocked the initial request, as a WTO member country has the right to do. = A=20 second such request cannot be blocked. USTR didn=0F't make a second request for a dispute-settlement panel when WT= O=20 officials convened Feb. 1, but that does not mean USTR has =0F"dropped=0F" = the=20 case, a USTR spokeswoman said. =0F"That is not at all the case,=0F" she sa= id. =0F"We=20 reserve the right to move forward.=0F" =20 She said a second set of WTO consultations with Mexico ended Jan. 16, and= =20 USTR is =0F"evaluating where we stand.=0F" Although the parties have made = some=20 progress in addressing U.S. concerns, several areas of disagreement remain,= =20 the spokeswoman said. The key concern, she said, is the level of=20 international settlement rates on routes to Mexico. Industry sources also warned against reading too much into USTR=0F's decisi= on=20 not to move forward immediately. =0F"They=0F're just giving [Mexico] some = more=20 time to address the situation,=0F" one source said. =0F"It doesn=0F't mean= they can=0F't=20 [seek an investigation] a month from now=0F" at the next meeting of the WTO= =0F's=20 dispute-settlement panel in Geneva. In addition, President Bush and Mexican President Vicente Fox plan to meet= =20 Feb. 16, and sources said telecom topics could be on the agenda. The meeti= ng=20 would be =0F"an excellent time [for Bush] to bring these important issues u= p,=0F"=20 another source said. And President Fox, who took office last fall, has sai= d=20 he =0F"understands the importance of a competitive telecom marketplace,=0F"= the=20 source said. In addition to Mexico=0F's high international settlement rates, U.S. indust= ry=20 also is concerned about other interconnection rates in Mexico that are =0F"= well=20 above cost=0F" and the fact that there is =0F"still no meaningful regulatio= n of=20 Mexico=0F's dominant carrier,=0F" the source said. Burns To Unveil =0F`Tech Seven=0F' Legislative Package; House, Senate Telec= om=20 Panels To Add Members With the makeup of the House and Senate telecom subcommittees beginning to= =20 take shape, lawmakers from both panels are preparing to launch the first=20 major telecom and Internet-related initiatives of the 107th Congress. Leading the way in the Senate is communications subcommittee Chairman Conra= d=20 Burns (R., Mont.), who plans to unveil his =0F"tech seven=0F" package of te= lecom=20 and Internet bills this week. Sen. Burns, who dubbed his high-tech agenda= =20 for the last Congress the =0F"digital dozen,=0F" will reintroduce a few hol= dover=20 bills that weren=0F't passed, as well as some =0F"new surprises,=0F" his sp= okesman=20 told TRlast week. Sen. Burns=0F' digital dozen enjoyed considerable success last in the last= =20 Congress, as nearly half of the bills became part of new telecom laws. Tho= se=20 successes include measures to privatize the international satellite=20 consortium Intelsat, designate =0F"911=0F" as the universal emergency telep= hone=20 number, permit direct broadcast satellite TV companies to retransmit local= =20 broadcast station signals, legalize digital signatures, and set up a rural = TV=20 loan guarantee plan. Almost certain to be included in this year=0F's package are bills to expand= =20 deployment of broadband services using low-power TV spectrum, to ease=20 reporting requirements for small incumbent local exchange carriers, and to= =20 lift the caps on universal service =0F"high-cost=0F" support, the Burns spo= kesman=20 said. The other =0F"top priorities=0F" on Sen. Burns=0F' agenda are bills to bols= ter online=20 privacy and to curb =0F"spamming=0F" (sending unsolicited commercial e-mail= ), the=20 spokesman said. Sen. Burns also may address the process by which the=20 Internet Corporation for Assigned Names and Numbers (ICANN) selects Interne= t=20 domain name suffixes. He might do so either through legislation or through= =20 the subcommittee=0F's oversight capacity. Meanwhile, Sen. Burns=0F' subcommittee has grown by three seats since the= =20 previous Congress. In handing out subcommittee assignments last week,=20 Commerce, Science, and Transportation Committee Chairman John McCain (R.,= =20 Ariz.) gave the Democrats two extra seats on the panel and the Republicans= =20 one more. Both parties now have 10 members on the panel. The new Democratic members are Barbara Boxer (Calif.) and John D. Edwards= =20 (N.C.). Sen. Edwards has said he would reintroduce a bill to give consumer= s=20 more control over how their telecom service providers could use their calli= ng=20 records for marketing (TR,Nov. 8, 1999). In a statement on the Senate floor last week, Sen. Edwards said, =0F"During= the=20 last Congress, I introduced the Telephone Call Privacy Act [S 1850] in orde= r=20 to prevent phone companies from disclosing consumers=0F' private phone reco= rds=20 without their permission. I will be reintroducing this bill soon,=0F" he s= aid. Senate Republicans had five seats to fill on the communications=20 subcommittee. The GOP picked up one seat from Sen. McCain=0F's decision to= =20 expand the panel and was forced to fill four more because of three election= =20 casualties and the departure of William H. Frist (Tenn.) from the full=20 Commerce Committee (TR,Jan. 15). =20 The new Republican members on the communications subcommittee are Olympia J= .=20 Snowe (Maine), Gordon Smith (Ore.), Peter G. Fitzgerald (Ill.), and freshme= n=20 John Ensign (Nev.) and George Allen (Va.). =20 Tauzin Expands Telecom Panel Meanwhile, efforts to organize the House telecommunications subcommittee we= re=20 held up by a dispute over whether to add seats to the full House Energy and= =20 Commerce Committee. =20 Democratic leadership was pushing to add one more Democrat to the Commerce= =20 Committee, which would narrow the balance of power on the committee to 30= =0F-26=20 in the Republicans=0F' favor. House Speaker J. Dennis Hastert (R., Ill.),= =20 however, has proposed adding one more GOP and one more Democratic seat. Final determinations on committee matters, including the jurisdiction and= =20 membership of its subcommittees, will be made at an organizational meeting= =20 set for Feb. 7. =0F"We=0F'll be operating under the assumption that they a= re=20 adding a Democrat and a Republican=0F" to the committee, Commerce spokesman= Ken=20 Johnson said Friday, Feb. 2. Despite the delay, Commerce Chairman W.J. (Billy) Tauzin (R., La.) said his= =20 subcommittee assignments and selections for subcommittee chairmen had been= =20 ratified by the Commerce Committee=0F's Republican members. Rep. Tauzin has proposed adding two more GOP seats to the telecommunication= s=20 subcommittee, which had 15 Republicans last session when it was called the= =20 telecommunications, trade, and consumer protection subcommittee. Assuming= =20 committee approval for that expansion, new telecom subcommittee Republicans= =20 will be its Chairman Fred Upton (Mich.), Michael Bilirakis (Fla.), Joe Bart= on=20 (Texas), Thomas M. Davis III (Va.), and John B. Shadegg (Ariz.). Rep. Clif= f=20 Stearns (R., Fla.), who was on the panel during the last Congress, will be= =20 its vice chairman. Commerce Committee Ranking Democrat John D. Dingell (Mich.) will wait for t= he=20 House leadership to agree on the size of the Commerce Committee before movi= ng=20 to select new committee members and announcing his subcommittee assignments= ,=20 a Dingell spokeswoman said. That could happen =0F"early [this] week,=0F" s= he said. The telecom subcommittee=0F's first hearing of the 107th Congress is schedu= led=20 for Feb. 8. The hearing will focus on ICANN=0F's recent selection of regis= try=20 operators for new top-level domains. Powell To Lead with Review Of FCC Operational Changes With a Republican administration in place for the first time since the=20 passage of the Telecommunications Act of 1996, GOP insiders appearing at la= st=20 week=0F's Comnet convention in Washington said the political landscape was = ripe=20 for overhauling the FCC. Key congressional and FCC staffers predicted that federal policy-makers wou= ld=20 launch major efforts this year to (1) curb the Commission=0F's authority to= =20 impose =0F"voluntary=0F" conditions on merger applications, (2) update the = agency=0F's=20 traditional common carrier rules, and (3) pressure the FCC to accelerate it= s=20 decision making. =20 The Republican-heavy panel also saw spectrum- management issues=0F-includin= g the=20 identification of new spectrum for third-generation wireless services=0F-to= pping=20 the Bush administration=0F's telecom agenda. Lauren J. (Pete) Belvin, an attorney at Wilkinson Barker & Knauer LLP, said= =20 history proved that telecom policies inevitably would come to the forefront= =20 of the Bush administration =0F"whether the administration is deeply involve= d=20 with telecom or not.=0F" Ms. Belvin is a former FCC and Senate staffer. =0F"Telecom [policy-making] happens,=0F" Ms. Belvin said, because =0F"the m= arket pipes=20 its tune, there=0F's a reaction to it, and the FCC is at front and center.= =0F" Recently designated FCC Chairman Michael K. Powell=0F's first order of busi= ness=20 will be to determine which of the Commission=0F's operations are =0F"messed= up,=0F"=20 said Peter Tenhula, Mr. Powell=0F's senior legal adviser. =0F"We=0F'll pro= bably start=20 with initiatives that may not be regulatory or deregulatory but more=20 operational,=0F" Mr. Tenhula said. =20 During his first week as chairman, Mr. Powell received numerous complaints= =20 about the slow pace of the FCC=0F's decision-making process, Mr. Tenhula sa= id. =0F" Right now, 80% of the FCC=0F's agenda is reactive instead of proactive, whe= re it=0F' s responding to a petition for rulemaking or a [section] 271 application,= =0F"=20 Mr. Tenhula said. =0F"At the top of the chairman=0F's agenda will be refor= ming the=20 operation of the Commission=0F" and =0F"expediting its decision making,=0F"= he said. Mr. Tenhula suggested that Chairman Powell also would reexamine whether=20 obtaining the authority to provide in-region interLATA (local access and=20 transport area) services still is an incentive to encourage the Bell=20 operating companies to open their local exchange markets to competition. = =20 Under section 271 of the Telecommunications Act of 1996, the Bells must=20 satisfy a 14-point =0F"competitive checklist=0F" of market-opening requirem= ents=20 before receiving the FCC=0F's blessing to offer interLATA services. =0F"I=0F'm sure that more [section 271 applications] are going to be filed = in the=20 future, but whether or not [in-region interLATA service authorization] is a= =20 yummy enough carrot anymore, I=0F'm not sure,=0F" Mr. Tenhula said. =0F"At= the time=20 of the Act, though, it sure looked yummy,=0F" he said. A reexamination of the section 271 process couldn=0F't come soon enough, sa= id=20 Howard Waltzman, the recently named telecom counsel to the House Energy and= =20 Commerce Committee. Technology has =0F"overtaken legislation,=0F" he said,= =0F"and=20 what has been happening in the marketplace has eviscerated many parts of th= e=0F"=20 Act. Policy-makers need to =0F"reevaluate some of the core parts of the Act and= =20 determine. . .whether or not they=0F're hindering investment and innovation= ,=0F" he=20 said. =20 He predicted a groundswell of bipartisan support in the newly elected=20 Congress for limiting the FCC=0F's role in reviewing merger-related license= =20 transfers, as well as limiting its ability to impose conditions on section= =20 271 and merger applications. Congress will be looking at =0F"what we can do to change the agency to make= it=20 more efficient,=0F" Mr. Waltzman said. =0F"The biggest frustration with th= e way=20 the FCC implemented the telecom act under the Clinton administration was th= at=20 the processes were too slow,=0F" he said. Asked to comment on the financial struggles of competitive local exchange= =20 carriers (CLECs), Mr. Waltzman said the CLECs=0F' financial woes don=0F't = portend=20 an end to local exchange competition. Cable TV providers and wireless=20 carriers also are deploying alternative local phone service, he noted. Verizon=0F's Strigl Has Spectrum Plan In a keynote address at the Comnet conference, the head of Verizon Wireless= =20 said that with the growth of the wireless data sector creating demand for= =20 spectrum, federal regulators must adopt a consistent, market-based approach= =20 to allocating frequencies. =0F"We need to ensure that the precious spectrum we have reaches its fulles= t=20 potential through a competitive and forward-looking policy,=0F" Verizon Wir= eless=20 Chief Executive Officer and President Dennis F. Strigl said. =0F"Marketpla= ce=20 forces of fair and open competition should be the sole basis for awarding= =20 spectrum, not artificial controls like caps on spectrum. . .or limitations= =20 based on allowances or set-asides for various groups.=0F" Regarding the wireless Internet, Mr. Strigl said that to be successful, U.S= .=20 carriers must create =0F"a unique Internet experience.=0F" He added that h= is=20 company is not =0F"replicating what is done on the desktop.=0F" =0F"Deep customization of both content and delivery=0F" will drive the succ= ess of=20 the wireless Web, Mr. Strigl said. Examples of this include alerts sent to= =20 wireless devices that can notify their users when preselected stocks hit a= =20 certain price or when schools are closed during inclement weather, he said.= =20 Or users can access data such as weather or flight information. Two-way te= xt=20 messaging is another feature Mr. Strigl said he expected to help drive the= =20 growth of the wireless data sector. As for the devices themselves, he said, =0F"we need compelling wireless=20 appliances.=0F" He expects =0F"nontraditional handsets=0F" such as persona= l digital=20 assistants (PDAs) with voice capability to become more popular. He stresse= d=20 the need for technical standards to promote the use of various devices. Mr. Strigl said all major U.S. wireless carriers this year would be=20 aggressively forming alliances with applications providers and Internet=20 vendors in hopes of promoting the growth of mobile e-commerce. He touted the potential of location-based services and vehicle-based=20 telematics. However, he acknowledged the industry needs to protect=20 consumers=0F' privacy when offering location-based services, and he said it= must=20 encourage responsible driving when using telematic applications. Tauzin Demands Report on Critical Infrastructure=20 House Energy and Commerce Committee Chairman W.J. (Billy) Tauzin (R., La.) = is=20 demanding that the National Security Council provide his panel with a copy = of=20 a 200-page critical infrastructure report that he says was required by law = to=20 be transmitted to Congress by Jan. 15 but never arrived. The lawmaker also is seeking further information about published reports th= at=20 former President Clinton waited until the end of his term before naming=20 members to the National Infrastructure Assurance Council, even though the= =20 NIAC had been established by executive order in the summer of 1999. =20 =0F"I am concerned that President Clinton waited until his last full day in= =20 office to finally appoint the first group of members to this critical=20 council,=0F" Rep. Tauzin said in Jan. 25 letter to Richard Clarke, NSC nati= onal=20 coordinator-infrastructure protection and counterterrorism. =20 The executive order had called for the 30-member panel to propose and devel= op=20 new ways for the public and private sectors to cooperate on telecom and=20 information infrastructure issues (TR,July 19, 1999).=20 Rep. Tauzin has asked Mr. Clarke to turn over to the committee the names of= =20 the last-minute NIAC appointees and to =0F"indicate whether your office=20 recommended each of these individuals for a position on the NIAC and, if no= t,=20 specify the individual or entity that recommended such person.=0F" In requesting a copy of the overdue infrastructure report, Rep. Tauzin also= =20 questioned why the study =0F"was, in fact, prepared but never signed by=0F"= former=20 President Clinton. =0F"Under the Defense Authorization Act of 2001, this r= eport=20 was required to be transmitted to the Congress by Jan.15, 2001,=0F" he note= d. Rep. Tauzin originally had asked Mr. Clarke to provide the committee with t= he=20 information by Wednesday, Jan. 31. But a committee spokesman said the pane= l=20 had decided to give the NSC =0F"more leeway=0F" in meeting that deadline = =0F"because=20 of transition issues=0F" related to the change in presidential administrati= ons. AT&T Execs See Hope of Truce In Long Distance Price Wars AT&T Corp. executives believe they=0F're seeing at least a temporary cease-= fire=20 in the long distance rate wars that have ravaged the revenue streams of=20 incumbent interexchange carriers (IXCs). =0F"Pricing still is aggressive, = but=20 it is not setting new lows,=0F" AT&T Chairman and Chief Executive Officer C= .=20 Michael Armstrong said Jan. 29 during a conference call with financial=20 analysts to discuss the company=0F's year 2000 financial results. Analysts warn, however, that any equilibrium in the IXC sector may be=20 temporary. =0F"Some have noted that long distance pricing has stabilized, = which=20 recent data support,=0F" said Frank J. Governali, an analyst for Goldman, S= achs=20 & Co., in a report. =0F"But expecting long term =0F`price stability=0F' in= long=20 distance in our view is not realistic.=0F" Lower rates will spur greater demand, but demand growth won=0F't be enough = to=20 offset the lower rates, said Daniel P. Reingold, managing director-equity= =20 research at Credit Suisse First Boston Corp. The market will become more= =20 competitive as Bell companies win approval to offer in-region interLATA=20 (local access and transport area) service, and new entrants like Global=20 Crossing Ltd. and Qwest Communications International, Inc., will continue= =20 their incursions, Mr. Reingold said in a report. Mr. Reingold has no rating on AT&T, but he gives WorldCom, Inc., a =0F"hold= =0F"=20 rating because of its reliance on long distance revenue. =0F"Our concern r= uns=20 far deeper than price competition and [Bell company entry] in the voice lon= g=20 distance business,=0F" he said. =0F"Rather, it runs to pricing in the long= -haul=20 data-transport segment as well.=0F" WorldCom=0F's 2000 financial results, scheduled to be unveiled Feb. 8, are= =20 likely to show the same weakness as those of Sprint Corp. and AT&T. Last= =20 week, Sprint reported a 17% decline in long distance operating income for t= he=20 fourth quarter of 2000 compared with figures for the year-ago quarter,=20 despite an 18% increase in long distance calling volumes. AT&T=0F's consumer services unit, which relies heavily on long distance rev= enue,=20 posted a 9.5% decline in year 2000 sales. The long distance turmoil hit AT= &T=0F' s business services unit, too. Because of its reliance on revenue from voi= ce=20 long distance services, the business unit=0F's annual revenue increased onl= y=20 3.3%, AT&T executives said. But the price war didn=0F't seem to hurt Verizon Communications, Inc., a=20 relatively new entrant in the interLATA service market. Verizon=0F's inter= LATA=20 service revenue increased $55 million in the fourth quarter, the company sa= id=20 last week. AT&T executives suggested that new competitors like Verizon would have more= =20 effect on market share than on rates. Low rates will continue to cause pai= n=20 because customers still are migrating to cheaper calling plans, but AT&T=0F= 's=20 larger woe is the continuing loss of long distance subscribers to Bell=20 companies, wireless service providers, and other new rivals, executives sai= d. AT&T has tried to boost its sagging fortunes by offering local service. =20 Bundles of local and long distance service are thought to be popular with= =20 consumers and profitable for carriers. Verizon=0F's success in the interLA= TA=20 service markets of New York stems largely from its dominance in that state= =0F's=20 local service markets. But AT&T=0F's efforts to compete as a local service provider are hamstrung = by=20 the prices it must pay incumbent local exchange carriers for unbundled=20 network elements (UNEs), Mr. Armstrong said. =0F"If there is an open marke= t, we=20 can compete,=0F" he said, noting that AT&T corralled 750,000 customers for = its =0F" any distance=0F" service in New York. That state has one of the most open = and=20 competitive local telephone markets in the nation, he said. But in other states, AT&T=0F's local-service efforts have fallen flat becau= se of=20 UNE rates, Mr. Armstrong suggested. =0F"The way that the markets have been= =20 opened is not operationally or economically viable,=0F" he said. That leav= es=20 AT&T dependent on its shrinking long distance business for revenue, and on= =20 its cable telephony business as a way to break into local-service markets. Verizon Wireless is rolling out its two-way text messaging service,... Verizon Wireless is rolling out its two-way text messaging service, Mobile= =20 Messenger, in more than 200 markets. Subscribers with two-way text messagi= ng=0F- capable phones can send and receive messages of up to 120 characters. They= =20 can either sign up for one of two rate plans or pay two cents for each=20 message received and a dime for each message sent. One rate plan is $2.99 = a=20 month and includes 100 free messages, while another is $7.99 a month and=20 includes 600 messages. All messaging fees will be waived until April 1. Versatel Absorbs VersaPoint, Cuts Workers, Writes Off Assets Versatel Telecom International NV has absorbed what remains of VersaPoint= =0F-its=20 former joint venture with NorthPoint Communications Group, Inc.=0F-after cu= tting=20 most of the workforce and halting many of the operations of the money-losin= g=20 business. It said it would be writing off redundant assets. Before NorthPoint=0F's recent filing for bankruptcy protection (TR, Jan. 22= ), it=20 arranged sell its 50% stake in VersaPoint to Versatel for $6.5 million. Th= e=20 companies created the venture less than a year ago. According to Versatel Chief Executive Officer Raj Raithatha, the company=20 remains committed to Versa-Point=0F's strategy of deploying digital subscri= ber=20 line (DSL) service to compete against European incumbent network operators.= =20 But VersaPoint focused on wholesale DSL markets and staked out a large=20 European territory that included France and the United Kingdom. =20 Versatel=0F's focus is more narrow, offering retail service to business=20 customers in the Netherlands, Belgium, Luxembourg, and northwestern Germany= ,=20 Mr. Raithatha said. Versatel is happy to take control of VersaPoint=0F's assets, especially its= =20 central office (CO) collocations in the Netherlands, where =0F"space is at = a=20 premium,=0F" Mr. Raithatha said. =0F"It was particularly important that we= secure=20 the Dutch COs.=0F" Still, many of VersaPoint=0F's assets are redundant or are not crucial to= =20 Versatel=0F's plans, he said. Of 286 VersaPoint workers, 200 will be laid = off. =20 About 1,000 CO collocations that were planned or operational are being=20 abandoned because they lie outside Versatel=0F's territory, Mr. Raithatha s= aid. The VersaPoint acquisition is a mixed financial bag for Versatel, which wil= l=20 have to absorb VersaPoint=0F's projected EBITDA (earnings before interest,= =20 taxes, depreciation, and amortization) loss of $9.3 million. Versatel will= =20 take a charge of $4.6 million to account for the layoffs and the write-off = of=20 redundant assets. But Versatel will be able to redeploy the $70 million it had planned to=20 invest this year in VersaPoint. With that additional money, Versatel won= =0F't=20 have to seek additional funding for at least two years, and by then it=20 expects to be profitable, Mr. Raithatha said. E.spire Mulls Reverse Split To Meet Nasdaq=0F's Conditions The Nasdaq Listing Qualifications Panel has agreed to continue listing=20 e.spire Communications, Inc.=0F's securities on the Nasdaq National Market,= but=20 the financially struggling carrier will have to boost its stock price if it= =20 wants to stay there past April 2. Under conditions set by the Nasdaq panel, e.spire must demonstrate a closin= g=20 bid price of $5 per share by April 2 and maintain its closing bid price at= =20 that level for 10 consecutive trading days. To accomplish that, e.spire is= =20 considering a =0F"reverse stock split,=0F" the company said. =20 The company also must complete a restructuring of its bond indebtedness by= =20 April 2, the Nasdaq panel said. If it accomplishes both those goals, the= =20 panel would consider listing e.spire=0F's stock under Nasdaq=0F's =0F"alter= native=20 listing standards,=0F" requiring net tangible assets of at least $4 million= . E.spire will need additional funding to survive until April. It is due to= =20 run out of cash this month. A spokeswoman said e.spire was =0F"working 24/= 7=0F" to=20 try to secure additional capital. Meanwhile, e.spire said the U.S. District Court in Baltimore had dismissed= =20 with prejudice a class action lawsuit against the company and some of its= =20 former officers and directors. The lawsuit alleged that e.spire had used= =20 improper accounting methods to overstate its earnings for 1999. =20 =0F"Having fought and won this case, we can turn our focus fully on buildin= g=20 shareholder value,=0F" said George F. Schmitt, e.spire chairman and acting = chief=20 executive officer. Convergent To Cut Workforce, Close Offices Convergent Communications, Inc., plans to reduce its workforce by 22% and= =20 close five offices in an effort to reduce its monthly losses by $3 million,= =20 the telecom systems integrator has said. Convergent, of Englewood, Colo.,= =20 already has eliminated 11 offices by selling its PBX and key telephone syst= em=20 businesses to Inter-Tel, Inc. (TR, Jan. 8, notes). Convergent will boost its data service sales force from 85 people to 155=20 people as part of its new focus on the data business, said Joseph Zell,=20 president and chief executive officer. Early Talks with WRC-03 Nations Seen As Key for U.S. Success It=0F's important for U.S. officials to consult with other nations as they= =20 prepare for the International Telecommunication Union=0F's 2003 World=20 Radiocommunication Conference (WRC-03), FCC officials and industry=20 representatives agree. =0F"One of the best ways of achieving a tremendous amount at WRC is. . .[by= ]=20 listening to our compatriots in other countries, listening to their thought= s=20 as to what should be done,=0F" Commissioner Susan Ness said last week at th= e=20 opening meeting of an industry advisory committee helping the agency draft= =20 proposals for the WRC-03. =0F"And to the extent that we can work with these other countries to achiev= e=20 their goals at the same time we=0F're trying to formulate our goals, we=0F'= re going=20 to have a much more successful and less confrontational radio conference,= =0F"=20 Ms. Ness added. She noted that WRC-03 would be the fourth such conference= =20 since she became a member of the Commission. Donald Abelson, chief of the FCC=0F's International Bureau, agreed that the= =20 lesson the FCC had learned from past conferences =0F"is the sooner we get t= o=20 talk to our foreign colleagues and coordinate with them, the better our=20 proposals are.=0F" Mr. Abelson said the advisory committee would be important because it would= =20 help the FCC develop WRC-03 proposals it can present to other federal=20 agencies, such as the Commerce and State departments. Those proposals eventually would be the subject of consultations with=20 regulators from other countries leading up to WRC-03. Peter A. Tenhula, senior legal adviser to Chairman Michael K. Powell, agree= d=20 that early planning was essential for a successful WRC-03. Full Slate of Issues Among the issues the advisory committee wants addressed at WRC-03 are (1)= =20 spectrum for third-generation (3G) services, also known as International=20 Mobile Telecommunications-2000 (IMT-2000); (2) terrestrial wireless=20 interactive multimedia services; (3) spectrum sharing in the 40 gigahertz= =20 band; (4) aeronautical mobile-satellite services; (5) public protection and= =20 disaster relief; (6) interregional sharing issues for broadcasting satellit= e=20 services; (7) high-frequency broadcasting service; and (8) regulatory=20 procedures governing satellite networks. Much of the advisory panel=0F's work will be done by seven informal working= =20 groups focusing on specific issues, said Brian Fontes, chairman of the=20 advisory committee and vice president-federal regulation at Cingular Wirele= ss=20 LLC. Mr. Fontes is a former FCC chief of staff who led the U.S. delegation= =20 at the 1995 WRC. Jennifer Warren, senior director-telecom trade and=20 regulatory affairs at Lockheed Martin Corp., is the panel=0F's co-chair. Many of the issues the panel will explore are contentious, Mr. Fontes said.= =0F" I know full well as a member of a competitive industry that there=0F's a lo= t of=20 competition among the U.S. industry interests and that competition will rea= r=20 its head in various debates and discussions,=0F" he added. =0F"There are a= lso=20 differences between government and industry about how spectrum should be=20 used.=0F" But after all the issues have been debated, Mr. Fontes said, it=0F's import= ant=20 to reach a consensus=0F-and to do so in time to allow consultations with ot= her=20 countries. =0F"We=0F're going to have to recognize where we each come from and how we = best can=20 work cooperatively and constructively together,=0F" he said. =0F"No more d= o we=20 have the luxury of waiting to the last moment to achieve the U.S.=20 objectives. We must be prepared well in advance.=0F" Julie Garcia, director of the FCC=0F's WRC-03 preparation team, said the ag= ency=20 was listening to industry feedback about how to improve its conference=20 planning. =0F"This is an ongoing process,=0F" she said. =0F"We will conti= nue to look=20 for ways that we can take the industry=0F's view into account.=0F" U.S. officials who participated in WRC-2000 last year felt that they were= =20 successful on issues such as broadcasting satellite service and IMT-2000=20 planning (TR, June 5, 2000). Bureau OKs Satellite Operators For Intersatellite Communications The FCC=0F's International Bureau has modified the licenses of 10 operators= of=20 geostationary orbit (GSO) satellite systems, enabling them to provide fixed= =20 satellite services in parts of the Ka-band. The license modifications allo= w=20 them to operate intersatellite service links (ISLs) using that spectrum. The bureau said that it could permit the operators to provide ISL services = as=20 a result of decisions made at the 1997 World Radiocommunication Conference= =20 (WRC-97) and in light of the operators=0F' studies on sharing the ISL spect= rum. =20 WRC-97 resolved technical issues regarding GSO satellite transmissions and= =20 assigned the 65=0F-71 gigahertz band for ISL use by fixed satellite service= =20 (FSS) providers. The FCC subsequently reserved that spectrum for=20 nongovernment use. The bureau granted the ISL license modifications to PanAmSat Corp., Teledes= ic=20 LLC, Loral Corp., Hughes Communications Galaxy, Inc., Astrolink Internation= al=20 LLC, CyberStar Licensee LLC, EchoStar Satellite Corp., and WB Holdings 1 LL= C,=20 GE American Communications, Inc., and Motorola, Inc. In a series of =0F"or= ders=20 and authorizations=0F" released Jan. 31, the bureau assigned each operator = a=20 frequency. In some cases it also set system build-out =0F"milestones=0F" t= hat=20 operators must meet to retain the modified licenses. Section 25.145(f) of the FCC=0F's rules states that a Ka-band GSO FSS licen= see=20 must (1) begin construction of its first satellite within one year of grant= ,=20 (2) begin construction of the remainder within two years, (3) launch at lea= st=20 one satellite into each of its assigned orbit locations within five years,= =20 and (4) launch the remainder of its satellites by the date required by the= =20 International Telecommunication Union. The bureau also issued a Jan. 30 order modifying VisionStar, Inc.=0F's lice= nse=20 to launch and operate a satellite system in GSO to provide FSSs. The burea= u=20 gave VisionStar 500 MHz of additional downlink operating frequencies for=20 satellite-to-user transmissions, bringing its total to 1,000 MHz. =20 DoJ, FBI Want Foreign Control Of DT Limited by FCC Conditions The U.S. Department of Justice and the Federal Bureau of Investigation say= =20 they have reached an agreement with VoiceStream Wireless Corp. and Deutsche= =20 Telekom AG that reduces the law enforcement, national security, and public= =20 safety risks of DT=0F's planned acquisition of VoiceStream. In December 2000, the law enforcement authorities and the companies asked t= he=20 FCC to defer a decision on the transaction until the outstanding concerns= =20 could be resolved (TR, Dec. 25, 2000). DoJ and the FBI now say they won=0F= 't=20 oppose the FCC=0F's approving license transfers associated with the transac= tion=20 as long as the terms of their agreement with the carriers are conditions of= =20 the approval. In a petition filed with the FCC in International docket 00-187, DoJ and th= e=20 FBI said the agreement pays particular attention to the German government= =0F's=20 control or influence over DT. DT says the government is not involved in it= s=20 operations. The German government currently owns 60% of DT; its interest i= n=20 the combined entity would decline to about 45% after DT=0F's acquisitions o= f=20 VoiceStream and Powertel, Inc. Among other things, the agreement stipulates that DT shall not disclose=20 classified or sensitive information, subscriber information, or transaction= al=20 or call data to any foreign government. It also requires DT officials to= =20 notify the FBI and DoJ if a foreign government attempts to participate in= =20 day-to-day management of DT or exercise control of it in a way that=20 interferes with the carrier=0F's obligations to abide by the agreement. Th= e=20 agreement was reached Jan. 12. =0F"Although the agreement does not eliminate every law enforcement, nation= al=20 security, or public safety risk posed by the proposed transactions, it does= =20 reduce those risks while affording the companies treatment consistent with= =20 other carriers in like circumstances,=0F" the FBI and DoJ said in their pet= ition. Intelsat Told To Disclose Privatization Info The FCC=0F's International Bureau has required Intelsat LLC to disclose cer= tain=20 information=0F-including its draft shareholder=0F's agreement and bylaws=0F= -to parties=20 who agree to be bound by a protective order. =20 Intelsat LLC is the privatized entity slated to succeed the intergovernment= al=20 organization Intelsat this spring. On Dec. 18, 2000, it asked for=20 confidential treatment of =0F"supplemental=0F" information it was filing in= the FCC=0F' s proceeding to determine wheth
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