Drawback

NCTA Pres. Robert Sachs told NCTA’s board that he won’t seek to renew his contract, which is up at the end of this year. His letter immediately touched off a round of speculation in the industry over who will replace him. NCTA Chmn. Glenn Britt, CEO of Time Warner Cable, said a search committee would be formed and a search firm retained, but the name on the lips of most sources we spoke to was Tori Clarke, the former NCTA vp who became the face representing the Pentagon during the U.S. invasion of Iraq. She recently returned to cable, as Comcast senior adviser-communications & govt. affairs. Others mentioned included Rep. Tauzin (R- La.), among other lawmakers stepping down after this term.

At our deadline Fri., Vodafone and Cingular Wireless were expected to submit bids for AT&T Wireless, with NTT DoCoMo reportedly bowing out of the competition for the carrier. It wasn’t immediately clear when the terms of any proposed offers would be made public, although AT&T Wireless’s board was expected to meet Sat. Legg Mason said in a research note last week that Cingular was the most likely winner. But Legg Mason said if Vodafone weighed in with a bid, Cingular could explore alternatives, such as pursuing T-Mobile USA if it didn’t win the auction for AT&T Wireless. “There have been preliminary discussions with Cingular and T-Mobile in the past so this option is not far- fetched, but the drawback is that T-Mobile has no interest in selling below its book value of approximately $22 billion,” Legg Mason said. It said that sum would be 10 times higher than the company’s projected earnings before interest, taxes, depreciation and amortization, which would be a significant premium to the 7 to 8 times multiple that AT&T Wireless might attain in its own bidding process. As for a Vodafone bid, Legg Mason said the biggest challenge would be the company unwinding its 45% stake in Verizon Wireless, its joint venture with Verizon. Another possibility stirring speculation Fri. was the emergence of Nextel as an AT&T Wireless bidder. Legg Mason said it didn’t expect a Nextel bid, but if it did, it probably would be based on concerns that “another company doesn’t obtain the wireless assets ‘on the cheap,'” it said. Meanwhile, UBS said in a research note Fri. that the sale of AT&T Wireless to either Cingular or Vodafone could affect the ownership of Venezuelan telco CANTV. If Vodafone won AT&T Wireless, Verizon would be likely to buy out Vodafone’s 45% minority stake in their joint venture. That could be financed in part by the sale of Verizon’s 28.5% ownership of CANTV, in which Verizon is the single largest shareholder, UBS said. Potential buyers could include Mexico’s Telmex or Spain’s Telefonica, it said. Medley Global Advisers said in a research note last week that regardless of whether Cingular or another carrier won the AT&T Wireless bidding, a “complicated and time-consuming merger review process” lay ahead at the FCC and Dept. of Justice. “The process will be cumbersome due to the range of technical and political issues that will need to be addressed,” it said, including questions on the appropriate ownership of spectrum in overlapping markets. In general, one scenario on which analysts were speculating last week was that a decision by AT&T Wireless could be announced as early as today (Tues.), although a bidder could still enter the fray beyond the 5 p.m. Feb. 13 deadline that the carrier had set for bids. As of late Fri., Vodafone reportedly was mulling a $34 billion bid for AT&T Wireless.

Reacting to a recent General Accounting Office report on cable rates, 2 foes debated the relative merits and drawbacks of re-regulating the cable industry. Consumer Federation of America (CFA) Research Dir. Mark Cooper told the audience at a Manhattan Institute Forum that the only thing that disciplined cable rates was wireline competition and that satellite was not a comparable alternative for many people. Referring to cable providers as “monopolists,” Cooper said the Commerce Committee of Sen. McCain (R-Ariz.) should promote the concept of tiering at the very least to give consumers more choices. “We would like to see consumer sovereignty. Give us choices,” Cooper said. He also is an advocate for giving 3rd-party Internet Service Providers (ISPs) access to cable’s high speed data lines. He said that, aside from Time Warner, which is under govt. mandate to offer independent ISPs, other cable operators were doing it only as a political ploy. Cable operators by and large have said offering competing ISPs is a good business model and should be handled through private negotiations rather than govt. intervention. Thomas Hazlett, a former FCC chief economist and fellow with the Manhattan Institute, essentially called previous attempts at cable regulation an abject failure. Using graphs, he said demand for cable services dropped, as did the annual increase in channels available, in the couple of years in the 1990s when cable was regulated. “Quality was being wiped out,” Hazlett said. He also argued that rising rates was not synonymous with high rates and in fact that if cable truly were a monopoly it would set rates at an artificially high price and wouldn’t have to raise it each year. While Cooper cited the dispute between Cox and ESPN as an example of why there should be a la carte or tiered pricing, Hazlett said companies had found that consumers liked to be offered a big bundle of choices out of convenience and personal preference.

The General Accounting Office (GAO) recommended Mon. that the FCC begin collecting service quality data in its annual report to Congress on the state of mobile wireless competition. The GAO report said call quality information “would provide an ongoing record to help determine whether the current regulatory framework for call quality is adequate or whether certain actions -- such as establishing call quality standards, mandating additional consumer information or reducing local government control over the siting of new base stations -- are needed.” In a letter to the GAO, FCC Chmn. Powell agreed to include such call quality information to the extent possible in future reports, although he cited a lack of objective data in that area.

Planned FCC notice on what changes, if any, are needed in certain protection levels for GPS is meant to open debate on issue that has surfaced since ultra-wideband proceeding began, Office of Engineering & Technology (OET) Chief Edmond Thomas said. In recent mobile satellite service (MSS) order, FCC chose less conservative limits to protect GPS from ancillary terrestrial operations than power levels NTIA backed. But 2 agencies agreed OET would seek comment on potential changes, if any, in protection levels for GPS in future. Agencies agreed “it was a reasonable course that we will start a public debate about whether it is necessary to set a generic limit for devices that have spurious emissions into the GPS band,” Thomas said. “If the answer to that is yes, what should that limit be?”

Although talks are expected to continue, industry and military still aren’t on same page on what direction U.S. should take internationally on harmonizing spectrum allocation for wireless local area networks (LANs) at 5 GHz, sources said. At a preparatory meeting last month in Geneva for World Radio Conference (WRC), U.S. stance was at odds with where other regions, such as Europe, would like to take that policy proposal when WRC 2003 convened in June.

FCC released Fri. notice of inquiry (NOI) on its annual analysis of competition in commercial mobile wireless sector, including relatively new offerings such as Wi-Fi. Commission approved NOI at agenda meeting last week, asking for feedback on how to improve data involved in its annual wireless competition report to Congress (CD Dec 12 p3). Notice said over past year, Wi-Fi “has begun to play an increasingly important role in the mobile data industry.” Notice asks for feedback on whether Wi-Fi competes with “commercial, interconnected mobile data services” and if it has potential to compete with these services to larger extent in future. It questions how many people or what percentage of U.S. population subscribes to or uses Wi-Fi services, in how many locations it is available, what are major drawbacks and how secure it is for end users. NOI also asks how FCC could improve methodology it uses for determining service availability and evaluating competition. Concern has been raised in past that reports have considered carrier as “covering” particular county if it offered service in any portion of that county. Notice acknowledged multiple operators shown as covering same county aren’t necessarily providing service to same part of county. “Consequently, some of the counties included in this analysis may have limited coverage from a particular provider,” it said. Analysis has overstated “to some degree” level of competition and total coverage concerning both geographic area and population covered, notice said. FCC asks in notice that to improve report’s accuracy, carriers submit coverage maps they make available to public, including maps used in ad material. Notice asks if carriers have more detailed coverage maps that aren’t available to public. In other areas, notice sought comment on ways it could obtain independent sources of information on competition data provided for report. Inquiry also explores what definition of rural FCC should use for examining availability of services in these areas. “We ask whether the existence of fewer facilities-based providers in rural areas necessarily indicates the existence of less meaningful competition in these areas,” notice said. In area of mobile satellite service, notice seeks information on geographic areas in which Globalstar, Iridium, Inmarsat and Mobile Satellite Venture provide coverage and offer service to new customers. Deadline for comments is Jan. 27, with replies due Feb. 11.

FCC opened inquiry Wed. into making additional spectrum available for unlicensed devices, including TV broadcast spectrum. Office of Engineering & Technology Chief Edmond Thomas cited Wi-Fi as example of kinds of technology that used cognitive, frequency-agile radios to share such spectrum with incumbents. FCC Chmn. Powell stressed item would balance how to use existing spectrum efficiently while not interfering with incumbents. Comr. Martin voiced concerns about unlicensed applications in current broadcast spectrum, particularly because inquiry comes during DTV transition.

Zoning challenges that remain for wireless tower build- outs include complying in some cases with local rules that limit structures to heights that may not be tall enough to meet colocation mandates, panelists said at PCIA zoning conference Wed. Some communities have policy that requires new towers to accommodate colocation but “require towers to be less than 80 feet in height,” PCIA Pres. Jay Kitchen said at one-day conference in Alexandria, Va. “At a minimum, that means the colocation opportunity is limited to one other carrier.” In other cases, zoning rules don’t address trend of tower companies’ focusing less on building new sites and more on redeveloping existing inventory that can predate local laws, said Liz Hill, corporate assoc. counsel, zoning, for American Tower. In yet other cases, federal siting issues are playing increasing role in local zoning arena, experts said.

Fighting bankruptcy and Wall St. skepticism, Globalstar moved to rejuvenate company by quietly receiving experimental license for Ancillary Terrestrial Component (ATC) for 2nd- generation satellite phones that company showcased for FCC and selected members of media at Crowell & Moring law firm in Washington Thurs. Officials of FCC Wireless and International Bureau attended first-known public demonstration of ATC system. As FCC ponders use of ATC networks with Mobile Satellite Services (MSS), Globalstar believes experimental license puts it out front of competitors that include ICO and Iridium. “We done it, built it and shown it,” Chmn. CEO Olof Lundberg told us: “We have a working prototype. This gives you the best of both worlds.”