Loral said in its 10-Q it won’t need additional financing to fund further operations: “We anticipate using excess cash flows from operations to populate our available slots with new satellites to meet market demand.” The company entered Ch. 11 bankruptcy protection in July (CD July 16 p6). Loral still plans to reorganize around its manufacturing operations and international satellite fleet for service in Southeast Asia, the Middle East and S. America. Loral didn’t provide an estimate of how long reorganization would take. Meanwhile, Loral reported an $80 million loss for first quarter 2004, an increase from a loss a year ago of $48 million. Total revenue decreased to $103 million from $155 million in first quarter 2003. The company also said it reached a settlement with ChinaSat and China Great Wall Industry Corp. (CGWI) in April resolving disputes between the companies concerning Loral’s delay in delivering a launch vehicle for the ChinaSat 8 launch. Loral is manufacturing the launcher and satellite. The settlement would release claims ChinaSat may have had against Loral, or Loral against CGWI, for payments made in connection with the launcher. Loral said it hasn’t received State Dept. licenses that would allow it to export the launcher and the satellite to China: “Delays in obtaining the necessary licenses and technical assistance agreements have in the past resulted in, and may in the future result in, the delay of [Space System/Loral’s (SS/L)] performance on its contracts, which could result in the cancellation of contracts by its customers.” Despite the settlement, Loral said ChinaSat can still cancel the contract with Loral, and may still seek a refund of $81.6 million for the satellite, plus $6.5 million in penalties. Loral said it doesn’t “believe that ChinaSat is entitled to such a refund or penalties and would vigorously contest any such claims by ChinaSat. If the ChinaSat 8 contract were terminated, SS/L estimates that it would incur costs of approximately $38 million to refurbish and retrofit the satellite.”
Exports to China
Bruce Mehlman, ex-Commerce Asst. Secy.-Technology Policy, and Alex Vogel, ex-aide to Sen. Majority Leader Frist (R-Tenn.), form Mehlman & Vogel public affairs firm… TV Azteca said board members Gene Jankowsky and James Jones are resigning… Jim Barnett, ex-AltaVista, joins ValueVision board… Daniel Saginario, ex-Nynex, joins AirNet board… Kathleen Earley, ex-AT&T, joins Vignette board… Elaine Reiss, ex-Ogilvy & Mather, named best practices leader, Distributed Computing Industry Assn… Curtis Siller, ex-Bell Labs, elected pres. of IEEE Communications Society… Jeffrey Babka, ex-Indus International, becomes NeuStar senior vp- CFO… Ronald Xiuru Xie resigns as pres.-CEO of China NetTV Holdings, is replaced by Vice Chmn. Anthony Garson… Pace Micro Technology promoted Sandy Barblett to regional dir.- Asia Pacific… BBC promoted Paul Telegdy to vp-programming & co-productions, L.A… Pappas Telecasting promoted Norm Wright to asst. dir.-engineering.
The U.S. Attorney, Boston, arrested 2 men Thurs. night accused of planning to buy and export to China restricted defense articles, including satellite components. John Chu of Pasadena, Cal., and Zhu Zhaoxin of Shenzhen, Guangdong Province, China, were arrested in L.A. after a flight from Boston. The men were accused of planning May 2003-May 2004 to export traveling wave tubes, and other items, “despite their awareness that such items cannot be shipped lawfully to China,” the U.S. Attorney’s office said. The men negotiated March-May 2004 with undercover Immigration & Customs Enforcement agents to buy the tubes, said the U.S. Attorney’s office: “They told the undercover agent that they wanted to make sure that some other items they had just purchased, believing them to be controlled defense articles, could be safely exported from the [U.S.] before formally placing the order for the [tubes].” The items they're accused of trying to buy were decoys. If convicted, they face up to 5 years in prison, 3 years of supervised release and $250,000 fines. A U.S. Attorney’s spokeswoman declined to comment on whether the arrests were related to a closed investigation of ITAR violations by Hughes Electronics and Boeing Satellite Systems (CD March 6/03 p8)
The high-tech industry urged Congress to undertake policy reforms to address the future of innovation in the U.S. It said changes were needed to ensure the U.S. high- tech industry remains competitive in the face of new economic rivalries from countries, such as China and India. “Economic isolation is not the answer in continuing to lead the world of innovation,” said NTIA Acting Dir. Michael Gallagher, commenting on a playbook released Wed. by the Electronic Industries Alliance (EIA) in coordination with CEA, TIA, Govt. Electronics & Information Technology Assn. and others.
The 3rd installment of the China-U.S. Telecom Summit will take place before Supercomm in Chicago, TIA announced Fri. The summit, June 17-19 at McCormick Place, is sponsored by NTIA and the Commerce Dept.’s International Trade Administration (ITA) in partnership with TIA. “The summit provides U.S. officials and company executives a unique opportunity to engage in dialogue on communications development in China, the world’s largest and fastest growing market,” TIA said. The event will be lead by Commerce Secy. Donald Evans and China’s Ministry of Information Industry Minister Wang Xudong. Summit participants will also be invited to attend Supercomm. Industry representatives are invited to a public organizational briefing on Thurs. at 10:30 a.m. at the City Club of Washington, Franklin Square, 1300 I St. Acting NTIA Dir. Michael Gallagher and TIA Pres. Matthew Flanigan are to speak. RSVP Ashley Heineman at 703- 907-7734, aheineman@tiaonline.org.
U.S. Trade Representative (USTR) said it reached an agreement with Korea to ensure that U.S. systems competing with Korea’s Wireless Internet Platform for Interoperability (WIPI) technology can continue to operate in that country’s telecom market. The long-standing trade dispute could have shut the U.S. telecom companies out of an important part of Korea’s market. “American telecommunications companies can now be assured of unimpeded access to this important market,” said USTR’s Robert Zoellick. The dispute goes back more than 2 years, when the Korean govt. launched development of the WIPI standard -- a technology that competes with several other established software platforms. WIPI was originally envisioned as the exclusive technology for downloading Internet content to cellphones in Korea. It threatened to shut out other competing systems, including a U.S. system that already had more than 7 million subscribers in the country and was expected to generate hundreds of millions of dollars over the next 5 years. The resolution follows bilateral consultations and meetings between senior officials in Washington and Seoul that have intensified the past several months, the USTR said. “It’s wrong for countries to mandate exclusive standards that have the effect of shutting us out,” Zoellick said: “The United States will continue to aggressively seek resolution of this and other similar issues throughout Asia and the world.” The industry applauded the decision, saying it would provide Korean wireless applications developers, manufacturers and operators with flexibility to introduce various wireless Internet technologies into their service offerings. Qualcomm Chmn. Mark Jacobs said “freedom for each operator to select a preferred wireless Internet platform… will maintain a high level of competition and creativity in the South Korean wireless market.” He said the decision would benefit “all parties in the mobile applications marketplace. Subscribers of BREW-enabled services, for example, can continue to benefit to delivering their locally developed BREW-based applications to the worldwide marketplace.” The deal comes shortly after the Chinese govt. last week decided not to impose the unique Chinese wireless LAN encryption standard (WAPI), which was set to go into effect June 1. China also agreed to work with international standard-setting bodies on wireless encryption and to adopt a policy of technology neutrality for licensing 3G services. The USTR said it hoped the agreements reached would provide momentum for resolution of Korea’s plan to mandate an exclusive domestic transmission standard for a new service -- portable broadband wireless Internet. “Telecom carriers should have maximum flexibility in the technology they choose, unencumbered by government interference,” the USTR said.
FCC’s pro-monopoly agenda is “one significant reason” for low broadband deployment in the U.S., said Brookings Institute Senior Fellow Charles Ferguson. Presenting his new book, The Broadband Problem: Anatomy of a Market Failure and a Policy Dilemma at a New America Foundation event Mon in Washington, he said: “The FCC recently has not helped and the FCC’s attitude towards line sharing, [UNEs], media concentration, the performance of the incumbents, which they seem to think is reasonably satisfactory, [is] not helpful.”
The potential introduction of mandatory single- technology standards that could restrict market access for U.S. technology suppliers was cited as “a new area of concern” in a report released by the U.S. Trade Representative (USTR) last week. The agency said it was “seriously concerned” about such standards being considered or proposed for wireless telecom services and equipment in China, Korea and Japan. “That could have the effect of excluding U.S. suppliers” from those markets, it said. It warned it would consider “all possible options to address” those barriers “if those countries proceed with implementing rules that are exclusionary and inconsistent with their trade commitments.” It said it planned to discuss resolution of standards issues with China at the U.S.-China Joint Commission on Commerce & Trade meeting scheduled for the end of April.
Foreign “countries are typically opening up” their telecom markets to competition and foreign investment, a U.S. Trade Representative (USTR) official told us: “There is a clear trend there.” The official said countries such as Cambodia and former Soviet Union republics had “opened up in terms of allowing new people to participate in the market. But at the same time, it’s hard” for foreign carriers to operate in many of those markets because “often [those markets] don’t have adequate rules to support competition.”
UTStarcom said it signed contracts worth $85.7 million with China Netcom to expand and upgrade its IP-based personal access system (PAS) networks in Beijing and the Heilongjiang province. It also updated its financial guidance for the first quarter, saying revenue would be $600 million due to the strong demand for its PAS infrastructure and handsets. It estimated it would ship 4.5 million handset units in the first quarter, and total units shipped in 2004 would exceed the 16.5 million shipped in 2003.