Telecommunications Reports -- 01/22/01 ,
 =20
=20

Telecommunications Reports - January 22, 2001

Bush Expected To Act Soon To Fill FCC Chair; Transition Team Discusses Agen=
cy=20
Changes
FCC Focuses on International Detariffing, Intercarrier Compensation in=20
Biennial Review
Furchtgott-Roth Says Departure Of Kennard Won=0F't Bring Deadlock
Time Warner Telecom, Inc., intends to raise as much as $700 million...
UWB Operations Feasible In 3=0F-6 GHz Band, NTIA Says
Angelos Amends Lawsuit Against Wireless Industry
NTIA Proposes Reimbursement Procedures For Relocated Government Spectrum Us=
ers
Antenna-Rule Violations Prompt Proposed Forfeitures of $327K
Fifth Circuit Joins Chorus On State Immunity Issue
AeA Seeking Federal Preemption Of Multiple State Privacy Laws
Libraries Mull Legal Challenge To New Internet-Filtering Law
Think Tank Slams City Telecom Efforts
Verizon Adds Data To Boost Massachusetts InterLATA Bid
Bureau Proposes SBC Pay $94K For Violating Collocation Rules
FCC Gets =0F`Ahead of the Curve=0F' With Inquiry on Interactive TV
Analysts See Shifting Alliance As BellSouth Sells Qwest Stock
Blaming Verizon for Bankruptcy, NorthPoint Plans Asset Auction
Qwest Touts Line-Sharing Pacts, Improved Service
WorldCom To Pay Users $88M To End Overcharging Lawsuit
Court Rejects AT&T=0F's Appeal In Reseller Discrimination Case
One Step from Bankruptcy, Globalstar Stops Debt Payments
=0F`Creative Financing=0F' Seen As Asian Network Necessity=20
Three Carriers Join Forces On European Wireless Data
Portugal Telecom Eyes Brazil As Fertile Ground for Expansion
Intelsat Plans Technical, Regional =0F`Flexibility=0F'=20
WorldCom, Intermedia Need State OKs, Face Digex Lawsuit
Rhythms Trims Workforce, Operations To Reduce Losses
Level 3, SBC Reach Agreement On =0F`Recip Comp=0F' Rate Scheme
TMI, Motient To Unite Assets, Focus On Wholesale Services
New Entrants Will Prolong IXC Price Wars, Analysts Say
Report Offers Road Map To E-government Security
Motorola, Inc., says it will stop making mobile phones at its Harvard, Ill.=
,=20
facility...
FCC Suggests Streamlining Carrier-Change Process
Verizon Wireless Asks FCC To Delay 700 MHz Band Auction
Ex-RSA Cellular Licensee Meets Judicial Skepticism
The Broadband Wireless Internet Forum has released two technical papers...
Viatel To Cut Workforce, Phase Out Most Voice Service
CLECs Seek Cautious Approach to Regulating Their Access Fees; AT&T, WorldCo=
m=20
Want Caps
U.S. Telecom Revenues
Proposal To Streamline Service-Quality Reporting Gets Booed from All Sides;=
=20
Some Question Timing
Time Warner Telecom, Inc., will be the first carrier...
NECA DSL Tariff
Rohde:  Spectrum Management Holds Key Challenge for Future
=0F`Datacasting=0F' License Caps To Be Imposed in Australia
Nigerian Sale Yields $855M For Three Cellular Licenses
BT To Prioritize Local Loop Unbundling in Top Exchanges
Court Allows Mobile Phone Lawsuit To Continue
Notes on the News. . .
Regulatory & Government Affairs
Industry News
FCC Reauction
Infostrada Acquisition
Interconnection Dispute
What's Ahead. . .
NTCA Makes Push for MAG Plan, Lifting Caps on Universal Service
Executive Briefings

Bush Expected To Act Soon To Fill FCC Chair; Transition Team Discusses Agen=
cy=20
Changes

With most of his decisions regarding top cabinet-level positions out of the=
=20
way, President Bush is expected to begin shifting his attention to selectin=
g=20
lower-level political appointees, including the FCC chairman and the=20
administrator of the National Telecommunications and Information=20
Administration (NTIA).

Late last week speculation was rife that a decision on the FCC top spot was=
=20
imminent, with a handful of insiders even predicting that a new chairman=20
could be appointed over the inaugural weekend or at the beginning of this=
=20
week.

One factor that several GOP insiders say could spur quick action from the=
=20
White House is the prospect of having Democratic Commissioner Susan Ness=20
assume the chairman=0F's duties.  As the most senior Commissioner at the FC=
C,=20
Ms. Ness would slide into that role absent an interim appointment by the=20
president, notes one longtime FCC observer.  =0F"And that just doesn=0F't s=
it too=20
well with a Republican administration,=0F" the source said.

Most Washington insiders expect Commissioner Michael K. Powell to be named=
=20
interim chairman, as no Senate confirmation is needed for a sitting=20
Commissioner to assume that post.  =0F"Mr. Powell is viewed by many as some=
one=20
who can get the FCC up and running without a learning curve,=0F" an industr=
y=20
source told TR.

But the question of who gets the permanent FCC job has been the topic du jo=
ur=20
for most telecom industry watchers.  Sources say Texas Public Utility=20
Commission Chairman Patrick H. Wood III has been positioning himself for th=
at=20
role, but Mr. Powell also is considered a front-runner for the position if =
he=20
wants it.

Under one scenario floated by a GOP insider, President Bush would name Mr.=
=20
Powell interim chairman and then, later on, nominate Mr. Wood as permanent=
=20
chairman and a new Democrat to replace Ms. Ness.  Ms. Ness=0F' term expired=
 in=20
June 1999; she currently is serving under a recess appointment that=20
then-President Clinton made late last month (TR, Dec. 25, 2000).  She may=
=20
continue in her position until a replacement is nominated by President Bush=
=20
and confirmed by the Senate, or until the end of the current congressional=
=20
session.

L. Ari Fleischer, a Bush transition team spokesman who was slated to become=
=20
White House spokesman after the inauguration, gave few clues during a Jan. =
19=20
press briefing about where the incoming administration stood on naming new=
=20
agency heads.  Asked by TR whether a timetable had been developed for=20
appointing a new FCC chairman, Mr. Fleischer replied,  =0F"That will happen=
 in=20
due order as those announcements are ready.=0F"

A spokesman at the Commerce Department=0F's NTIA said former Administrator=
=20
Gregory L. Rohde hadn=0F't made any decisions about his future plans.  As a=
=20
political appointee under former President Clinton, Mr. Rohde stepped down=
=20
from his post last Friday.

=0F"The wireless community wanted him to stay on at NTIA to help oversee th=
e =0F`
3G=0F' [third generation] initiative, but so far there=0F's been no indicat=
ion=0F"=20
that President Bush plans to renominate Mr. Rohde to be NTIA administrator,=
=20
the NTIA spokesman told TR.=20

Mentioned as possible candidates to succeed Mr. Rohde at NTIA are Earl=20
Comstock, a partner at the Washington law firm of Sher & Blackwell and a=20
former aide to Sen. Ted Stevens (R., Alaska); James Derderian, former House=
=20
Commerce Committee staff director and a member of the NTIA transition team;=
=20
and Kevin Martin, who oversaw communications policy issues for the Bush=20
transition team.

FCC Transition Team Gathers

A Jan. 17 meeting of the Bush administration=0F's FCC transition team may h=
ave=20
failed to produce a name and a timetable for replacing Mr. Kennard.  But=20
numerous industry participants described the meeting as a productive first=
=20
step in smoothing out some of the rough edges at the FCC=0F-particularly th=
e=20
pace at which the Commission makes decisions and its role in reviewing=20
mergers.

Participating in the Jan. 17 meeting, sources say, were nearly all of the F=
CC=20
=0F"transition advisory team=0F" members (TR, Jan. 15) and officials from t=
he Bush=20
administration=0F's =0F"in-house=0F" transition team:  Mr. Martin; former R=
ep. Bill=20
Paxon (R., N.Y.), who is chairman of the transition advisory committee; and=
=20
Rebecca Armendariz, project director-FCC transition team.

Speaking briefly with TR last week, Ms. Armendariz described the meeting as=
 =0F"
good=0F" and =0F"productive=0F" and said it was the =0F"first and last=0F" =
time that the FCC=20
advisory team would meet with Bush transition officials.  Ms. Armendariz al=
so=20
reported that the FCC advisory team had grown to a total of about 42 member=
s,=20
which is =0F"six to eight=0F" more than was posted on the Bush-Cheney trans=
ition=20
Web site (http://www.bushcheneytransition.com) as of Jan. 19.

An advisory team member who didn=0F't want to be identified said the meetin=
g=20
lasted about one and a half hours and mostly focused on changes in general=
=20
FCC procedures.  =0F"There wasn=0F't much time for a lengthy discussion on =
specific=20
points, and they didn=0F't mention any names=0F" of potential chairman nomi=
nees,=20
the source said.  =0F"But there was a sense that things need to be speeded =
up at=20
the FCC, and [that] there ought to be less FCC involvement in the=20
merger-review context,=0F" the source reported.

Meanwhile, documents circulated among the FCC advisory team members show th=
e=20
Bush transition team sought feedback from the advisers on the following six=
=20
subjects:  (1) the top five issues facing the FCC; (2) what rules and/or=20
policies are in most need of reform; (3) what management, administrative or=
=20
procedural issues need to be addressed; (4) what can be done to expedite th=
e=20
FCC=0F's decision-making process; (5) what significant challenges will the =
new=20
administration and FCC face with respect to Congress, public perceptions, o=
r=20
the press; and (6) what organizational changes should be considered early i=
n=20
the new administration.

Participants in last week=0F's meeting were given a chance to go over paper=
s=20
containing their FCC =0F"wish lists,=0F" sources report, and the Bush trans=
ition=20
team =0F"seemed to be interested and listening.=0F"  Still, one source desc=
ribed=20
the meeting as =0F"light on substance=0F" and doubted whether =0F"anyone ha=
d even read=20
our paper yet.=0F"=20

Jay Kitchen, an FCC advisory team member and president and chief executive=
=20
officer of the Personal Communications Industry Association, told TR he was=
=20
encouraged that finding more spectrum for third-generation (3G) technology =
=0F"
was near the top of everybody=0F's list.=0F" =20

PCIA=0F's paper to the Bush team stressed the need to =0F"speed up the towe=
r-siting=20
process=0F" and ensure that wireless carriers =0F"receive all the interconn=
ection=20
rights they are due under=0F" the Telecommunications Act of 1996, Mr. Kitch=
en=20
said.

Progress & Freedom Foundation fellow Randolph J. May, also a member of the=
=20
FCC advisory team, called the Jan. 17 meeting =0F"productive=0F" and said i=
t gave=20
the Bush transition team a =0F"good chance to offer their views on what the=
y=20
thought were the most important and pressing=0F" issues at the FCC.  =0F"At=
 the top=20
of my list,=0F" Mr. May told TR, =0F"was changing the strategic focus of th=
e FCC=20
toward becoming a market deregulator.=0F"

SBC Communications, Inc., recently submitted a paper to the Bush team=20
recommending, among other things, =0F"closing the reciprocal compensation=
=20
loophole=0F" and =0F"ensuring that the marketplace regulates broadband Inte=
rnet=20
service,=0F" an SBC spokesman told TR.

SBC also proposed eliminating the =0F"duplicative review of mergers=0F" tha=
t=20
carriers face at the FCC and Department of Justice.  But SBC didn=0F't spec=
ify=20
which review should be phased out.  =0F"That=0F's the policy question that =
needs to=20
be answered by the new administration,=0F" he said.

Even telecom interests that weren=0F't represented on the FCC transition=20
advisory team have forwarded their telecom agendas to the Bush=20
administration. =20

In a letter sent to President-elect Bush on Jan. 18, the National Telephone=
=20
Cooperative Association advised him to appoint FCC commissioners who =0F"
understand rural America=0F" and give =0F"considerable thought to rural=20
representation=0F" at NTIA.

The Association for Local Telecommunications Services has submitted a paper=
=20
calling the =0F"the failure=0F" of incumbent local exchange carriers (ILECs=
) to=20
open their networks one of the =0F"three greatest market failures that stym=
ie=20
full, effective competition.=0F"

=0F"According to the FCC, after almost five years, the ILECs have opened th=
eir=20
networks to competitors in only two states,=0F" ALTS wrote.  =0F"As a resul=
t,=20
[competitive local exchange carriers] have great difficulty interconnecting=
=20
with the Bell company networks to provide advanced services.=0F"

The Cellular Telecommunications & Internet Association has had =0F"extensiv=
e=20
conversations=0F" with the Bush team about spectrum management issues, wire=
less=20
location privacy principles, repealing the 3% federal excise tax on telepho=
ne=20
bills, and moving from intercarrier compensation for wireless calls to a =
=0F"
bill-and-keep=0F" regime, a CTIA spokesman told TR last week.

=0F-Ryan B. Oremland

FCC Focuses on International Detariffing, Intercarrier Compensation in=20
Biennial Review

The FCC has asked its staff to prepare proposals to eliminate or streamline=
 a=20
broad range of Commission rules, including those governing intercarrier=20
compensation for terminating telecom traffic, wireless licensing terms and=
=20
renewals, and international service tariffs for nondominant interexchange=
=20
carriers.

The FCC issued its directives in a report released Jan. 17 in Common Carrie=
r=20
docket 00-175.  The biennial regulatory review provisions of the=20
Communications Act of 1934 require the agency in even-numbered years to=20
decide whether given rules remain in the public interest, the FCC said. =20

The FCC doesn=0F't have to take final action repealing or modifying the rul=
es in=20
the even-numbered years, it said.

The latest FCC directives reflect staff recommendations outlined in a revis=
ed=20
version of the September 2000 staff report on the biennial regulatory revie=
w=20
(TR, Sept. 25, 2000).  The FCC wants the Common Carrier Bureau to prepare=
=20
rulemaking notices on the following:

=0F=07   Identifying alternative approaches to inter-carrier compensation =
=0F"that=20
are more consistent with the long-term development of competition=0F";

=0F=07   Excluding rural telcos from the requirements that independent incu=
mbent=20
local exchange carriers provide interexchange service through separate=20
subsidiaries;

=0F=07  Simplifying FCC review of the =0F"average schedules=0F" used in det=
ermining=20
certain telcos=0F' costs and shares of the National Exchange Carrier=20
Association, Inc.=0F's revenue pools; and

=0F=07  Changing the schedule for NECA board elections to reduce the=20
administrative costs of the association, which was created by FCC directive=
=20
to maintain access charge tariffs for many local exchange carriers.

The International Bureau will prepare rulemaking notices to initiate the=20
following streamlining efforts:

=0F=07  Extending the detariffing regime adopted for domestic interexchange=
=20
services to the international services of nondominant interexchange carrier=
s,=20
=0F"including commercial mobile radio service providers and U.S. carriers=
=20
classified as dominant solely because of foreign affiliations=0F";

=0F=07 Further streamlining the earth station and space station licensing=
=20
processes;

=0F=07 Requiring electronic filing of applications for earth station licens=
es, to=20
save processing time;

=0F=07 Expanding the availability of pro forma transfers of control and=20
assignments of international facilities authorizations under section 214 of=
=20
the Communications Act of 1934; and=20

=0F=07 Reducing the reporting burdens for international telecom carriers.

The FCC asked the Wireless Telecommunications Bureau to prepare rulemaking=
=20
notices to pursue the following streamlining goals:

=0F=07 Considering whether to eliminate restrictions =0F"on the aggregate a=
mount of=20
broadband PCS (personal communications service), cellular, and specialized=
=20
mobile radio spectrum that an entity can hold in any market=0F";

=0F=07 Extending license terms beyond 10 years and implementing automatic o=
r=20
default renewal procedures to avoid late-filing problems;

=0F=07 Considering partially privatizing the site-by-site, frequency-by-fre=
quency=20
licensing process for the private and common carrier microwave services;

=0F=07 Bringing the technical and operational rules=0F-including radiated p=
ower=20
restrictions=0F-for cellular service, PCS, and general wireless communicati=
ons=20
service into conformity with each other;

=0F=07 Considering whether any of its part 22 (cellular) rules are obsolete=
 as a=20
result of competitive or technological developments; and

=0F=07 Bringing its radio frequency emission regulations into compliance wi=
th the=20
International Telecommunication Union=0F's radio regulations.

And the Commission asked its Office of Engineering and Technology to prepar=
e=20
rulemaking notices to address the following issues:

=0F=07 Clarifying a variety of equipment authorization rules and eliminatin=
g=20
ambiguities in equipment test procedures, including authorization procedure=
s=20
for transmitters that operate both in the U.S. and overseas; and

=0F=07 Reviewing the emission limits on devices that operate in spectrum ab=
ove 2=20
gigahertz.

The FCC also agreed with a staff recommendation that when it evaluates new=
=20
rules, it should use criteria similar to that used in the biennial review t=
o=20
evaluate existing rules.  It stopped short, however, of adopting any criter=
ia=20
in binding rules or procedures.

The FCC rejected a proposal the U.S. Telecom Association had offered in=20
comments on the September staff report (TR, Oct. 16, 2000).  USTA had asked=
=20
the FCC to set a firm time limit for acting to eliminate rules identified a=
s=20
unnecessary during biennial reviews.

Citing the need to make the best use of its limited resources and to retain=
=20
flexibility, the FCC directed all bureaus and offices =0F"to prioritize=20
rulemaking proceedings stemming from this biennial review on the basis of=
=20
various public policy considerations and a comprehensive evaluation of=20
comments received=0F" in response to the planned rulemaking notices.

Issuing a separate statement, Commissioner Harold W. Furchtgott-Roth said t=
he=20
FCC shouldn=0F't view the biennial reviews as =0F"a burden to be endured or=
 a hoop=20
through which we must dutifully jump every other year.=0F"  He added, =0F"A=
s the=20
Commission moves forward, it is my sincere hope that we will devote=20
full-time, year-round staff to this endeavor.

Furchtgott-Roth Says Departure Of Kennard Won=0F't Bring Deadlock

Although the departure of FCC Chairman William E. Kennard leaves the agency=
=20
temporarily with four members=0F-two Republicans and two Democrats=0F-Commi=
ssioner=20
Harold W. Furchtgott-Roth doesn=0F't expect the agency to be deadlocked.

=0F"A lot is made about the political divisions=0F" at the FCC, he said Jan=
. 18=20
during his monthly briefing with reporters.  =0F"But I really don=0F't see =
it at=20
all.=0F"

About 90% of the FCC=0F's votes over the past three years have been unanimo=
us,=20
Mr. Furchtgott-Roth said.  Only about 2% or 3% have been 3=0F-2 votes, he=
=20
estimated.  So it=0F's unlikely that many votes will be deadlocked with the=
 two=20
Republicans=0F-Mr. Furchtgott-Roth and Michael Powell=0F-voting against Dem=
ocratic=20
Commissioners Susan Ness and Gloria Tristani, he said.

Mr. Furchtgott-Roth commended then-Chairman Kennard for not trying to push =
=0F"
11th-hour=0F" initiatives before leaving the agency.  =0F"A lot of people w=
ere=20
worried that some things might be railroaded through,=0F" he said.  =0F"Cha=
irman=20
Kennard has been very principled about this, not trying to do a lot of=20
11th-hour rules.=0F"

Meanwhile, Mr. Furchtgott-Roth said, the FCC had made =0F"significant progr=
ess=0F"=20
in its second =0F"biennial review=0F" of its regulations.  The Telecommunic=
ations=20
Act of 1996 directs the FCC to review its regulations every two years and t=
o=20
eliminate or revise any rules that are no longer necessary or in the public=
=20
interest. =20

Last week, the FCC issued a report on what rule changes it would propose as=
 a=20
result of its second biennial review (see separate story).

The report represents a =0F"substantial improvement over the really patheti=
c=20
effort that was done two years ago=0F" when the agency conducted its first=
=20
biennial review (TR, Jan. 4, 1999), Mr. Furchtgott-Roth said.

Mr. Furchtgott-Roth also reiterated his complaints about the FCC=0F's=20
coordination with other agencies in reviewing mergers and related license=
=20
transfers.  Regarding the proposed Deutsche Telekom AG=0F-VoiceStream Wirel=
ess=20
Corp. merger, Mr. Furchtgott-Roth disagreed with the FCC=0F's decision to p=
ut=20
its review on hold while the U.S. Department of Justice and the Federal=20
Bureau of Investigation probe national security concerns (TR, Dec. 25,=20
2000). =20

He said it would be inappropriate for the FCC to impose conditions on the=
=20
merger that are requested by DoJ and FBI.  That, however, has been the FCC=
=0F's=20
practice in past merger reviews, he said.

Time Warner Telecom, Inc., intends to raise as much as $700 million...

Time Warner Telecom, Inc., intends to raise as much as $700 million through=
=20
the sale of stock and debt securities to help pay for its acquisition of GS=
T=20
Telecommunications, Inc.  Time Warner Telecom, of Littleton, Colo., reveale=
d=20
its plan in a filing with the Securities and Exchange Commission.  The fund=
s=20
would be used to repay an unsecured bridge loan that was used to pay for GS=
T,=20
Time Warner Telecom said.  Further details of the fundraising effort will b=
e=20
disclosed in future filings, it said.  Time Warner Telecom recently complet=
ed=20
the $690 million acquisition of GST, a competitive local exchange carrier=
=20
that was in bankruptcy (TR, Sept. 18, 2000).

UWB Operations Feasible In 3=0F-6 GHz Band, NTIA Says

Ultrawideband (UWB) devices likely can operate in spectrum between 3 and 6=
=20
gigahertz without harming incumbent users, including fixed satellite servic=
e=20
(FSS) operators, according to test results released last week by the Nation=
al=20
Telecommunications and Information Administration.  But NTIA said that step=
s=20
to mitigate interference probably would be necessary.

NTIA has been studying the interference potential of UWB devices since last=
=20
year as part of a rulemaking proceeding launched by the FCC to explore=20
allowing UWB devices to operate on an unlicensed basis under part 15 of its=
=20
rules (TR, Nov. 6, 2000).

Separate tests of UWB devices=0F' effect on Global Positioning System (GPS)=
=20
receivers are expected to be released next month.  The test results release=
d=20
last week involved only non-GPS operations.

Results Will Aid Decision Making

NTIA Administrator Gregory L. Rohde said at a Jan. 18 news conference that=
=20
the test results =0F"will form the basis of negotiations between NTIA and t=
he=20
FCC to develop a final rule that will permit the development and availabili=
ty=20
of ultrawideband technologies.=0F"

UWB devices use precisely timed pulses of radio frequency (RF) energy sprea=
d=20
across a wide swath of spectrum at extremely low power.  Proponents of the=
=20
technology have hailed its potential in myriad applications, including law=
=20
enforcement, fire and rescue services, the military, medicine, education, a=
nd=20
home and office local area networks (TR, Sept 18, 2000).  They say it won=
=0F't=20
interfere with existing systems.

But aviation groups, the GPS and satellite industries, and others have=20
expressed concern that the devices could interfere with existing systems. =
=20
They=0F've asked the FCC to hold off approving their use until tests show t=
hey=20
won=0F't cause such interference.

In its tests, NTIA assessed the interference potential of five UWB devices =
on=20
federal air-route surveillance radar, airport surveillance radar, and air=
=20
traffic control beacon systems.

Based on the results of those tests, NTIA engineers developed mathematical=
=20
models to analyze the impact of UWB devices on nine other systems, includin=
g=20
those operating between 3100 and 5650 megahertz, or 3.1 and 5.65 GHz.  The=
=20
tests indicated UWB devices could operate in that range, although limits=20
might need to be placed on power levels, distance, and pulse-repetition=20
frequency.  However, there=0F's a question about whether UWB devices would =
have=20
a =0F"big enough window=0F" to operate if restrictions are imposed, Mr. Roh=
de said.

Among those operating in that spectrum are FSS users (3.7=0F-4.2 GHz), micr=
owave=20
landing services (5.03=0F-5.091 GHz), and Doppler weather radar (5.6=0F-5.6=
5 GHz). =20
For FSS systems, =0F"the worst-case situation=0F" with regard to interferen=
ce =0F"
would occur for receivers located at ground level with a low antenna=20
elevation angle of 5 degrees,=0F"  NTIA=0F's report said.  There would be m=
uch less=20
interference potential for FSS systems on tops of buildings or with higher=
=20
elevation angles, it said.

=0F"However, at this time uncertainty exists as to the effect of UWB signal=
 duty=20
cycle on the performance of FSS earth stations which have digital signal=20
processing,=0F" the report said.  =0F"This information would assist in esta=
blishing=20
the UWB signal peak power limit; NTIA study is continuing on this important=
=20
consideration.=0F"

Regarding microwave landing services, UWB operations at power limits=20
currently permitted for part 15 devices may exceed the receiver interferenc=
e=20
protection standard.  More analysis of the effect on such systems is needed=
,=20
NTIA said.

Tests on systems operating between 900 and 1610 MHz and 1610=0F-3100 MHz=20
suggested there could be significant interference problems with incumbent=
=20
systems, NTIA officials said at the news conference.

But NTIA=0F's report indicated that UWB operations below 3.1 GHz were possi=
ble. =20
It said that while UWB operations in that spectrum =0F"will be quite=20
challenging,=0F" mitigating factors =0F"could relax restrictions=0F" on UWB=
 devices.

It also said that UWB emission levels would have to be significantly reduce=
d=20
to guard against interference.  And it concluded that further studies are=
=20
needed to assess degradation of existing systems, as well as relative level=
s=20
of noise, interference, and =0F"clutter signals.=0F"

Mr. Rohde said NTIA engineers used existing standards for determining the=
=20
potential interference of UWB devices.  =0F"Obviously this is going to be a=
n=20
area that=0F'll be the subject of a lot of debate. . .as to what really is =
the=20
criteria that determines interference,=0F" he added.

Findings Draw Praise

NTIA=0F's test results drew praise from the UWB industry.  Officials of Tim=
e=20
Domain Corp., a leading marketer of UWB technology, said they were still=20
reviewing NTIA=0F's findings.  But they indicated they were happy the tests=
=20
showed the devices could share non-GPS spectrum.

=0F"While we have questions regarding some of the conclusions made by NTIA,=
 we=20
are pleased that the test results confirm that compatible operation of UWB=
=20
devices with government services is possible,=0F" said Jeffrey L. Ross, Tim=
e=20
Domain=0F's vice president-corporate development and strategy.  =0F"We have=
 full=20
confidence that the FCC will impose appropriate regulations and power limit=
s,=20
and look forward to the FCC=0F's timely completion of its rulemaking,=0F" h=
e added.

Last year, Time Domain questioned NTIA=0F's testing methods, saying they mu=
st=20
reflect real-world conditions to be accurate (TR, Sept. 4, 2000).

Another developer of UWB devices, Fantasma Networks, Inc., also hailed the=
=20
test results.  =0F"We are confident that our deployment of ultrawideband=20
[devices] does not pose a threat of harmful interference to public safety=
=20
agencies or to any other user of the radio spectrum,=0F" said Roberto Aiell=
o,=20
Fantasma=0F's chief technology officer.

Angelos Amends Lawsuit Against Wireless Industry

As expected, noted plaintiffs=0F' attorney Peter G. Angelos has entered the=
=20
legal fray against the wireless industry over the safety of mobile phones. =
=20
Mr. Angelos has filed an amended lawsuit on behalf of a Maryland doctor who=
=20
claims that using a mobile phone caused his brain tumor (TR, Aug. 7 and Dec=
.=20
25, 2000).

The lawsuit, filed last week in the U.S. District Court in Maryland, seeks=
=20
$375 million in compensatory damages and $750 million in punitive damages.

The lawsuit says the industry failed to conduct adequate testing on the=20
health effects of mobile phones and warn consumers about known risks.  The=
=20
industry =0F"manipulated the results of other testing, concealed evidence t=
hat=20
[mobile phone] radiation is harmful and suppressed scientific and medical=
=20
research,=0F" the lawsuit alleges.

According to the lawsuit, the medical and scientific communities have been=
=20
aware of the biological effects of radio frequency (RF) exposure since the=
=20
1920s.  The wireless industry was or should have been aware of evidence of=
=20
such health hazards, the lawsuit alleges.

Michael F. Altschul, vice president and general counsel of the Cellular=20
Telecommunications & Internet Association, which is named in the lawsuit,=
=20
said he hadn=0F't seen the amended complaint.

=0F"Regardless of who the lawyer is. . .the legal requirements remain the s=
ame,=0F"=20
Mr. Altschul said.  The plaintiffs have to show a link between RF radiation=
=20
exposure and cancer, he said, and =0F"that science just isn=0F't there.=0F"=
  Spokesmen=20
for Motorola, Inc., and Verizon Communications, Inc., which also are named =
as=20
defendants, have made similar points.

Last week=0F's amended lawsuit, Christopher J. Newman et al. v. Motorola, I=
nc.,=20
et al. (case no. CCB-00-2609) was filed after U.S. District Judge Catherine=
=20
C. Blake last month dismissed a number of the counts in the original filing=
=20
but gave the plaintiffs permission to amend their complaint.  The wireless=
=20
industry had succeeded in moving the case from Baltimore City Circuit Court=
=20
to federal court.

Mr. Angelos, owner of the Baltimore Orioles, has won major cases against th=
e=20
asbestos industry and represented Maryland in litigation against the tobacc=
o=20
industry.  John A. Pica, a lawyer in Mr. Angelos=0F' Baltimore firm, has be=
en=20
quoted saying Mr. Angelos plans to file 10 lawsuits this year against the=
=20
wireless industry.  Messrs. Angelos and Pica could not be reached for comme=
nt.

Bob Gordon, a consultant to Baltimore attorney Joanne Lynch Suder, who file=
d=20
the original lawsuit on behalf of the Maryland doctor, said Mr. Angelos=20
agreed to be the co-counsel in a number of cases that Ms. Suder planned to=
=20
file against the phone industry.  Lawyers around the country also are worki=
ng=20
on the planned litigation, he said.

Meanwhile last week, German researchers said there could be a link between=
=20
the use of mobile phones and cancer of the inner eye.  The results were=20
published in the January issue of the research journal Epidemiology.

But the researchers, who interviewed 118 subjects with eye cancer and a=20
control group of 475 people, said their findings were inconclusive because =
of=20
the study=0F's limitations.  In a statement, CTIA cited those limitations a=
nd=20
the small size of the study group.

NTIA Proposes Reimbursement Procedures For Relocated Government Spectrum Us=
ers

The National Telecommunications and Information Administration is proposing=
=20
procedures for relocating federal government spectrum incumbents to other=
=20
bands to make way for commercial users.  Among the issues to be decided are=
=20
the circumstances under which incumbents will be required to relocate and=
=20
which relocation costs will be eligible for reimbursement.

NTIA Administrator Gregory L. Rohde said the rules could bolster a high-lev=
el=20
effort to identify and allocate spectrum for third-generation (3G) wireless=
=20
services.  Then-President Clinton launched the initiative by executive=20
memorandum in October 2000 (TR, Oct. 16, Nov. 6, and Nov. 20, 2000; and Jan=
.=20
8).

As part of that effort, NTIA is studying the possible use of the 1755=0F-18=
50=20
megahertz band, which is used heavily by the Defense Department.  The FCC i=
s=20
analyzing use of the 2500=0F-2690 MHz band, which is used mostly by multich=
annel=20
multipoint distribution service and instructional television fixed service=
=20
operators.

NTIA=0F's proposed rules would cover such future reallocations, Mr. Rohde s=
aid=20
at an industry-government meeting on the 3G plan last week.  He said he hop=
ed=20
the final rules would be released this summer.

The National Defense Authorization Act for fiscal year 1999 required privat=
e=20
entities to reimburse federal spectrum users for the cost of relocating or=
=20
modifying their systems because of reallocation.  The notice of proposed=20
rulemaking NTIA released Jan. 17 suggests ways to implement that mandate. =
=20
Comments are due March 19 with replies due April 18 in docket no.=20
001206341-0341-01.

In its rulemaking notice, NTIA seeks comments on whether federal government=
=20
spectrum incumbents should be required to relocate if sharing is technicall=
y=20
possible in their present bands.

If the incumbents are not required to relocate, under what conditions shoul=
d=20
they be permitted to remain in their current bands and who would pay for an=
y=20
system modifications that would improve spectrum sharing? NTIA asks.  For=
=20
example, it asks, should the federal incumbent be allowed to stay in the ba=
nd=20
on a noninterference basis with 3G systems?

NTIA suggests that federal incumbents not be forced to relocate until a =0F=
"
comparable facility=0F" is available for a reasonable period of time.  It=
=20
defines comparable facility as one that has the same or superior operationa=
l=20
capabilities as the original spectrum.  NTIA suggests using four factors to=
=20
determine comparability:  (1) communications throughput, (2) system=20
reliability, (3) operating costs, and (4) operational capability.  It seeks=
=20
comments on its definition and whether the four factors are sufficient.

NTIA outlines which relocation costs should be eligible for reimbursement. =
=20
It also suggests a process for resolving differences over those costs,=20
including a mandatory negotiation period, third-party mediation, and=20
nonbinding arbitration.

NTIA seeks comments on what type of cost-sharing plan to adopt and asks=20
whether a =0F"band manager=0F" or some other entity should serve as a clear=
inghouse=20
to administer the plan.  And it wants input on whether it should =0F"sunset=
=0F" a=20
cost-sharing plan five years after any auction of former government=20
spectrum.  The rulemaking notice also seeks comment on how to treat spectru=
m=20
with classified frequency assignments.

At the direction of the Omnibus Budget Reconciliation Act of 1993 and the=
=20
Balanced Budget Act of 1997, NTIA identified 255 MHz of spectrum that can b=
e=20
reallocated from federal government to private use.  The bands identified f=
or=20
which federal incumbents would qualify for reimbursement are 216=0F-220 MHz=
,=20
1432=0F-1435 MHz, 1710=0F-1755 MHz, and 2385=0F-2390 MHz.

The FCC has proposed allocating the 1710=0F-1755 MHz band for 3G services. =
 In=20
addition, Mr. Rohde said the reimbursement rules would apply to the 1755=0F=
-1850=20
MHz band if federal incumbents there are relocated under the 3G initiative.

Rohde Uncertain of Effort=0F's Future

At last week=0F's 3G meeting, Mr. Rohde said he didn=0F't know if the Bush=
=20
administration would make any changes to the 3G effort, which is operating =
on=20
a tight schedule that calls for the FCC to issue licenses for 3G spectrum b=
y=20
Sept. 30, 2002.  But he said he had stressed its importance in his dealings=
=20
with Bush transition team staff members.  =0F"I can=0F't predict what=0F's =
going to=20
happen=0F" beyond Inauguration Day, Mr. Rohde told reporters.

The Bush transition team staff member responsible for NTIA, James Derderian=
,=20
a former Republican staff director of the House Commerce Committee, couldn=
=0F't=20
be reached for comment.  But at his confirmation hearing for Commerce=20
secretary earlier this month, Donald L. Evans said the Bush administration=
=20
was committed to finding 3G spectrum (TR, Jan. 8).

Industry Expresses Frustration

At last week=0F's meeting, several industry representatives expressed=20
frustration that they didn=0F't have access to data they said they needed t=
o=20
make recommendations on use of the 1755=0F-1850 MHz and 2500=0F-2690 MHz ba=
nds in=20
time for NTIA and the FCC to consider.  Industry representatives in=20
NTIA-established working groups are reviewing the bands.

The 3G initiative calls for final reports on the two bands to be released i=
n=20
March, with the FCC issuing an order allocating the selected spectrum in Ju=
ly.

Rick Kemper, director-wireless technology and security for the Cellular=20
Telecommunications & Internet Association, said determining the cost of=20
relocating incumbents or whether band sharing or segmentation was feasible=
=20
requires information on how many systems operate in the frequencies and how=
=20
they are being used.  But he said that data wasn=0F't available.

Donald Brittingham, director-wireless policy for Verizon Wireless, said he=
=20
was concerned that the final band studies wouldn=0F't reflect all the indus=
try=0F's=20
input.  He urged the regulators to delay releasing the reports.

=0F"One concern is we=0F're going to do a lot of work and in the end it wil=
l be too=20
late to be included in your final report,=0F" added Joanne C. Wilson,=20
director-global public affairs for Lucent Technologies, Inc.

Frederick R. Wentland, NTIA=0F's director-spectrum plans and policies, said=
 some=20
information wouldn=0F't  be available until the final band studies were=20
released.  =0F"Unfortunately, time happens to be our enemy here,=0F" Mr. We=
ntland=20
added.

But he urged industry officials to continue participating in the process,=
=20
including filing comments in response to the FCC=0F's recent notice of prop=
osed=20
rulemaking on 3G spectrum (TR, Jan. 8).

Diane J. Cornell, associate chief of the FCC=0F's Wireless Telecommunicatio=
ns=20
Bureau, said the current process was designed =0F"to crystalize the issues,=
=0F" and=20
she urged industry engineers to focus on technical issues concerning band=
=20
sharing and segmentation.

Ms. Cornell also said industry should submit comments in response to NTIA=
=0F's=20
notice and an FCC rulemaking notice released in November 2000 suggesting=20
allocations for 27 MHz of spectrum transferred from government to private u=
se=20
(TR, Nov. 27, 2000).

After the final band studies are released in March, she said, =0F"I expect =
there=20
will be differences of perspectives.=0F"  She said industry officials would=
 get=20
another chance to submit comments after that.

Antenna-Rule Violations Prompt Proposed Forfeitures of $327K

The FCC and its Enforcement Bureau have proposed that two wireless carriers=
=20
and two tower companies pay $327,000 for violations of its antenna rules.

The largest proposed forfeiture was against American Tower Corp. for 36=20
violations in 14 states and Washington, D.C.  The FCC has ordered the=20
Enforcement Bureau to conduct a more thorough investigation of American Tow=
er=0F'
s compliance with its rules.

Separately, the Enforcement Bureau proposed an $80,000 forfeiture against=
=20
Telecorp Communications, Inc.; an $18,000 forfeiture against AT&T Wireless=
=20
Services, Inc.; and an $17,000 forfeiture against SpectraSite Corp.

In a notice of apparent liability for forfeiture, the FCC said American Tow=
er=20
failed to (1) properly light an antenna during construction, (2) register t=
wo=20
existing antennas, (3) notify the agency of ownership changes involving 24=
=20
antennas, and (4) post registration numbers on nine antennas.

=0F"We are concerned that ATC continues to violate our rules despite both o=
ral=20
and written warnings regarding the Commission=0F's antenna structure=20
requirements,=0F" the FCC said in its Jan. 16 forfeiture notice.  It said m=
ore=20
than half of American Tower=0F's 36 violations were uncovered after a July =
2000=20
meeting between FCC field agents and American Tower officials.

In separate notices released the same day, the Enforcement Bureau found tha=
t=20
Telecorp failed to light antennas properly on four occasions and that AT&T=
=20
Wireless failed to post antenna registration numbers on nine occasions.  It=
=20
also found that SpectraSite failed to post antenna registration numbers on=
=20
four occasions and failed to notify the FCC of ownership changes on three=
=20
occasions.  The violations were discovered by FCC field agents during routi=
ne=20
investigations and inspections.

Russell Wilkerson, director-corporate affairs for TeleCorp PCS, Inc., told =
TR
, =0F"We=0F're talking to our folks in the field. . .to compare the cases b=
y the=20
FCC and some of their findings and then we will respond to them.=0F"  He ad=
ded, =0F"
We make it a practice to follow the FCC rules and regulations.=0F"  Spokesm=
an=20
for the three other companies could not be reached for comment.

Fifth Circuit Joins Chorus On State Immunity Issue

The U.S. Court of Appeals for the Fifth Circuit (New Orleans), echoing thre=
e=20
other appellate circuits, has ruled that the U.S. Constitution doesn=0F't=
=20
protect state utility commissions from federal judicial review of their=20
decisions regarding carrier interconnection agreements.

In a two-to-one decision issued Jan. 16, the Fifth Circuit rejected 11th=20
Amendment immunity claims raised by the Louisiana Public Service Commission=
=20
during proceedings stemming from a lawsuit filed by AT&T Corp.  AT&T was=20
challenging the PSC=0F's 1997 arbitration decision regarding its interconne=
ction=20
agreement with BellSouth Telecommunications, Inc.

Section 252 of the Telecommunications Act of 1996 directed state commission=
s=20
to review, approve, and, when necessary, arbitrate carrier interconnection=
=20
agreements.  The Act also says that parties aggrieved by state commission=
=20
determinations in carrier interconnection proceedings can ask the appropria=
te=20
federal district court to the review the carrier agreement.

In AT&T Communications v. BellSouth Telecommunications, Inc., et al. (case=
=20
no. 99-30421), the Fifth Circuit reversed a ruling by the U.S. District Cou=
rt=20
in Baton Rouge.  The lower court had held that the 11th Amendment to the U.=
S.=20
Constitution prohibited such lawsuits against state agencies or employees. =
=20
(AT&T had named the PSC and its individual commissioners in the lawsuit).

The 11th Amendment grants states immunity from being sued in federal courts=
. =20
But states may lose that immunity under an exception carved out by the U.S.=
=20
Supreme Court in its 1908 decision in Ex parte Young.  The Ex parte Young=
=20
doctrine allows lawsuits against state employees in order to prevent ongoin=
g=20
violations of federal law.

The Fifth Circuit found that the PSC and the commissioners had waived their=
=20
constitutional sovereign immunity rights by agreeing to arbitrate the=20
interconnection dispute under the provisions of the 1996 Act.  The court al=
so=20
ruled that the Ex parte Young doctrine applied to AT&T=0F's request for=20
prospective injunctive relief from PSC arbitration rulings that AT&T had=20
argued contravened the interconnection requirements of sections 251 and 252=
=20
of the Act.

The appeals court reversed the district court=0F's ruling and remanded the =
case=20
for further proceedings.  Circuit Judge James L. Dennis wrote the opinion a=
nd=20
was joined by Judge Henry A. Politz.  Judge Jerry E. Smith dissented from t=
he=20
majority=0F's opinion.

Finding Echoes Other Circuits

Appeals courts in the Sixth, Seventh, and 10th Circuits already have held=
=20
that the Ex parte Young exception applies to federal court challenges to=20
state commission decisions affecting carrier interconnection agreements (TR=
,=20
April 5 and Oct. 25, 1999; and Jan. 24, June 26, and July 31, 2000).  Last=
=20
fall, the U.S. Supreme Court refused to review the issue in a case arising =
in=20
the Sixth Circuit (TR, Oct. 9, 2000).

In his dissent, Judge Smith cited the U.S. Supreme Court=0F's 1996 decision=
 in=20
Seminole Tribe v. Florida.  Under that ruling, he said, Congress=0F' referr=
al of=20
disputes surrounding state commission=0F-arbitrated interconnection agreeme=
nts =0F"
supplants=0F" a party=0F's ability to sue the state commission under the 19=
08=20
Supreme Court decision in Ex parte Young.  But, he added, Congress=0F' refe=
rral=20
of such disputes to the federal courts violates the 11th Amendment to the=
=20
Constitution.

The Chicago-based Seventh Circuit rejected a similar argument last year in=
=20
which state utility commissioners had invoked Seminole Tribe (TR, July 31,=
=20
2000).

AeA Seeking Federal Preemption Of Multiple State Privacy Laws

Lawmakers in the 107th Congress should make federal preemption of multiple=
=20
state privacy laws =0F"one of the top legislative concerns=0F" for the comi=
ng=20
session, according to AeA, formerly the American Electronics Association. =
=20
Federal privacy legislation =0F"should play a crucial role=0F" in maintaini=
ng=20
consistency and certainty=0F" in the marketplace, said William T. Archer, A=
eA=0F's=20
president and chief executive officer.

Mr. Archer warned, however, that =0F"poorly crafted legislation=0F" could h=
ave the=20
unintended effect of =0F"imposing burdensome, impractical new requirements=
=0F" on=20
e-commerce and Internet businesses.  =0F"Only the federal government is in =
a=20
position to create uniform U.S. privacy standards and work for internationa=
l=20
harmonization,=0F" he said.  =0F"Otherwise, online business could face 50=
=20
conflicting sets of privacy rules.  Consumers and businesses alike would=20
lose.=0F"

AeA urged lawmakers Jan. 18 to consider its =0F"privacy principles=0F" in d=
rafting=20
federal preemption legislation.  The principles recommend creating uniform,=
=20
technology-neutral national standards to protect privacy. =20

AeA wants standards to require merchants to notify consumers of=20
information-collection practices, while allowing them to =0F"opt out of the=
 use=20
or disclosure=0F" of information if it=0F's unrelated to the initial transa=
ctions=20
between consumers and merchants.

The AeA principles also urge lawmakers to build on private-sector privacy=
=20
seal programs and privacy codes while relying on the Federal Trade Commissi=
on=0F'
s existing authority to enforce data-collection notice requirements.=20

Libraries Mull Legal Challenge To New Internet-Filtering Law

The American Library Association (ALA) has been given the green light from=
=20
its executive board to launch a court challenge of the Children=0F's Intern=
et=20
Protection Act (CIPA)  The law passed last year (TR, June 12, 2000) require=
s=20
schools and libraries to install Internet- filtering software if they use=
=20
federal funds=0F-such as universal service =0F"E-rate=0F" support=0F-to pur=
chase=20
computers or connect to the Internet.

ALA said its executive board had authorized the legal action =0F"after more=
 than=20
a week of intense discussions among leaders and members during the=20
association=0F's annual midwinter meeting.=0F" =20

ALA announced Jan. 18 that it was =0F"researching and exploring its options=
 in=20
preparation for litigation,=0F" as it believes the law infringes on freedom=
s=20
guaranteed by the First Amendment to the U.S. Constitution. =20

The First Amendment protects free exercise of religion, free speech, freedo=
m=20
of the press, freedom to assemble, and freedom to petition the government f=
or=20
redress of grievances.

The Internet-filtering requirements would affect three federal funding=20
streams that libraries frequently use to purchase computer equipment or=20
connect to the Internet, ALA said.  They are the Elementary and Secondary=
=20
Education Act, the Library Services and Technology Act, and the E-rate=20
program.

=0F"All three programs help ensure schools and libraries provide access to =
the=20
resources communities need to thrive in the Information Age,=0F" ALA said. =
 =0F"
CIPA runs counter to these federal efforts to close the digital divide for=
=20
all Americans.=0F" =20

Think Tank Slams City Telecom Efforts

Through government-owned telecom networks, some states and cities are tryin=
g=20
to make sure their constituents don=0F't have to wait for advanced telecom=
=20
services.  But such efforts are counterproductive, according to a paper=20
released by the Progress & Freedom Foundation, a Washington, D.C., think ta=
nk.

=0F"Governments that have entered the telecom-munications business have bee=
n=20
saddled with financial losses and obsolete, legacy technologies. =20
Furthermore, government entry in the marketplace distorts incentives and=20
slows the development of private-sector competition,=0F" writes PFF Preside=
nt=20
Jeffrey A. Eisenach, author of Does Government Belong in the Telecom Busine=
ss?

He views the pace of state and local government entry into telecom and=20
Internet service businesses as =0F"rapid and increasing,=0F" citing efforts=
 by=20
municipally owned utilities on Long Island, N.Y.; in Los Angeles; and in=20
Chicago.  The paper lists 233 municipal utilities that were providing one o=
r=20
more of the following services in 1998:

=0F=07 Cable TV,

=0F=07 Internet access,

=0F=07 High-speed data,

=0F=07 Broadband data resale,

=0F=07 Local telephony,

=0F=07 Long distance services,

=0F=07 Leased fiber, and

=0F=07 Municipal data network services.

Of these services, the most commonly offered by municipalities is cable TV=
=20
service, according to the PFF findings.  Eighty-seven cities offered cable =
TV=20
service, compared with 73 cities that run data networks and 61 that provide=
=20
Internet access.  Only 18 cities were found to be offering local telephony,=
=20
and 10 cities offered long distance service.

Seven states had 11 or more cities offering telecom services:  22 cities in=
=20
Iowa, including Cedar Falls; 16 cities in Minnesota; 12 cities in Georgia; =
12=20
cities in Missouri, including Columbia and Springfield; 11 cities in Florid=
a,=20
including Gainesville and Tallahassee; 11 cities in Massachusetts; and 11=
=20
cities in Texas, including Brownsville and College Station.

Verizon Adds Data To Boost Massachusetts InterLATA Bid

Officials at Verizon New England are counting on new data to satisfy=20
regulators=0F' concerns about its application to provide interLATA (local a=
ccess=20
and transport area) services in Massachusetts.  Early last week, Verizon=20
again asked the FCC to allow it to enter that market; late last month, the=
=20
company withdrew a similar pending application it had filed last fall.

The officials are hoping the new data will answer questions regulators rais=
ed=20
about last fall=0F's application, including whether the telco provides=20
nondiscriminatory access to DSL (digital subscriber line)- capable loops (T=
R,=20
Dec. 25, 2000).

Under section 271 of the Telecommunications Act of 1996, a Bell company mus=
t=20
obtain FCC approval before providing in-region interLATA services.  The FCC=
=20
must determine whether the company has met a 14-point =0F"competitive check=
list=0F"=20
of market-opening mandates laid out in the Act.

Thomas J. Tauke, Verizon=0F's senior vice president-external affairs and pu=
blic=20
policy, said that the new filing =0F"demonstrates that we provide=20
nondiscriminatory access to lines other DSL providers lease from us, as wel=
l=20
as parity of service for installation and repair.=0F"

FCC Chairman William E. Kennard had focused on Verizon=0F's provisioning of=
=20
DSL-capable loops when the company withdrew its original Massachusetts=20
application.  He cautioned Verizon that it should include in a new=20
application =0F"verified data reflecting acceptable levels of performance,=
=20
including an independent showing for loops used to provide advanced service=
s.=0F"

But competitors aren=0F't so sure that the new application addresses those=
=20
concerns=0F-and other concerns raised in comments to the FCC.  Verizon =0F"=
still=20
didn=0F't get it right,=0F" AT&T Corp. Vice President-federal government af=
fairs=20
Len Cali said, adding that the =0F"refiled application has failed to adequa=
tely=20
address the shortcomings of the original application.=0F"  AT&T particularl=
y=20
objected to Verizon=0F's prices for unbundled network elements, saying they=
=20
still weren=0F't cost-based, as required by the Act.

Verizon included in its application last week new rates for switched servic=
es=20
provided to competitors in Massachusetts.  It had informed the FCC of the n=
ew=20
rates in ex parte filings regarding the earlier application.  Competitors h=
ad=20
complained that the FCC shouldn=0F't consider those rates in reviewing the=
=20
earlier application because they were submitted after comment deadlines in=
=20
the proceeding.  =0F"Refiling puts to rest any concerns that interested par=
ties=20
did not have the opportunity to comment on all the issues,=0F" Mr. Tauke sa=
id.

The FCC now has 90 days to consider the new application.  Under section 271=
,=20
it must consult with Massachusetts regulators and the Department of Justice=
=20
before issuing a decision.  Justice had given Verizon=0F's original applica=
tion=20
a thumbs-down (TR, Oct. 30, 2000).  The Massachusetts Department of=20
Telecommunications and Energy had recommended that the FCC approve it (TR,=
=20
Oct. 23, 2000).

The DTE=0F's recommendation to the FCC is due Feb. 6; Justice must submit i=
ts=20
recommendation by Feb. 21.  Comments and replies are due to the FCC by Jan.=
=20
30 and Feb. 28, respectively.  Parties also are invited to meet with Common=
=20
Carrier Bureau staff for ex parte discussions about the proceeding between=
=20
Jan. 30 and Feb. 23.

Bureau Proposes SBC Pay $94K For Violating Collocation Rules

The FCC=0F's Enforcement Bureau has found SBC Communications, Inc., apparen=
tly=20
liable for violating Commission rules regarding competitors=0F' collocation=
 of=20
equipment in incumbents=0F' central offices.  Specifically, the bureau says=
 SBC=20
failed to update its Web site to identify facilities that have run out of=
=20
physical collocation space.

In a Jan. 18 notice of apparent liability (file EB-00-IH-0326a), the bureau=
=20
proposed that SBC forfeit $94,500 for the alleged infraction, which the=20
bureau uncovered during an =0F"independent audit.=0F"  The FCC made the aud=
it a=20
condition of its approval of license transfers related to the merger of SBC=
=20
Communications, Inc., and Ameritech Corp. (TR, Oct. 11, 1999).

The FCC=0F's =0F"posting rule=0F" requires incumbent local exchange carrier=
s to update=20
their Web sites to list premises that run out of space for competitors to=
=20
install facilities.  They must provide those updates within 10 days of usin=
g=20
up the space.  But information provided by SBC to the bureau indicates that=
=20
in =0F"numerous instances=0F" SBC failed to provide timely updates to its W=
eb site.

SBC has 30 days to pay the $94,500 or file a written statement showing why=
=20
the proposed forfeiture should be eliminated or reduced.

FCC Gets =0F`Ahead of the Curve=0F' With Inquiry on Interactive TV

Although the market for high-speed interactive TV (ITV) services is in the=
=20
early stages of development, the FCC hopes to get =0F"ahead of the curve=0F=
" by=20
collecting information on the status of the ITV market and whether it shoul=
d=20
regulate it.

The FCC issued the notice of inquiry in Cable Services docket 01-7 because=
=20
comments in its recently completed proceeding on the America Online, Inc.=
=0F-
Time Warner, Inc., merger (TR, Jan. 15) =0F"raised the possibility=0F" that=
 a=20
vertically integrated cable TV and ITV service provider could discriminate=
=20
against alternative ITV service providers.  It asked for comments in the=20
docket 01-7 proceeding by March 19 and replies by April 20.

The inquiry seeks comment on what services constitute ITV services, how the=
y=20
will be delivered, and other questions about the status of the ITV market. =
=20
The FCC acknowledged that it was =0F"difficult to specify a definition=0F" =
for ITV=20
services because of the technological and business changes in the new=20
industry.  It sought comment on its initial characterization of ITV as a =
=0F"
service that supports subscriber-initiated choices or actions that are=20
related to one or more video programming streams..=0F"

The FCC asked about the technical resources or =0F"building blocks=0F" a=20
distribution system would require to support ITV.  The FCC said it saw thre=
e=20
major building blocks:  (1) a video stream, (2) a two-way high-speed Intern=
et=20
protocol connection, and (3) specialized customer premises equipment.

=0F"To assess the possibilities for discriminatory behavior and what enforc=
ement=20
procedures might be effective for any rules that might be proposed in the=
=20
future, it is important to understand clearly how ITV providers will delive=
r=20
their services to consumers, including what type of contractual arrangement=
s=20
will govern,=0F" the FCC said.

It also asked whether cable TV providers would have the =0F"superior platfo=
rm=0F"=20
for distribution of high-speed ITV service and sought comment on the ITV=20
capabilities of direct broadcast satellite providers and digital subscriber=
=20
line service providers.  The FCC also sought comment on the legal=20
classifications of ITV services, what public and statutory objectives ITV=
=20
rules would promote, and what authority the FCC has over such services.

The notice states that the Cable Television Consumer Protection and=20
Competition Act of 1992 directed the FCC to adopt rules =0F"limiting the sh=
are=20
of cable capacity that could be used for commonly owned content and requiri=
ng=20
vertically integrated cable programmers to provide their content to rival=
=20
distribution platforms on nondiscriminatory terms.=0F"  The FCC added that =
if=20
the =0F"same factual predicates that Congress cited in the 1992 Cable Act w=
ere=20
to apply to a distribution platform delivering ITV services, then some=20
regulation of those distribution facilities might be warranted.=0F"

The notice also asks for comment on how the FCC could implement rules to ba=
r=20
providers of multichannel video programming from discriminating against=20
unaffiliated ITV providers.  It asked for comment on how nondiscrimination=
=20
rules should be enforced.  It suggested that ITV providers and cable TV=20
operators =0F"rely on private enforcement arrangements=0F" or that aggrieve=
d=20
parties use the FCC=0F's complaint procedures.

Kennard Warns against Discrimination

Then=0F-FCC Chairman William E. Kennard acknow-ledged that ITV services wer=
e in=20
the =0F"early stages of development=0F" but said the FCC would =0F"do well =
to get=20
ahead of the curve.=0F"  He said it was =0F"clear=0F" that cable TV would b=
e an =0F"
important platform for delivery of ITV services, at least in the near term,=
=20
and I am concerned that a vertically integrated ITV service provider might=
=20
have the incentive and ability to discriminate against unaffiliated ITV=20
service providers.=0F"

Commissioner Gloria Tristani supported the inquiry but =0F"regretted=0F" th=
at the=20
FCC issued an inquiry rather than a notice of proposed rulemaking.  =0F"Thi=
s=20
Commission must move promptly to ascertain the public interest in nascent=
=20
industries to ensure appropriate measures are timely vetted and resolved,=
=0F"=20
she said.

Commissioner Harold W. Furchtgott-Roth dissented from the FCC=0F's decision=
,=20
saying it was =0F"premature=0F" to address the issue of cable interactive T=
V=20
services.  =0F"While the item is framed as a notice of inquiry, it is no le=
ss=20
damaging to raise the specter of government regulation. . .for services tha=
t=20
are still in their gestational period.=0F"  He said he had =0F"serious=20
reservations=0F" about the FCC=0F's legal authority to address ITV issues.=
=20

Robert Sachs, president and chief executive officer of the National Cable=
=20
Television Association, was =0F"pleased=0F" that the FCC was launching an i=
nquiry=20
rather than a =0F"rulemaking which presumes a regulatory outcome.=0F"  But =
he added=20
that =0F"asking dozens of hypothetical questions about regulating a busines=
s=20
which has yet to take form still puts the cart before the horse, in=20
regulatory terms. . .There is no evidence to suggest that government=20
regulation is called for here.=0F"

Analysts See Shifting Alliance As BellSouth Sells Qwest Stock

It was the rumor du jour 21 months ago:  BellSouth Corp.=0F's purchase of a=
 10%=20
stake in Qwest Communications International, Inc., meant the companies migh=
t=20
merge.  Times have changed, however, and BellSouth now is cashing in much o=
f=20
its Qwest investment to raise $1 billion for other projects.

=0F"The transaction underscores a change in the direction of the relationsh=
ip=20
between Qwest and BellSouth,=0F" said Marion Boucher Soper, a Bear, Stearns=
 &=20
Co. analyst, in a Jan. 16 report.  =0F"While both appear to be interested i=
n=20
strategic expansion, other opportunities are likely to be higher on the=20
priority list.=0F"

BellSouth=0F's 10% stake already has been diluted to about 5% by Qwest=0F's=
=20
acquisition of U S WEST, Inc., Merrill Lynch & Co. analyst Adam Quinton=20
noted.  =0F"The gradual dilution and now sell down of the BellSouth stake s=
peaks=20
to the changing nature of the relationship between the two,=0F" Mr. Quinton=
 said=20
in a report also issued Jan. 16.

=0F"BellSouth seems to be indicating it has other strategic priorities and =
that=20
securing a strong relationship with a leading =0F`next-gen=0F' long distanc=
e=20
provider can be done via commercial relationships, which do not need the=20
backing of any equity position,=0F" Mr. Quinton said.

=0F"Realistically, BellSouth=0F's investment in Qwest is not strategic to i=
ts=20
long-term growth strategy, and the $1 billion in proceeds will give it cash=
=20
on hand,=0F" said Goldman, Sachs & Co. analysts Kathryn D. Willing and Fran=
k J.=20
Governali.

=0F"We were a very different company two years ago when they invested in us=
,=0F"=20
said Joseph P. Nacchio, Qwest=0F's chairman and chief executive officer.  I=
f=20
BellSouth now needs cash instead of Qwest stock, Mr. Nacchio said, =0F"I=0F=
'm glad=20
to be strong enough now to be able to help out.=0F"

The transaction satisfies both companies=0F' needs, analysts said.  It give=
s=20
BellSouth a cash infusion to spend on deployment of digital subscriber line=
=20
service and on its wireless initiatives in the U.S. and Latin America.

Qwest, on the other hand, gains the opportunity to boost its stock value, M=
r.=20
Quinton said.  =0F"Qwest=0F's management is clearly sending a signal to the=
 market=20
that the company=0F's stock is undervalued at current levels,=0F" he said.

The sale of 22.22 million Qwest shares back to Qwest will leave BellSouth=
=20
with 52 million shares, or a 3% stake in Qwest.  BellSouth agreed to hold=
=20
those shares until Jan. 16, 2002, except for 11 million shares it can sell=
=20
after Feb. 16, 2001.

Qwest probably will not be the buyer if BellSouth decides to sell those 11=
=20
million shares, Mr. Nacchio said during a Jan. 16 conference call.  Qwest m=
ay=20
help BellSouth sell the shares to Qwest=0F's independent pension fund, but =
Qwest=20
can=0F't buy any more shares without running the risk of hurting its credit=
=20
rating, Mr. Nacchio suggested.

Qwest management consulted credit-rating agencies and decided $1 billion =
=0F"was=20
a good number we could handle.  It wasn=0F't going to put any burden on us,=
=0F" Mr.=20
Nacchio said.

Two credit-rating agencies agreed.  Qwest intends to fund the purchase by=
=20
issuing commercial paper, a short-term funding solution.  =0F"The company h=
as=20
adequate balance-sheet flexibility to absorb the additional debt,=0F" Stand=
ard &=20
Poor=0F's said.  Moody=0F's Investors Service said it was =0F"comfortable t=
hat Qwest=0F's=20
actions. . .are sensitive to the overall credit implications.=0F"

Despite the stock buyback, the relationship between the companies will=20
increase.  In addition to continuing its co-marketing agreement with Qwest=
=20
and using Qwest for long-haul transport, BellSouth will buy $250 million=20
worth of services from Qwest, paying   with Qwest shares.

Blaming Verizon for Bankruptcy, NorthPoint Plans Asset Auction

NorthPoint Communications Group, Inc., doesn=0F't expect to emerge from=20
bankruptcy as an independent entity but has asked a bankruptcy court to all=
ow=20
a =0F"structured sale=0F" of its assets.

=0F"The purpose of our filing is to use the breathing room Chapter 11 provi=
des=20
to sign an agreement with a financially sound strategic partner who is=20
interested in our world-class network,=0F" said Elizabeth A. Fetter, NorthP=
oint=0F'
s president and chief executive officer, in a conference call with financia=
l=20
analysts.

NorthPoint filed for protection under Chapter 11 of the U.S. bankruptcy cod=
e=20
Jan. 16 in U.S. Bankruptcy Court for the Northern District of California. =
=20
The filing follows a financial slide for which NorthPoint largely blames=20
Verizon Communications, Inc.  In November 2000, Verizon canceled plans to=
=20
acquire 55% of NorthPoint and provide $350 million in financing (TR, Dec. 4=
,=20
2000).

NorthPoint has laid off workers, scaled back operations, and sold stakes in=
=20
joint ventures in Europe and Canada, but those moves apparently weren=0F't=
=20
enough to keep the company solvent.  In conjunction with its bankruptcy=20
filing, the company obtained agreements for as much as $38 million in =0F"
debtor-in-possession=0F" financing to continue operations.

=0F"The company=0F's available cash only funds its operations for a few wee=
ks,=0F"=20
said Kenneth Hoexter, an analyst with Merrill Lynch & Co.  =0F"Even with th=
e=20
nearly $12 million in cash received through recent divestitures, we believe=
=20
that the company has virtually run out of additional funds to keep operatio=
ns=20
running.=0F"

=0F"The only surprise for most investors in this bankruptcy filing was that=
 it=20
wasn=0F't announced sooner given the critical funding situation at NorthPoi=
nt,=0F"=20
Credit Suisse First Boston Corp. analyst Mark Kastan said in a Jan. 17 repo=
rt.

=0F"With NorthPoint=0F's assets now officially on the block, look for a num=
ber of=20
telecom companies to express an interest,=0F" Mr. Kastan said.  Potential=
=20
bidders include McLeodUSA, Inc., XO Communications, Inc., and any=20
interexchange carrier that needs more local broadband infrastructure, Mr.=
=20
Kastan said.

NorthPoint=0F's condition has raised new doubts about the other major =0F"d=
ata=20
CLECs=0F" (competitive local exchange carriers)=0F-Rhythms NetConnections, =
Inc.,=20
and Covad Communications Group, Inc.=0F-whose business models depend largel=
y on=20
deployment of DSL (digital subscriber line) service.

=0F"Although both Rhythms NetConnections and Covad Communications have enou=
gh=20
cash to last for several more quarters, we believe it will be extremely=20
difficult for either of these companies to obtain additional financing,=0F"=
 Mr.=20
Kastan said.  =0F"We expect significant scale-back initiatives=0F-in additi=
on to=20
those already announced=0F-from both of them.=0F"  Covad already has taken =
steps to=20
conserve cash, and Rhythms announced similar steps last week (see separate=
=20
story).

Credit Suisse First Boston analyst Daniel P. Reingold noted that the downfa=
ll=20
of the data CLECs had left Bell companies and independent incumbent telcos=
=20
well positioned to attack the market for high-speed Internet access.

=0F"A year ago investors had genuine fear that DSL CLECs, using the FCC=0F'=
s highly=20
discounted UNE [unbundled network elements] and line-sharing rates, would b=
e=20
able to profitably take significant share=0F" from Bell companies and=20
independent incumbent local exchange carriers, Mr. Reingold said in a Jan. =
17=20
report.

=0F"Now with NorthPoint in bankruptcy, Covad and Rhythms cutting back cover=
age=20
dramatically, AT&T [Corp.] and WorldCom [Inc.] nowhere in DSL, and Bell=20
companies ramping [up] DSL install rates, it is apparent the consumer=20
high-speed access market will be left to the cable [TV] and incumbent=20
telephone companies, and the small-business market to the latter,=0F" he sa=
id.

Qwest Touts Line-Sharing Pacts, Improved Service

Qwest Communications, Inc., has said it improved its service to end-user=20
customers and other carriers in 2000 in key areas=0F-including those that h=
ave=20
come under fire from consumers and state regulators.

Qwest filled almost 98% of it service orders for 2000 on time, Afshin=20
Mohebbi, Qwest=0F's president-worldwide operations, told reporters during a=
 Jan.=20
15 conference call.  Ninety-five percent of local service repairs were=20
completed on time, Qwest=0F's best performance in this category since 1996,=
 he=20
said.  He also cited reductions in the percentage of customers whose servic=
e=20
was out for more than 24 hours and a decrease in =0F"held or delayed=0F" or=
ders.

Last week, Qwest also unveiled permanent line-sharing agreements with=20
MULTIBAND Communications, Inc., New Edge Networks, NorthPoint Communication=
s,=20
Inc., and Contact Communications.  Line-sharing agreements enable competito=
rs=20
to use the high-frequency portion of the loop for data transmission while=
=20
Qwest continues to provide voice service over the low-frequency portion. =
=20
Permanent line-sharing agreements now are available to all wholesale=20
customers, Mr. Mohebbi said.

In other long-term plans, Qwest will seek the FCC=0F's approval to offer=20
interLATA (local access and transport area) services in at least one state =
by=20
year-end; it plans to initiate state-level proceedings in several others, M=
r.=20
Mohebbi said.  He said Qwest hoped to obtain approval in all the states in=
=20
its service area by the end of next year.

Under section 271 of the Telecommunications Act of 1996, a Bell company mus=
t=20
obtain FCC permission before providing in-region interLATA services.  The F=
CC=20
must consult with the relevant state commissions as well as the Justice=20
Department to ensure that the Bell company has opened its markets to=20
competition sufficiently.=20

WorldCom To Pay Users $88M To End Overcharging Lawsuit

WorldCom Corp. has agreed to pay $88 million to customers who claim they we=
re=20
overcharged for direct-dialed calls.  The proposed settlement would end a=
=20
class action lawsuit brought by subscribers who complained that MCI WorldCo=
m,=20
Inc. (now WorldCom) misled them about the conditions under which it would=
=20
charge higher nonsubscriber rates for domestic and international calls.

While the company admits no wrongdoing, it has agreed to compensate custome=
rs=20
for the higher charges on calls placed between Feb. 5, 1996, and Oct. 15,=
=20
2000.  Under the terms of the settlement, WorldCom also agreed not to raise=
 =0F"
casual calling=0F" rates for nonsubscribers this year.  Daniel Girard, an=
=20
attorney who represents the subscribers, said a letter regarding the=20
settlement would be sent to 5 million people who might be eligible for=20
reimbursement.

The U.S. District Court for the southern district of Illinois will decide a=
t=20
a March 29 hearing whether to approve the terms of the settlement in the ca=
se=20
In re MCI Nonsubscriber Telephone Rates Litigation (docket no. 1275).

In the lawsuit, the subscribers claimed that MCI didn=0F't provide sufficie=
ntly=20
clear tariff information describing when it would charge them the higher=20
nonsubscriber rates and surcharges for placing direct-dialed calls.  The=20
tariff stated that customers who remain =0F"presubscribed to MCI after [the=
ir]=20
account(s) are removed from MCI=0F's billing system=0F" would be charged=20
nonsubscriber rates.

In 1998, the FCC found that the tariff was =0F"too confusing=0F" (TR, Nov. =
19,=20
1998).  The FCC=0F's decision =0F"opened the door=0F" for the lawsuit and r=
esulting=20
settlement, Mr. Girard said.=20

Court Rejects AT&T=0F's Appeal In Reseller Discrimination Case

A federal appeals court has upheld a lower court=0F's decision directing AT=
&T=20
Corp. to pay $2.1 million in damages for discriminating against a reseller =
in=20
favor of its own retail customers.

The U.S. Court of Appeals for the Second Circuit (New York) last week said=
=20
there was enough evidence to support a Manhattan federal district jury=0F's=
=20
finding that AT&T had favored its own end-user customers in providing=20
software-defined network (SDN) services to reseller National Communications=
=20
Association.

The appeals court rejected AT&T=0F's claim that the district judge should h=
ave=20
dismissed the case and set a new trial, adding that the lower court had =0F=
"
acted within its discretion=0F" by denying AT&T=0F's requests.  A three-jud=
ge panel=20
of the Second Circuit held that there was sufficient evidence to support th=
e=20
jury=0F's finding of discriminatory service under section 202(a) of the=20
Communications Act.

The appeals court also rejected AT&T=0F's argument that the district court =
judge=20
erred in instructing the jury that AT&T bore the burden of proving that its=
=20
different treatment of NCA and its own end-user SDN customers wasn=0F't=20
unreasonable and unjust under section 202(a).

In its original claim, NCA charged that AT&T delayed resale orders for up t=
o=20
nine months in an effort to =0F"intentionally discriminate against the=20
resellers.=0F"  Citing the nondiscrimination clause of the Act, U.S. Distri=
ct=20
Judge Loretta A. Preska in February 1998 directed AT&T to pay $1.8 million =
in=20
damages.  In June 1999, the district court augmented NCA=0F's damages award=
 to=20
$2.1 million in damages and prejudgment interest.

The Jan. 12 appeals court ruling in National Communications Association,=20
Inc., v. AT&T Corp. (consolidated cases beginning at no. 98-9673) was writt=
en=20
by Chief Judge John M. Walker Jr.  He was joined by Circuit Judges Thomas A=
.=20
Meskill and Sonia Sotomayor.

In their opinion, the judges said there was =0F"sufficient evidence on the =
basis=20
of which a jury could reasonably have found that AT&T=0F's discrimination w=
as=20
willful.=0F"

One Step from Bankruptcy, Globalstar Stops Debt Payments

A skeptical audience confronted Bernard Schwartz as he announced Globalstar=
=20
Telecommunications Ltd.=0F's plan to suspend payment on its debts.  As Mr.=
=20
Schwartz, Globalstar=0F's chairman and chief executive officer, hosted a=20
conference call unveiling the plan, he was confronted by investors who=20
demanded to know why they shouldn=0F't force the company into bankruptcy.

=0F"A premature action to cause bankruptcy. . .would be damaging to the=20
prospects of all=0F" Globalstar investors, Mr. Schwartz argued during the J=
an.=20
16 call.  =0F"We=0F're buying time to add the kinds of resources we think a=
re=20
necessary to turn the situation around.=0F"

But some analysts don=0F't give the company much hope.  Globalstar is about=
 as=20
close to bankruptcy as a company can come, analysts say.  It would take onl=
y=20
three disgruntled bondholders to initiate an involuntary bankruptcy action=
=20
against the company now that it has stopped its debt payments, Mr. Schwartz=
=20
acknowledged.

Even before Globalstar=0F's announcement last week, Credit Suisse First Bos=
ton=20
Corp. analyst Cynthia M. Motz urged clients to sell the company=0F's shares=
.  In=20
an October report, she declared, =0F"There is a decent probability the comp=
any=20
will be shut down over the next 12 months.=0F"

=0F"We are not surprised that Globalstar has decided to stop making payment=
s on=20
its debt,=0F" she said in a report last week.  =0F"At this point, we remain=
=20
unconvinced that there will be sufficient market demand to sustain Globalst=
ar=0F'
s operations in their current form.=0F"

But Mr. Schwartz urged investors to be patient and to wait for a report fro=
m=20
The Blackstone Group, which Globalstar hired to devise a new plan to fund a=
nd=20
operate the business. =20

Like its predecessors in the global mobile arena=0F-Iridium LLC and ICO Glo=
bal=20
Communications Ltd.=0F-Globalstar appears to be falling prey to the ability=
 of=20
terrestrial wireless service providers to offer comparable, worldwide servi=
ce=20
at lower prices and with smaller handsets.  Iridium and ICO both ended up i=
n=20
bankruptcy.

With only 31,200 subscribers for its global mobile telephone service,=20
Globalstar must do more to recruit customers, must make its handsets and=20
service more affordable, and must deploy new services, Mr. Schwartz said. =
=20
Globalstar=0F's decision to suspend payments on its credit facility, vendor=
=20
financing agreements, senior notes, and preferred stock dividends will give=
=20
the company time to retool, he said.

Suspension of debt payments will save the company $400 million this year,=
=20
enabling it to continue operations into next year, Mr. Schwartz said. =20
Globalstar=0F's main creditors and investors, including QUALCOMM, Inc., and=
=20
Loral Space & Communications Ltd., said they supported Globalstar=0F's move=
. =20
But Standard & Poor=0F's and Moody=0F's Investors Service lowered Globalsta=
r=0F's=20
credit ratings.

The new ratings =0F"reflect the very limited prospects for recovery for=20
Globalstar=0F's creditors in a restructuring given the company=0F's very lo=
w=20
subscriber levels and very modest growth,=0F" Moody=0F's said.

=0F`Creative Financing=0F' Seen As Asian Network Necessity=20

Future telecom infrastructure projects in Asia will require =0F"creative=20
financing solutions=0F" if development is to keep pace with demand, a=20
Washington, D.C.=0F-based international telecom lawyer says.  The greatest=
=20
obstacle to meeting Asia=0F's demand for Internet and other telecom network=
s is =0F"
meeting the communications sector=0F's demand for capital,=0F" according to=
 Glenn=20
S. Gerstell, a Milbank, Tweed, Hadley & McCloy LLP partner.

Speaking Jan. 15 at the Pacific Telecommunications Council=0F's conference =
in=20
Hawaii, Mr. Gerstell presented a white paper describing the benefits and=20
drawbacks of various financing methods=0F-and how a combination of approach=
es=20
can secure needed financing in spite of the reluctance of financial=20
institutions to take risks in less-developed nations.=20

Techniques for Financing Telecoms and Internet Infrastructure Buildout in=
=20
Asia, which was co-authored by Milbank, Tweed Senior Associate Alisa Fiddes=
,=20
focuses on projects and companies in =0F"start-up  mode,=0F" rather than on=
 more =0F"
mature=0F" businesses.=20

Vendor financing historically has provided limited options to purchasers. =
=20
Continued telecom industry privatization, combined with a =0F"proliferation=
 of=20
start-up companies,=0F" has further limited this option, according to the=
=20
paper.  However, national export credit agencies (ECAs) often are eager to=
=20
finance and participate in projects involving sales of domestic high-tech=
=20
goods.

Combining vendor financing with ECA or multilateral credit agency funding=
=20
could help overcome weaknesses in either financing method, the paper says. =
=20
Likewise, reaching out to a combination of commercial bank markets and=20
capital markets or entering into strategic partnerships =0F"can reduce proj=
ect=20
risks by bringing together partners with different resources and expertise,=
=0F"=20
it adds.

Three Carriers Join Forces On European Wireless Data

An agreement to form a joint venture to deploy wireless data services=20
throughout Europe has been unveiled by KPN Mobile NV, NTT DoCoMo, Inc., and=
=20
Telecom Italia Mobile SpA.  The venture will attempt to extend to the=20
European market NTT DoCoMo=0F's experience in providing its =0F"i-mode=0F" =
service in=20
Japan. =20

The companies aim to deploy mobile data services=0F-including games, e-mail=
,=20
messaging, and Internet access=0F-in the second half of this year in Belgiu=
m,=20
Germany, Italy, and the Netherlands.

Separately, NTT DoCoMo and KPN Mobile will create a new wireless data compa=
ny=20
that will be 25% owned by NTT DoCoMo and 75% owned by KPN Mobile.  Creating=
=20
the company is the latest step in an ongoing alliance that was launched whe=
n=20
NTT DoCoMo acquired a 15% stake in KPN Mobile (TR, May 15, 2000).

The new company will begin life with $132 million in funding=0F-$85 million=
 from=20
KPN Mobile and $47 million from NTT DoCoMo. =20

The company will take possession of the mobile data assets of KPN Mobile an=
d=20
its subsidiaries, E-Plus Mobilfunk GmbH and KPN Orange.  The new company wi=
ll=20
be based in the Netherlands and will be established in March, the companies=
=20
said.

Portugal Telecom Eyes Brazil As Fertile Ground for Expansion

Portugal Telecom SGPS SA plans to expand its Brazilian presence by acquirin=
g=20
wireless operator Global Telecom SA, which operates networks in the Parana=
=20
and Santa Catarina states.  Those states are neighbors to Sao Paulo, where=
=20
Portugal Telecom already offers wireless service through its Brazilian=20
subsidiary, Telesp Celular Participacoes SA (TCP).

Under an agreement announced Jan. 15, TCP will pay $556 million in cash and=
=20
assume $654 million in debt to acquire Global Telecom from its current owne=
rs=0F-
Japan=0F's KDDI Corp., Argentina=0F's ITX Corp., and Brazil=0F's Inepar SA =
Industria e=20
Construcoes.

Global Telecom=0F's area has 15 million =0F"pops=0F" (potential customers),=
 of which=20
the carrier has captured 463,000 subscribers.  TCP has about 4 million=20
subscribers. =20

The combination of the two requires the approval of Brazilian telecom=20
regulator Anatel.  TCP intends to pay for the transaction with its cash=20
reserves and debt financing.

The announcement prompted Moody=0F's Investors Service to place the debt ra=
tings=20
of Portugal Telecom on review for possible downgrade. =20

By acquiring Global Telecom, Portugal Telecom would take =0F"advantage of a=
=20
unique investment opportunity in a high-growth wireless business,=0F" Moody=
=0F's=20
said.  But =0F"the magnitude of the investment may constrain the financial=
=20
ratios=0F" of Portugal Telecom, Moody=0F's said, =0F"as well as expose it t=
o a=20
higher-risk operating environment.=0F"

Intelsat Plans Technical, Regional =0F`Flexibility=0F'=20

Intelsat=0F's chief executive officer says that the intergovernmental=20
organization is building flexibility into its business plans in preparation=
=20
for its expected July 18 privatization. =20

Rather than limiting the group to its traditional focus on the space segmen=
t=20
of satellite communications, Intelsat intends to expand the terrestrial=20
elements of its operations, said CEO Conny Kullman.

Intelsat is planning to build technological =0F"intelligence=0F" into its g=
round=20
segment, instead of having most of that technology on board the satellites,=
=20
he said. =20

This approach is less risky, can be brought to market more quickly, is =0F"=
less=20
complex,=0F" and =0F"will come at a lower price tag for us,=0F" Mr. Kullman=
 told=20
reporters during a Jan. 17 briefing at Intelsat=0F's Washington, D.C.,=20
headquarters.=20

WorldCom, Intermedia Need State OKs, Face Digex Lawsuit

WorldCom, Inc.=0F's planned purchase of Intermedia Communications, Inc., an=
d the=20
latter=0F's 55% controlling stake in Web host Digex, Inc., cleared the fina=
l=20
federal regulatory hurdle last week when three FCC bureaus approved the=20
transfer of licenses involved in the proposed transaction.

The transaction still needs additional state regulatory approvals, and=20
WorldCom is facing a lawsuit from Digex minority shareholders seeking to=20
block the merger (TR, Dec. 18, 2000).  They=0F've argued that WorldCom=0F's=
=20
proposed takeover of Intermedia would deprive Digex shareholders of the ful=
l=20
value of their investment.

WorldCom Chief Operating Officer Ronald R. Beaumont wouldn=0F't comment abo=
ut=20
the status of the Digex lawsuit during a presentation last week at the=20
company=0F's Ashburn, Va., offices.  But he told reporters and analysts tha=
t the=20
company was =0F"doing all the right things to bring this deal to closure, a=
nd I=20
feel confident we=0F'll get it done.=0F"

Acting on delegated authority in an order issued Jan. 17, the FCC bureaus=
=20
said WorldCom=0F's taking control of Digex would serve the public interest =
by =0F"
increasing competition for next-generation data services provided to busine=
ss=20
customers.=0F"  The Jan. 17 order notes that the U.S. Department of Justice=
 has=20
required WorldCom to divest Intermedia=0F's competitive local exchange carr=
ier=20
assets, essentially leaving WorldCom with just Intermedia=0F's Digex stake =
(TR,=20
Nov. 20, 2000).

Meanwhile, WorldCom officials at the Ashburn event stressed that acquiring=
=20
Digex would bolster its =0F"generation D=0F" portfolio of Web-based service=
s (TR,=20
April 17, 2000).  Asked whether WorldCom planned to be back on the=20
acquisition trail anytime soon, Mr. Beaumont said the company might conside=
r=20
pursuing some =0F"smaller acquisitions=0F" but added that its own size and =
sluggish=20
stock price likely would complicate any efforts to take over a large teleco=
m=20
company.  =0F"It=0F'll be very, very difficult for WorldCom to do large=20
acquisitions,=0F" as evidenced by the failed merger with Sprint Corp., he=
=20
acknowledged.

And even though it doesn=0F't have a strong nationwide cellular presence, M=
r.=20
Beaumont said WorldCom planned to address the growing demand for mobile dat=
a=20
services through =0F"a number of different strategies,=0F" including partne=
rships=20
and resale agreements.  =0F"Ultimately, we=0F'll be a virtual operator, and=
 tackle=20
the wireless world in that manner,=0F" he said.

Rhythms Trims Workforce, Operations To Reduce Losses

Rhythms NetConnections, Inc., intends to reduce its expected losses this ye=
ar=20
by 15%, to $395 million, by cutting 450 employees=0F-or 23% of its workforc=
e=0F-and=20
by suspending operations in about 20 of its smaller markets.  The Englewood=
,=20
Colo.=0F-based =0F"data CLEC=0F" (competitive local exchange carrier) won=
=0F't eliminate=20
its presence in those smaller markets but will sharpen its focus on its 40=
=20
largest markets, enabling it to cut 100 employees who work in the smaller=
=20
markets, the company said.

Productivity gains and improved back-office systems, meanwhile, will enable=
=20
the company to cut 300 installer positions.  By scaling back=0F-as other da=
ta=20
CLECs already have done=0F-Rhythms will be able to last a few additional mo=
nths=20
before having to seek funding in an iffy capital market.  Rhythms said it=
=20
would have enough funding to stay in business until early next year.

=0F"Clearly we=0F'll need additional funding as we get further into 2001" t=
o=20
support operations in the following year, said Catherine Hapka, the company=
=0F's=20
chairman and chief executive officer, in a Jan. 18 conference call with=20
analysts.  =0F"We=0F're exploring a myriad of options.=0F"

Some Wall Street analysts, however, seemed unimpressed by Rhythms=0F' effor=
ts to=20
reduce spending.  Eliminating 300 installer positions is an =0F"aggressive=
=0F" move=20
that =0F"could result in a degradation of service,=0F" said Merrill Lynch &=
 Co.=0F's=20
Kenneth Hoexter.

Rhythms=0F' losses could be deeper than the $395 million the company predic=
ts,=20
Mr. Hoexter said in a report.  =0F"We are only lowering our loss estimate b=
y 10%=20
to $430 million. . .as we believe employee cutbacks will also result in=20
slower revenue growth.=0F"

Mark Kastan, an analyst with Credit Suisse First Boston Corp., estimates th=
at=20
the cutbacks will give Rhythms only two additional months to obtain funding=
.

Contrary to the company=0F's projection that it can last until early 2002, =
the=20
company will require new financing late this year, Mr. Kastan said in a=20
report.

=0F"While we are somewhat relieved to see that Rhythms management has scale=
d=20
back its business plan, we still estimate that the company needs to raise=
=20
over $1 billion of additional capital to be fully funded, and we believe th=
at=20
the capital markets will remain closed to data CLECs for the foreseeable=20
future.=0F"

Level 3, SBC Reach Agreement On =0F`Recip Comp=0F' Rate Scheme

Level 3 Communications, Inc., and SBC Com-munications, Inc., have agreed on=
 a=20
two-tiered reciprocal compensation scheme designed to resolve disputes abou=
t=20
payments for terminating dial-up calls to Internet services providers (ISPs=
).

The agreement covers 13 states and sets two rates, one for =0F"in-balance=
=0F"=20
traffic and a lower rate for =0F"out-of-balance=0F" traffic.  Traffic is co=
nsidered=20
in balance if the carriers=0F' ratio of originating to terminating traffic =
is=20
3-to-1 or less; it is out of balance if the ratio is more than 3 to 1.

Although rates vary by state, the companies said the average rate for=20
in-balance traffic is $0.0032 cents per minute.  The average rate for=20
out-of-balance traffic is $0.0018 per minute (retroactive to Sept. 1, 2001)=
=20
and declines to an average of $0.00101 by June 1, 2002.  The agreement runs=
=20
through May 2003.

=0F"Our agreement should be helpful to state and federal regulators,=0F" sa=
id=20
Tricia Paoletta, vice president-government relations at Level 3.

=0F"This freely negotiated agreement proves that a reasonable solution to t=
he=20
reciprocal compensation issue can be reached in the marketplace,=0F" Ms.=20
Paoletta said.

The agreement comes as the FCC continues trying to craft an order addressin=
g=20
reciprocal compensation.  FCC Chairman William E. Kennard recently said he=
=20
wanted to complete work on the matter before his Jan. 19 departure from the=
=20
Commission (TR, Jan. 15).

Sources say that the Commissioners haven=0F't been able to agree on some as=
pects=20
of the proposed order and that the issue is likely to remain a priority eve=
n=20
after Mr. Kennard=0F's departure.

Financial analysts at Merrill Lynch & Co. saw the Level 3-SBC agreement as =
=0F"
modestly positive=0F" for both companies.  =0F"The agreement removes an ong=
oing=20
uncertainty relating to fluctuations in both costs for SBC and revenues for=
=20
Level 3,=0F" Merrill Lynch said.  =20

=0F"But in neither case is the impact sufficiently material for us to alter=
 our=20
revenue/expense projections, since the amounts fall within any normal range=
=20
of forecasting error,=0F" it said.

TMI, Motient To Unite Assets, Focus On Wholesale Services

TMI Communications & Co. L.P. of Ottawa and Motient Corp. of Reston, Va.,=
=20
plan to integrate their mobile satellite communications operations.  The ne=
w=20
entity, tentatively named Mobile Satellite Ventures, will focus on=20
provisioning wholesale satellite service to North American carriers.

The companies said they would consolidate some facilities to maximize the=
=20
joint venture=0F's efficiency, assuming regulatory approvals.  Columbia Cap=
ital,=20
Spectrum Equity Investors, and Telcom Ventures LLC are investing about $50=
=20
million in the new entity.

=0F"We are convinced that a satellite-only system is ideal for rural and re=
mote=20
areas, and with terrestrial enhancements can also be affordable and =20
competitive in urban communities,=0F" said Gary M. Parsons, Motient=0F's ch=
airman.

New Entrants Will Prolong IXC Price Wars, Analysts Say

The financial future of interexchange carriers (IXCs) continues to be cloud=
ed=20
by downward pressure on rates for voice long distance services, financial=
=20
analysts say.  That pressure will intensify=0F-and will begin to affect dat=
a=20
service, too=0F-as new entrants like Global Crossing Ltd. and Level 3=20
Communications, Inc., finish building networks and Bell companies gain=20
permission to offer in-region interLATA (local access and transport area)=
=20
service, they predict.

=0F"We are deeply concerned about the incumbent long distance companies,=0F=
" said=20
Daniel P. Reingold, managing director-equity research for Credit Suisse Fir=
st=20
Boston Corp.  New entrants will be able to offer cut-rate service because=
=20
their next-generation networks cost less to run than older networks, Mr.=20
Reingold said Friday, Jan. 19, during a conference call with clients.

Rosemarie Kalinowski, an analyst for the credit-rating agency Standard & Po=
or=0F'
s, agreed that pressure would intensify on long distance carriers. =20

Incumbents like AT&T Corp. and WorldCom, Inc., are building new Internet=20
protocol networks, she noted.  But it=0F's unclear whether those networks w=
ill=20
be finished in time to =0F"produce the cost efficiencies necessary to offse=
t the=20
pricing pressures and compete head-to-head with the new entrants,=0F" she s=
aid=20
during a teleconference earlier in the week.

Managers at incumbent IXCs apparently were in a state of denial or were=20
caught off guard by a steeper-than-expected decline in rates, Ms. Kalinowsk=
i=20
said.  They mistakenly thought they could correct the situation by cutting=
=20
rates=0F-and thereby reducing their profitability, she said.

Although Mr. Reingold advised investors to steer clear of most incumbent lo=
ng=20
distance carriers, he said he thought Sprint Corp. might increase in value=
=20
because of a potential merger with Qwest Communications International, Inc.=
 =20
He said he expected a Qwest-Sprint merger to be announced in the next 12=20
months.

Merger activity in general may increase under a Republican administration,=
=20
Mr. Reingold asserted.  But some combinations will remain difficult or=20
impossible because traditional antitrust laws and the Telecommunications Ac=
t=20
of 1996 will stand in the way, no matter who is in power, he said.  For=20
example, he said, recent speculation that a Bell company might buy WorldCom=
=20
is misguided; the regulatory hurdles are simply too high.

But Mr. Reingold said he thought a merger of SBC Communications, Inc., and=
=20
BellSouth Corp. might be possible in a few years=0F' time.  Those companies=
=20
already have merged their wireless units to form Cingular Wireless.  Bell=
=20
companies are well positioned for the current economic climate because they=
=20
typically outperform the stock market during recessions, he said.

Bell companies also will benefit from the turmoil in the competitive local=
=20
exchange carrier (CLEC) industry, whose inroads into local markets have=20
slowed as a shortage of funds has forced CLECs to cut back, Mr. Reingold=20
said.  =0F"I don=0F't believe the CLECs are going away,=0F" he said.  =0F"H=
owever, there=0F'
s a reality here . . .There are going to be fewer of them coming out of thi=
s=0F"=20
financial strife.

But the CLEC industry already is beginning to show signs of recovery, Credi=
t=20
Suisse First Boston analyst Mark Kastan said.  =0F"Sentiment has bottomed a=
nd=20
now is improving for the first time since spring of last year,=0F" he said.

After a long drought, financing now appears to be available for a select=20
group of CLECs, Mr. Kastan said.  McLeodUSA, Inc., and XO Communications,=
=20
Inc., are engaged in successful fund-raising efforts, he noted, and Time=20
Warner Telecom, Inc., is poised to attempt to raise $300 million through th=
e=20
sale of stock.

Report Offers Road Map To E-government Security

U.S. government agency officials now have guidance on how to address key=20
security concerns when offering Internet and other electronic services.  A=
=20
new publication, Securing Electronic Government, is the product of an=20
eight-month partnership of the Information Technology Association of Americ=
a=20
and two councils for the chief information officers (CIOs) and chief=20
financial officers (CFOs) in various governmental units.

The report covers electronic security concerns in three principal areas: =
=20
government electronic procurement, Web-based information services, and=20
governmental financial transactions.

=0F"We will. . .provide this to the federal community and, based on [the]=
=20
feedback, we will expand to other areas or refine these three areas,=0F" sa=
id=20
John Gilligan, deputy chief information officer and principal deputy=20
assistant secretary for business and information management for the U.S. Ai=
r=20
Force.

Mr. Gilligan stressed that the government needs to ensure the security of=
=20
electronic documents to avoid a loss of public confidence.  ITAA, the CIO=
=20
Council, and CFO Council initially met in May 2000 to develop guidelines fo=
r=20
adequate security.

The report states that information availability and integrity are the most=
=20
important priorities in providing Web-based information services, such as=
=20
data on taxes and unemployment rates.  Denial-of-service =0F"attacks=0F"=0F=
-attempts=20
to overload a Web site or server with information requests or e-mail messag=
es=0F-
and malicious data change were identified as the biggest threats to these=
=20
priorities.  =0F"Techniques do exist to safeguard these priorities,=0F" sai=
d David=20
Nelson, deputy chief information officer for the National Aeronautics and=
=20
Space Administration.

Regarding Internet-based government procurement, the report says that curre=
nt=20
industry security solutions for credit card purchases are adequate for=20
transactions of $100,000 or less, which make up the bulk of government onli=
ne=20
procurement deals.  Midsize procurements between $100,000 and $10 million=
=20
require heightened time sensitivity and confidence, necessitating more=20
extensive security precautions.  Purchases of more than $10 million require=
=20
customized solutions to ensure the integrity of data.

=0F"The public holds government to high standards. . .and [the government n=
eeds]=20
to ensure high public confidence,=0F" said Sky Lesher, deputy chief financi=
al=20
officer at the Department of the Interior.  =0F"They need to feel like they=
 are=20
in a secure environment.=0F"

Mr. Lesher said the report advocates a proactive approach to government=20
electronic security.  =0F"We prefer to be in a prevention mode rather than =
a=20
recovery mode,=0F" reacting to security breaches, he said.  Mr. Nelson adde=
d=20
that the report provides government managers with security =0F"know-how=0F"=
 from=20
industry representatives.

Motorola, Inc., says it will stop making mobile phones at its Harvard, Ill.=
,=20
facility...

Motorola, Inc., says it will stop making mobile phones at its Harvard, Ill.=
,=20
facility as part of a long-term effort to consolidate manufacturing and=20
improve financial performance.  The company=0F's decision will cost about 2=
,500=20
workers their jobs.  Last month, Motorola announced an outsourcing alliance=
=20
that will cut 2,870 more positions (TR, Dec. 11, 2000, notes).  Earlier thi=
s=20
month, Motorola reported disappointing fourth quarter results.

FCC Suggests Streamlining Carrier-Change Process

The FCC has proposed rule changes that would make it easier for carriers to=
=20
sell or transfer exchanges.  The existing rules require carriers to get an=
=20
FCC rule waiver or obtain permission from all their customers before=20
switching them to a new service provider.=20

The Commission is considering an alternative scheme to its current =0F"
subscriber selection change=0F" rules as part of its =0F"biennial review=0F=
"=20
proceeding.  The Telecommunications Act of 1996 directs the FCC to conduct=
=20
reviews of its regulations every two years and to eliminate or revise those=
=20
rules that it finds are no longer necessary (see separate story).

Under section 64.1120 of the FCC=0F's current rules and section 258 of the=
=20
Communications Act of 1934, as amended, a carrier must obtain and verify a=
=20
customer=0F's permission to change his or her service provider.  Those rule=
s are=20
designed to deter =0F"slamming,=0F" or the authorized switching of a custom=
er=0F's=20
preferred carrier.=20

In a third further notice of proposed rulemaking released last week in Comm=
on=20
Carrier dockets 00-257 and 94-129, the FCC said it receives numerous reques=
ts=20
a month from carriers seeking waivers of those rules in order to complete=
=20
transactions involving transferring customer accounts to another carrier.

The Commission suggested an =0F"expedited process=0F" for such carriers whe=
reby the=20
carrier would be required only to notify its customers of the upcoming chan=
ge=20
and to provide them with an opportunity to switch carriers.  Comments are d=
ue=20
on the rulemaking notice 21 days after it is published in the Federal=20
Register.  Replies are due 10 days later.

Under the FCC=0F's proposal, the acquiring carrier would be required to not=
ify=20
the affected customers 30 days before the close of the transaction.  The=20
Commission is seeking input on the 30-day interval as well as the kind of=
=20
information that should be included in the notification.  It also proposed=
=20
that carriers notify the Commission of any such transactions.

In its rulemaking notice, the Commission asked if the advance-notice=20
requirements should differ based on the type of service that the carrier=20
provides.  It also asked if any additional obligations should be placed on=
=20
the carriers, such as establishing a toll-free number to answer customers=
=0F'=20
questions. =20

The Commission also asked how it could tailor the rules to prevent =0F"
unscrupulous=0F" carriers from selling customer accounts to evade enforceme=
nt=20
actions.

Verizon Wireless Asks FCC To Delay 700 MHz Band Auction

Citing a host of concerns, Verizon Wireless has asked the FCC for another=
=20
six-month delay of the auction of spectrum in the 700 megahertz band, which=
=20
is scheduled to begin March 6.  The auction has been delayed three times=20
already.

In a Jan. 18 letter to Wireless Telecommunications Bureau Chief Thomas J.=
=20
Sugrue, Verizon asked that the sale be postponed until September.  The lett=
er=20
was signed by John T. Scott, Verizon Wireless=0F' vice president and deputy=
=20
general counsel-regulatory law.

Mr. Scott said that if the auction was held as scheduled, potential bidders=
=20
wouldn=0F't have enough time to assess their spectrum needs because a reauc=
tion=20
of =0F"C=0F" and =0F"F=0F" block PCS (personal communications service) lice=
nses is still=20
ongoing (see separate story).  =0F"Short form=0F" applications for the 700 =
MHz band=20
auction are due Feb. 2, under the current schedule.

=0F"If the 700 MHz [band] auction begins on the current schedule, there wou=
ld be=20
no time for companies that are bidding in the PCS reauction to reassess the=
ir=20
business plans and develop bidding strategies for [the] 700 MHz [band=20
auction],=0F" Mr. Scott said.

The FCC immediately sought comments on Verizon=0F's request.  Comments are =
due=20
Jan. 24 and should reference DA 01-143.

Package Bidding Rules Cited

Mr. Scott also said carriers need more time to prepare because of new packa=
ge=20
bidding rules that will be used in the auction (TR, July 10, 2000).  He als=
o=20
cited continued concerns over when winning bidders would be able to build o=
ut=20
systems to use their newly licensed frequencies.  Similar concerns were cit=
ed=20
by the wireless industry when they successfully petitioned the FCC to move=
=20
the 700 MHz band auction from September 2000 to March 2001(TR, Aug. 7 and 2=
1,=20
2000).

Carriers had complained about the uncertainty of when the spectrum would be=
=20
available.  TV broadcasters with licenses for channels 60=0F-69 now occupy =
large=20
chunks of the spectrum and don=0F't have to leave until 2006 at the earlies=
t as=20
part of the transition to digital TV.

Mr. Scott said the uncertainty over when incumbent broadcasters would leave=
=20
the spectrum was still an issue.  He also noted that the FCC hadn=0F't yet=
=20
adopted proposed band-clearing mechanisms for those frequencies.  Even if=
=20
such mechanisms were adopted immediately, 700 MHz band auction bidders woul=
dn=0F'
t have time to use them, he said.

Mr. Scott also mentioned the high-level government-industry effort to=20
identify and allocate spectrum for third-generation (3G) services (see=20
separate story).  He noted that the 700 MHz band could be used for such=20
offerings and said the FCC should not auction that spectrum until it issued=
=20
an order allocating 3G bands.  That order is expected this summer.

=0F"There remains considerable uncertainty about the process for the auctio=
n,=20
the availability of the 700 MHz band itself, and the availability of=20
alternate spectrum,=0F" Mr. Scott said in the letter.  =0F"As a matter of s=
ound=20
spectrum-management policy, this spectrum should not be auctioned until the=
se=20
issues are resolved.=0F"

=0F"Conducting the auction before prospective bidders are able to make the=
=20
necessary assessments about spectrum use will jeopardize the efficient=20
assignment of this spectrum and ultimately disserve the public interest,=0F=
" he=20
added.  =0F"Greater certainty will enable the 700 MHz band to realize its f=
ull=20
economic and public benefit.=0F"

A spokesman for the Cellular Telecommunications & Internet Association told=
=20
TR that Verizon Wireless=0F' request to delay the auction =0F"is legitimate=
=0F" and=20
said the trade group planned to file comments in support of a postponement.

During a briefing with reporters last week before Verizon Wireless=0F' lett=
er=20
was submitted (see separate story), Commissioner Harold W. Furchtgott-Roth=
=20
said he had opposed the previous delays of the auction and would oppose any=
=20
effort to put it off further.  =0F"I would be very disappointed if there we=
re=20
any more delays,=0F" he said.

Ex-RSA Cellular Licensee Meets Judicial Skepticism

A three-judge panel of the U.S. Appeals Court in Washington expressed=20
skepticism at a former cellular licensee=0F's argument that the FCC wrongly=
=20
revoked its license for =0F"lack of candor.=0F"  Alee Cellular Com-municati=
ons had=20
falsely maintained that all of its partners were U.S. citizens.

The judges appeared to agree with the FCC=0F's contention that substantial=
=20
evidence showed the licensee=0F's partners knowingly deceived the agency to=
=20
retain a rural service area (RSA) license for Catron, N.M.  The license was=
=20
awarded by lottery in 1988, when noncitizens were barred from holding an=20
ownership stake in FCC licensees.

Hearing oral arguments in Alee Cellular Commun-ications v. FCC (case no.=20
99-1460) Jan. 16 were Chief Judge Harry T. Edwards and Judges Douglas H.=20
Ginsburg and A. Raymond Randolph.

In 1992, FCC Administrative Law Judge Walter C. Miller ruled that Alee had=
=20
told the Commission falsely that all of its 14 partners were U.S. citizens=
=20
when it knew one wasn=0F't (TR, Jan. 11, 1993).  The finding was part of a=
=20
broader proceeding in which Mr. Miller found that nearly two dozen cellular=
=20
license applicants, including Alee, had agreed to share with each other the=
=20
revenue earned using RSA licenses.  Those =0F"risk-sharing agreements=0F" w=
ere a=20
violation of FCC rules, the ALJ found..

The FCC=0F's review board upheld Alee=0F's license revocation in 1994.  In =
1997,=20
the full Commission upheld the decision, saying Alee=0F's =0F"lack of cando=
r=0F"=20
required the revocation (TR, June 9, 1997).

Alee:  License Revocation Unfair

Alee attorney Philip J. Mause told the court that the FCC arbitrarily and=
=20
capriciously relied on Mr. Miller=0F's findings about the credibility of=20
witnesses that had testified in a hearing on the risk-sharing agreements. =
=20
Mr. Mause said Mr. Miller compiled no written record of his judgments about=
=20
the witnesses to indicate why he found them credible or incredible.

Mr. Mause also contended that the FCC rejected substantial, credible eviden=
ce=20
that showed that Alee=0F's partners hadn=0F't intended to deceive the Commi=
ssion=20
regarding the noncitizen partner.  He also said the agency=0F's decision wa=
s not=20
supported by substantial evidence.

Even if there was such evidence to indicate a lack of candor, Mr. Mause sai=
d,=20
the punishment of license revocation was too harsh considering that (1) Ale=
e=20
reported the infraction to the agency and (2) other licensees in similar=20
situations had received more mild sanctions.

But FCC attorney Joel Marcus told the court that before upholding the licen=
se=20
revocation, the Commission conducted an independent review of the case, in=
=20
which it arrived at the same conclusion Mr. Miller had.

Mr. Marcus said the agency=0F's decision was supported by substantial evide=
nce. =20
=0F"That standard is easily met here,=0F" he said, citing the testimony of=
=20
witnesses and documentary evidence.

Mr. Marcus also said the rule violations by other licensees were not as=20
severe as Alee=0F's.  He added that agencies are given broad deference in=
=20
developing sanctions for rule violations.

The judges seemed to agree with the Commission=0F's argument.  =0F"It looke=
d to me=20
like it was doing its own independent evaluation,=0F" Judge Randolph said o=
f the=20
FCC.

=0F"They rely on documentary evidence, which they cite,=0F" Judge Edwards a=
dded. =20
Judge Ginsburg noted that the FCC cited both documentary evidence as well a=
s=20
evidence of the witnesses=0F' demeanor in reaching its decision to uphold t=
he=20
license revocation.

The Broadband Wireless Internet Forum has released two technical papers...

The Broadband Wireless Internet Forum has released two technical papers tha=
t=20
provide background and explanation of the technology advocated by the group=
. =20
The forum supports fixed broadband systems based on vector orthogonal=20
frequency division multiplexing (VOFDM).  The papers can be found at=20
http://www.bwif.org.

Viatel To Cut Workforce, Phase Out Most Voice Service

Viatel, Inc., has disclosed plans to cut 30% of its workforce while phasing=
=20
out residential voice telephony services =0F"in countries that do not meet=
=20
long-term corporate objectives.=0F"  The New York City=0F-based company, wh=
ich=20
operates a transatlantic cable system and pan-European network, said that=
=20
instead it would focus on higher-growth broadband and corporate=20
communications services.=20

It didn=0F't disclose which operating units would be consolidated, nor did =
it=20
specify the countries in which it would cease providing residential voice=
=20
service.  Viatel said its Jan. 18 decision followed the =0F"logical evoluti=
on=0F"=20
of the company, which is completing a three-year network build-out.=20

=0F"By streamlining operations and concentrating principally on the pan-Eur=
opean=20
communications needs of major corporations and carriers, Viatel will=20
immediately strengthen its current financial profile and improve its EBITDA=
=0F"=20
(earnings before interest, taxes, depreciation, and amortization), said=20
Michael J. Mahoney, Viatel=0F's chairman and chief executive officer.

CLECs Seek Cautious Approach to Regulating Their Access Fees; AT&T, WorldCo=
m=20
Want Caps

Many competitive local exchange carriers (CLECs) seem resigned to the FCC=
=0F's=20
adoption of a =0F"benchmark=0F" rate essentially capping the access charges=
 they=20
can levy on interexchange carriers (IXCs). =20

But they urged the FCC to take a cautious approach, recognizing that they=
=20
often have higher costs than incumbent local exchange carriers (ILECs),=20
particularly if they serve rural areas.

IXCs oppose any effort to exempt CLECs operating in rural areas from=20
complying with future benchmark rates.  Some CLECs and IXCs agreed that a=
=20
recent proposal from the Association for Local Telecommunications Services=
=20
(ALTS) offered at least a step toward resolving the simmering disputes=20
between CLECs and IXCs over access charges.

Seeking additional comments in its long-running proceeding in Common Carrie=
r=20
dockets 96-262 and 97-146, the FCC late last year asked parties to address=
=20
(1) the need for a =0F"rural exemption=0F" to any benchmark established for=
 CLECs=0F'=20
interstate access charges, and (2) the extent of abuses by CLECs in setting=
=20
terminating and originating access rates.

The Association for Communications Enterprises (ASCENT) reiterated its call=
=20
for the FCC to adopt =0F"safe harbor=0F" ranges for CLEC access charges; ch=
arges=20
within those ranges would be deemed reasonable and lawful.

ASCENT said there was =0F"significant merit=0F" to the ALTS proposal (TR, J=
an. 15),=20
which would impose ceilings on CLECs=0F' access charges and bar IXCs=0F' =
=0F"
self-help=0F" actions=0F-meaning their refusal to pay CLEC access charges t=
hat they=20
deem excessive.

In joint comments, e.spire Communications, Inc., KMC Telecom, Inc., Talk.co=
m=20
Holding Corp., and XO Communications, Inc., supported ALTS=0F' Guaranteed=
=20
Reduced Exchange Access Tariffs (GREAT) proposal.

=0F"The GREAT proposal recognizes that the entire industry can benefit from=
 the=20
establishment of benchmark access rates that are deemed reasonable by the=
=20
Commission and that the access charge rates of ILECs and CLECs are not=20
readily comparable, primarily because ILECs and CLECs do not necessarily=20
employ the same rate structures or network architectures,=0F" they said.

Other CLEC comments didn=0F't address the GREAT proposal directly and urged=
 the=20
FCC to proceed with caution=0F-if at all=0F-in imposing a benchmark limit o=
n CLEC=20
access charge rates.

=0F"The vast majority of access charges assessed by CLECs are comparable to=
=20
those of ILECs, which is significant in and of itself given the higher cost=
s=20
CLECs face in providing such access,=0F" said Focal Communications Corp., R=
CN=20
Telecom Services, Inc., and Winstar Communications, Inc., in joint comments=
.

If the FCC sets a benchmark for CLEC access rates, it should be done =0F"on=
 the=20
basis of ensuring that CLECs are able to collect their rightful charges and=
=20
that their customers are able to make and receive long distance calls,=0F" =
they=20
said.  They supported an exception to the benchmark for CLECs serving rural=
=20
and other high-cost areas.

Z-Tel Communications, Inc., also supported the use of a benchmark but oppos=
ed=20
mandatory detariffing for CLEC access rates, regardless of their level.  (T=
he=20
GREAT proposal envisions mandatory detariffing for charges above the=20
specified ceilings).=20

Requiring CLECs to detariff would allow ILECs to continue to =0F"bind IXCs =
with=20
tariffs,=0F" while Z-Tel and other CLECs would have to negotiate access=20
arrangements with hundreds of IXCs, it said.  =0F"By forcing CLECs to incur=
=20
negotiation costs not incurred by incumbents, mandatory detariffing raises =
a=20
barrier to entry in local exchange markets,=0F" Z-Tel said.

McLeodUSA Telecommunications Services, Inc., said the record =0F"does not=
=20
clearly establish=0F" the need for regulation of CLEC access charges.  Any=
=20
FCC-established benchmark rate for CLEC access charges thus should =0F"refl=
ect=20
the higher costs that CLECs incur in providing access service and provide a=
n=20
exemption for CLECs providing service to customers outside of defined=20
metropolitan statistical areas,=0F" he said.

CTSI, Inc., and Madison River Communications said the FCC should ensure tha=
t=20
any benchmark system =0F"does not legally, or [practically], prescribe a ra=
te=20
structure for CLECs.=0F"  The FCC would need to establish a methodology for=
 =0F"
converting rates of CLECs that choose=0F" a different rate structure from t=
hat=20
reflected in the benchmark rate, they said.  For instance, some CLECs choos=
e=20
not to charge a separate presubscribed interexchange carrier charge.

USTA:  No Rules Necessary

The U.S. Telecom Association said the FCC should not regulate CLEC access=
=20
rates.  =0F"A benchmark should not be adopted based on the arguments raised=
 in=20
this or any other proceeding by AT&T,=0F" it said.  =0F"Neither AT&T nor an=
y IXC=20
should be permitted to unilaterally determine which CLECs=0F' access rates =
are=20
too high and, therefore, which CLECs=0F' access services it will not purcha=
se.=0F"

USTA said the record didn=0F't justify imposing a benchmark rate for CLECs=
=0F'=20
access fees.  =0F"At a time when the Commission is seeking to encourage=20
competition and reduce regulation in competitive areas, new regulations=20
imposed on competitive entrants are not justified,=0F" it said.

The National Telephone Cooperative Association said a single nationwide=20
benchmark for CLEC access charges would lead to =0F"further disputes,=0F" =
=0F"possibly=20
result in confiscatory rates,=0F" and =0F"continue to hinder the developmen=
t of=20
facilities-based competition in poorly served rural areas.=0F"  The FCC sho=
uld=20
establish a separate benchmark for rural CLECs or create some other =0F"
regulatory alternative=0F" to allow them to recover their legitimate costs,=
 NTCA=20
said.

The FCC should not create a =0F"rural exemption=0F" to any prohibition on C=
LECs=0F'=20
tariffing rates above those charged by the ILEC in a given service area, sa=
id=20
AT&T Corp.  =0F"There is neither a legal nor an economic justification for=
=20
creating any exclusion for =0F`rural=0F' CLECs=0F" from a general rule link=
ing CLEC=20
and ILEC access rate levels in the same service area, it said.

A rural exemption would =0F"improperly support operations of a class of CLE=
Cs in=20
some as-yet-undefined =0F`rural=0F' areas through subsidies that are implic=
it in=20
tariffed access rates that are higher than those of the ILEC operating in t=
he=20
same geographic service territory,=0F" AT&T said.  Plus, the exemption woul=
d =0F"
inequitably place the burden of funding these CLECs=0F' subsidies in rural =
areas=20
solely upon those carriers=0F' access customers (including, in particular, =
IXCs=20
such as AT&T that serve large numbers of end users in nonurban regions),=0F=
" it=20
said.

WorldCom, Inc., joined AT&T in opposition to a rural exemption.  A single,=
=20
nationwide benchmark is the =0F"most effective, most easily administered wa=
y to=20
bring about CLEC access charge reductions,=0F" it said.

The =0F"general approach=0F" advocated in ALTS=0F' GREAT proposal is =0F"co=
nsistent with=20
sound public policy and merits serious consideration,=0F" WorldCom said.  I=
t=20
worked with ALTS in developing the proposal but said it didn=0F't support a=
ll of=20
its provisions.  Specifically, it opposed ALTS=0F' recommendation for a=20
six-month transition period before implementing a tariff ceiling.  WorldCom=
=20
said such a lengthy transition period was unnecessary.

WorldCom also submitted data on access charges that it said showed that man=
y=20
CLECs charge substantially more than ILECs.  Nearly one third of the CLECs=
=20
from which WorldCom purchases switched access services charge rates that ar=
e =0F"
more than five times higher=0F" than the average rates of ILECs.

=0F"IXCs will not be able to continue to absorb these costs for much longer=
,=0F"=20
WorldCom said.  =0F"Unless the Commission takes action, it is inevitable th=
at=20
IXCs will begin blocking switched access traffic from all CLECs with the=20
highest charges.=0F"

U.S. Telecom Revenues

U.S. spending on telecom services and equipment increased by 12.5% last yea=
r,=20
generating revenues of $609.2 billion, according to a report released last=
=20
week by the Telecommunications Industry Association. =20

In its 2001 MultiMedia Telecommunications Market Review and Forecast, TIA=
=20
says spending on telecom transport services reached $287.6 billion in 2000,=
=20
which is an 8.9% increase over 1999 levels.  Spending on =0F"specialized=0F=
"=20
services such as unified messaging, voice messaging, and broadband Internet=
=20
access, reached $5.8 billion last year, a 62.2% increase over the previous=
=20
year=0F's figures, the report says.

Proposal To Streamline Service-Quality Reporting Gets Booed from All Sides;=
=20
Some Question Timing

The FCC=0F's proposal to reduce service-quality reporting requirements for=
=20
incumbent local exchange carriers (ILECs) got a big thumbs-down last week a=
s=20
state regulators, end-user interests, and competitive carriers argued the=
=20
need for the ILEC data.  And even the ILECs themselves=0F-which ostensibly =
would=20
benefit from the reduced obligations=0F-objected to portions of the plan.

Competitive carriers and small to midsize ILECs took issue with the FCC=0F'=
s=20
proposal to subject them to the same service-quality reporting requirements=
=20
that large ILECs must follow.  And state regulators in particular worried=
=20
that reducing the amount of available service-quality data could hamper sta=
te=20
proceedings.

Overall, most parties commenting last week on the proposal criticized it fo=
r=20
adding=0F-rather than eliminating=0F-regulations.  The rulemaking proposal =
in=20
Common Carrier docket 00-229 was undertaken as part of the Commission=0F's=
=20
biennial regulatory review, which is required by the Telecommunications Act=
=20
of 1996.

The biennial reviews are aimed at reducing regulations that are no longer=
=20
necessary as a result of increased competition (TR, Nov. 13, 2000, and=20
separate story in this issue).  Many industry members and state regulators=
=20
commenting last week questioned whether competition in local markets had=20
developed sufficiently to warrant streamlining the reporting requirements.

ILECs are required to submit to the FCC data about their performance in=20
providing retail service to end-user customers.  The data is submitted in t=
he=20
carriers=0F' Automated Reporting Management Information System (ARMIS) repo=
rts. =20
Citing increases in competition in local markets, the FCC had proposed, amo=
ng=20
other measures, slashing the number of reporting categories from 30 to six=
=20
and making the data more consumer-oriented.

States:   We Need ILEC Data

The National Association of Regulatory Utility Commissioners said that=20
monitoring ILECs=0F' service quality is particularly important =0F"in situa=
tions=20
where no competitive alternatives exist.=0F"  It noted that =0F"large incum=
bents=20
still hold in excess of 98% of at least the residential market across the=
=20
country,=0F" and several large ILECs have reported =0F"long-term negative t=
rend[s]=20
in service quality.=0F"  It pointed to instances in which state regulators=
=20
relied on the data reported to the FCC to make decisions about an ILEC=0F's=
=20
service quality. =20

The Florida Public Service Commission not only objected to any reductions i=
n=20
reporting requirements but also pressed the FCC to require ILECs to submit=
=20
even more specific data.  It said ILECs=0F' service-quality data should be =
=0F"
disaggregated=0F" to a state or smaller geographic level to give customers =
more=20
useful information.  =0F"It is easy to demonstrate high-quality service=20
performance overall while performing poorly in small geographic areas,=0F" =
it=20
said.

The Wyoming Public Service Commission questioned the timing of the=20
deregulatory proceeding.  Under the Act=0F's biennial review provisions, th=
e FCC=20
is required to examine its regulations to determine whether they are=20
necessary =0F"as a result of economic competition between providers.=0F" =
=20
Competition has had very little influence on the residential local exchange=
=20
market nationally, the Wyoming PCS said, adding that competition in Wyoming=
=20
is nascent.=20

=0F"Why would customers living in rural America, much of which is served by=
=20
price cap companies without competitive options, want to limit the=20
service-quality data that could be used by state and federal regulators?=0F=
" the=20
PSC asked.  =0F"It is too soon to narrow the focus of the quality-of-servic=
e=20
reporting to only that desired or needed by customers in a competitive=20
market.=0F"

The service-quality data reported to the FCC is important because it =0F"ca=
n be=20
compared across state lines,=0F" the Indiana Utility Regulatory Commission =
said.=20
 And the reporting requirements are useful even in a competitive service=20
market, the IURC added.  =0F"The FCC and the states must be vigilant, ensur=
ing=20
that unwarranted deregulation does not cause service quality to deteriorate=
,=0F"=20
it said.

The Illinois Commerce Commission asked the FCC to ensure that states be abl=
e=20
to impose additional service-quality reporting requirements in the absence =
of=20
federal requirements.  In its rulemaking notice, the FCC sought comments on=
 =0F"
alternative ways the FCC can continue to work with states=0F" on service-qu=
ality=20
issues.

The Wisconsin Public Service Commission acknowledged that streamlining=20
service-quality reporting requirements might be justified.  But some of the=
=20
FCC=0F's proposals go =0F"too far,=0F" it said, and prevent states from acc=
essing=20
meaningful data.  Monitoring service quality still =0F"is one of the most=
=20
important regulatory roles,=0F" the Wisconsin PSC said.

The FCC=0F's reference in its rulemaking notice to deregulation in the airl=
ine=20
industry is =0F"interesting,=0F" the Texas Public Utility Commission said. =
 =0F"
Competition in that industry has driven the need to create the reporting of=
=20
basic comparative retail performance data.=0F"  It said that during times o=
f=20
industry =0F"transition,=0F" regulators must have access to service data to=
 prevent=20
=0F"backsliding.=0F"

The federal service-quality reports are often used in state proceedings=20
evaluating the Ameritech Corp. telcos=0F' service, the Michigan Public Serv=
ice=20
Commission said.  =0F"These reports have allowed us to monitor [Ameritech=
=0F's=20
performance in] our state [and] compare . . .it to that of other states in =
a=20
meaningful way.=0F"

The Ohio Public Utilities Commission supported the FCC=0F's proposal to req=
uire=20
ILECs to submit data that is more useful to consumers. The FCC had suggeste=
d=20
that carriers report consumer-oriented data including time required for=20
installation, maintenance, and repair of equipment.  The Ohio commission sa=
id=20
ILECs wouldn=0F't need to =0F"develop or retain any data that they do not c=
urrently=20
keep for their own business practices.=0F"=20

End Users Say Data Is =0F`Crucial=0F'

End-user groups mostly opposed reductions in service-quality reporting, whi=
ch=20
they said gives customers a means of making informed decisions about=20
telecommunications service providers.  Most supported various extensions of=
=20
the FCC=0F's data reporting rules.

The FCC should continue to require carriers to submit service-quality data=
=20
that differentiates between business and residential customers, the General=
=20
Services Administration said.  Responding to the rulemaking notice on behal=
f=20
of federal agency telecom service customers, GSA said carriers also should =
be=20
required to disaggregate data for urban and rural areas, since =0F"these re=
gions=20
have different competitive conditions and cost characteristics,=0F" it said=
.

The Texas Public Utility Counsel, which represents business and residential=
=20
customers in state and federal proceedings, said the FCC should extend=20
service-quality reporting requirements to regulated DSL (digital subscriber=
=20
line) services.  It added, however, that =0F"neither consumers nor regulato=
rs=20
would benefit significantly from an expansion of FCC service-quality=20
reporting requirements to encompass=0F" competitive local exchange carriers=
=20
(CLECs).  It also urged the FCC to require companies to post their=20
service-quality data on their Web sites and to notify customers periodicall=
y=20
about the available information.

Siemens Medical Solutions Health Services Corp. said that making=20
service-quality data available enables =0F"consumers to distinguish among=
=20
service providers and choose a vendor based on service and value.=0F"  ILEC=
s=20
should be required to submit data about =0F"the length of time a customer h=
as to=20
wait on hold before speaking to a customer-service representative and the=
=20
percentage of callers who hang up while waiting,=0F" Siemens said.

ILECs Not Enthusiastic

Incumbent local exchange carriers applauded the FCC=0F's plan to reduce the=
ir=20
reporting requirements, but they disagreed with many other aspects of the=
=20
rulemaking notice, including the FCC=0F's proper role in collecting the dat=
a and=20
monitoring service quality and the FCC=0F's plan to require carriers to pro=
vide=20
consumer-oriented data.

The U.S. Telecom Association said the FCC=0F's proposal would increase the =
level=20
of detail required for the remaining six service-quality categories.  Despi=
te=20
the reduction in the number of categories, =0F"it is unclear whether the=20
reporting burden will be reduced,=0F" it said.

USTA also sharply disagreed with the FCC=0F's statement that its =0F"basic =
role in=20
service quality is to serve as an efficient clearinghouse for information.=
=0F" =20
USTA said that role was not statutorily defined and added that it=0F's =0F"=
unlikely=20
that ARMIS reports, even a streamlined version, will be a primary source of=
=20
information for consumers.=0F"

Under the biennial review process, =0F"ILEC service- quality requirements m=
ust=20
be based only upon a predicate of finding federal regulatory necessity in=
=20
light of meaningful competition and the public interest,=0F" Qwest Corp. sa=
id.  =0F"
This would exclude reporting elements claimed to  be =0F`useful=0F' or =0F`=
helpful.=0F'=0F" =20
The FCC should determine what the federal interest in service-quality=20
reporting requirements is and eliminate all requirements that don=0F't meet=
 this=20
standard, Qwest said.

Service-quality reporting requirements are =0F"a perfect example of the typ=
e of=20
obsolete regulation that Congress had in mind when it enacted=0F" the bienn=
ial=20
review provisions of the Act, Verizon Communications Corp. said. =0F"Elimin=
ation=20
of obsolete regulations is not optional=0F-the Act states that the Commissi=
on =0F`
shall=0F' repeal or modify any regulation that is no longer necessary.=0F"=
=20

Verizon accused the FCC of shifting the focus of the reporting requirements=
=20
to consumers as a way of evading the Act=0F's mandate to remove regulations=
 that=20
have outlived their usefulness.  =0F"To concoct a new rationale for an obso=
lete=20
rule evidences a lack of commitment to [the] biennial review,=0F" it said.

BellSouth Corp. suggested that service-quality reporting be done at the sta=
te=20
level.  The categories the FCC has proposed leaving in place =0F"relate to =
the=20
provision of local service and therefore should be left to the state public=
=20
service commissions to establish appropriate requirements for these=20
categories,=0F" it said.

SBC Communications, Inc., was skeptical of the FCC=0F's proposal to use ARM=
IS=20
data to inform consumers.  The information in ARMIS reports isn=0F't availa=
ble=20
to the public in an accessible format and doesn=0F't allow customers to com=
pare=20
a wide range of carriers, SBC said.=20

The Independent Telephone & Telecommunications Alliance, which comprises=20
midsize ILECs, strongly objected to the FCC=0F's proposal to extend=20
service-reporting requirements to all its members.  The FCC currently=20
requires only ILECs that are regulated by a price cap mechanism to file=20
service-quality reports.

ITTA objected to the FCC=0F's introducing the proposal during a biennial re=
view=20
proceeding.  =0F"It is unclear under what authority the Commission seeks to=
=20
extend service-quality reporting burdens to new classes of carriers and=20
service providers=0F" in such a proceeding, it said.

Imposing such conditions on carriers that serve less than 2% of the nation=
=0F's=20
access lines would place an unfair burden on small and rural carriers, ITTA=
=20
said.  =0F"Congress has long endorsed differentiating between LECs [local=
=20
exchange carriers] on the basis of size,=0F" it added.

Requiring rural LECs to provide service-quality data isn=0F't necessary, th=
e=20
National Telephone Cooperative Association said.  =0F"Rural LEC customers l=
iving=20
in small, closely-knit communities are intimately familiar with the quality=
=20
of service provided by rural LECs.  It is hard to see how such data would b=
e=20
more valuable to consumers than the reputation a company has in its local=
=20
market.=0F"

Small and rural carriers are =0F"focused on their communities, and they res=
pond=20
quickly to problems because they are not insulated from the consumer by=20
distance or size,=0F" NTCA added.

A group of small ILECs from Vermont said in a joint filing that they alread=
y=20
submit service-quality reports to the state commission, and additional=20
reporting requirements for smaller ILECs would be =0F"an unnecessary and=20
inefficient use of resources.=0F"  The carriers were Franklin Telephone Co.=
,=20
Ludlow Telephone Co., Northfield Telephone Co., Perkinsville Telephone Co.,=
=20
Shoreham Telephone Co., Topsham Telephone Co., Vermont Telephone Co., Inc.,=
=20
and Waitsfield-Fayston Telephone Co., Inc.

CLECs, IXCs Want More Data

Most CLECs had harsh words for the FCC=0F's proposal to extend service-qual=
ity=20
reporting requirements to other classes of carriers, including CLECs.  Most=
=20
blasted the plan as favoring ILECs and pushed for additional reporting=20
requirements.

=0F"Streamlining regulations does not lead to a more competitive market but=
=20
rather should be a response to a market that has already moved toward=20
competition,=0F" the Association for Local Telecommunications Services said=
. =20
Regulations should be reduced only to the extent that there is a =0F"proven=
=20
level of competition,=0F" ALTS said.

Some of the reporting requirements that the FCC is considering eliminating=
=20
provide =0F"vital=0F" data to CLECs, ALTS said.  =0F"The Commission=0F's ac=
tions in this=20
proceeding could also be setting a dangerous precedent=0F" for other=20
proceedings, it added.  It cited proceedings related to section 271 of the=
=20
Act, under which Bell companies can apply for authority to provide in-regio=
n=20
interLATA (local access and transport area) services once they open their=
=20
local exchange markets to competition.

In future section 271 applications, the Bells =0F"may argue that they are n=
o=20
longer required to report submetrics vital to OSS (operation support system=
)=20
performance and [preventing] backsliding,=0F" ALTS said.

In joint comments, the Competitive Telecommunications Association, e.spire=
=20
Communications, Inc., KMC Telecom, Inc., Net2000 Communications, Inc., XO=
=20
Communications, Inc., and Z-Tel Communications, Inc., said the FCC=0F's=20
proposals would reduce regulation of ILECs while increasing regulation of=
=20
CLECs.

=0F"If anything, a review of the state of competition in the local exchange=
=20
market reveals that the Commission should institute additional reporting=20
requirements for ILEC provisions of [unbundled network elements] and=20
wholesale services the CLECs,=0F" the CLECs said.

Measuring CLEC service quality is unnecessary, since CLECs are =0F"beholden=
 to=20
the ILECs in their provisioning of services,=0F" Focal Communications Corp.=
=20
said.  Requiring CLECs to report such data would =0F"further hinder competi=
tion=20
by placing an additional burden on carriers already experiencing difficulti=
es=20
competing with ILECs.=0F"

The FCC should use this proceeding as =0F"an ideal opportunity to police th=
e=20
incumbents=0F' market-opening behaviors,=0F" Covad Communications Co. said.=
  It=20
suggested that the FCC collect data on ILECs=0F' wholesale service quality =
and=20
then use that data to =0F"streamline the section 271 and enforcement=20
processes.=0F"  This could =0F"end the =0F`he said, she said=0F' battle of =
data=20
reconciliation,=0F" it added.

Advanced TelCom Group, Inc., opined that the reasons the FCC mandated the=
=20
reporting requirements =0F"remain valid today.=0F"  It pointed out that inc=
reases=20
in the reporting requirements had been included as conditions of the FCC=0F=
's=20
approval of several mergers involving large ILECs.  =0F"It seems wholly=20
inconsistent to increase the reporting requirements for SBC and Bell Atlant=
ic=20
[now Verizon] and, at the same time, propose reducing the reporting=20
requirements for price cap LECs generally,=0F" Advanced TelCom said.

Making the reporting requirements voluntary, rather than mandatory, as the=
=20
FCC suggested, =0F"would defeat the purpose=0F" of the requirements, Dynerg=
y CLEC=20
Communications, Inc., said.  The FCC=0F's proposed changes of the reporting=
=20
system =0F"are unnecessary and will yield an inaccurate service picture of=
=20
carrier performance.=0F"

CLEC reporting requirements aren=0F't necessary, since CLEC customers are=
=20
service-quality=0F-sensitive, Teligent Inc., said.  =0F"To the extent that =
a CLEC=0F's=20
service quality is not comparable to an ILEC=0F's, its customers will migra=
te=20
back to the ILEC and the CLEC will find itself without customers.=0F"

EarthLink, Inc., applauded the FCC=0F's proposal to require ILECs to report=
=20
service-quality data on the provisioning of DSL service.  =0F"Limited repor=
ting=20
obligations for DSL services by large ILECs and their data affiliates would=
=20
well serve the public with relevant service information, while reducing=20
carriers=0F' overall filing burden as compared to the current ARMIS=20
obligations,=0F" it said.=20

Retaining the current reporting requirements would bring =0F"no material ad=
verse=20
consequences,=0F" AT&T Corp. said.  Meeting those obligations is not a=20
significant burden for ILECs, it said.  =0F"The systems seeded to generate =
the=20
ARMIS data are already established and were funded by captive ratepayers=20
years ago,=0F" AT&T added.  =0F"In fact, introducing different reporting=20
requirements may be more costly for the ILECs than maintaining the current=
=20
ones, because any changes to current requirements will necessitate systems=
=20
changes,=0F" AT&T concluded.

Interexchange carriers (IXCs) don=0F't have =0F"bargaining power to obtain=
=20
good-quality access service provisioning from ILECs,=0F" WorldCom Corp. sai=
d. =20
ARMIS data shows a =0F"steady decline=0F" in service quality from ILECs ove=
r the=20
past two years, showing that =0F"ILECs are engaged in precisely the type of=
=20
behavior that the service-quality reports are intended to reveal:  maximizi=
ng=20
earnings by reducing service quality,=0F" it said.

Time Warner Telecom, Inc., will be the first carrier...

Time Warner Telecom, Inc., will be the first carrier to deploy Lucent=20
Technologies, Inc.=0F's WaveStar 1.6T, an optical networking system that Lu=
cent=20
said can transmit the equivalent of 320 million simultaneous one-page e-mai=
l=20
messages.  The competitive local exchange carrier has signed a $100 million=
,=20
three-year agreement with Lucent to deploy the DWDM (dense-wave-division=20
multiplexing) equipment.=20

NECA DSL Tariff

The National Exchange Carrier Association, Inc., has filed its first FCC=20
tariff transmittal for a DSL (digital subscriber line) promotional offering=
.

Under the terms of transmittal 888, the rural telcos that participate in NE=
CA=20
tariffs will waive the installation fee for asymmetric and symmetric DSL=20
services for customers who agree to take the service for 12 months.

Rohde:  Spectrum Management Holds Key Challenge for Future

Spectrum management, including identifying and allocating spectrum for=20
third-generation (3G) services, is one of the key issues facing federal=20
regulators in the coming year, says Gregory L. Rohde, who last week finishe=
d=20
his service as head of the National Telecom-munications and Information=20
Administration.

At a news conference last week, Mr. Rohde discussed NTIA=0F's achievements =
over=20
the past year and its future challenges.  The Commerce Department agency=20
outlined many of these points in the annual report it submitted to Congress=
=20
last week.

Citing highlights from the past year, Mr. Rohde noted numerous=20
spectrum-management issues, including ultrawideband (UWB) technology testin=
g,=20
the Clinton administration=0F's effort to identify and allocate bands for 3=
G=20
services (see separate story), and U.S. success at last year=0F's World=20
Radiocommunication Conference (WRC-2000).

Mr. Rohde also cited NTIA=0F's efforts to bridge the =0F"digital divide,=0F=
" its=20
Technology Opportunities Program, and its work with the FCC to improve=20
telecom access on tribal lands.   NTIA has revitalized its Minority=20
Telecommunications Development Program, Mr. Rohde said, and it has worked t=
o=20
protect online privacy and raise awareness about online profiling.

Looking to the future, he stressed the importance of allocating 3G spectrum=
=20
and said regulators must realize the implications of the shift from=20
traditional telephony to data-transmission services.  He said the nation mu=
st=20
continue to close the digital divide for Americans who don=0F't have Intern=
et=20
access, and the universal service support system for =0F"high-cost=0F" area=
s must=20
be reformed.

Mr. Rohde said the U.S. should reach out to developing countries, or it cou=
ld=20
find itself isolated in international telecom policy-making.  =0F"I firmly=
=20
believe that it=0F's in our self-interest to work with the developing world=
 to=20
get more people online,=0F" Mr. Rohde said.

At the International Telecommunication Union=0F's World Telecommunication=
=20
Standardization Assembly last fall, the U.S. was the only ITU member countr=
y=20
that objected to cost-sharing for international Internet interconnection an=
d=20
targets for international settlement rates (TR, Oct. 9, 2000).

=0F`Datacasting=0F' License Caps To Be Imposed in Australia

The Australian Communications Authority intends to impose ownership limits =
on=20
=0F"datacasting=0F" transmitter licenses, which it expects to auction in th=
e first=20
half of the year. =20

Datacasting providers would be limited to holding one license in each of th=
e=20
nation=0F's eight datacasting service areas.  The regulatory body is puttin=
g its=20
spectrum-allocation plans in final form.

Richard Alston, Minister of Communications, Information Technology, and the=
=20
Arts, said Jan. 18 that ownership restrictions were necessary to ensure=20
competition.  =0F"At this early stage of a new industry, it is important to=
=20
encourage the maximum amount of competition in the market, and this is best=
=20
done by imposing a limit on the number of licenses that may be purchased by=
=20
one player [=0F`or its associates=0F'] in each market,=0F" he said.=20

Upon completing its spectrum engineering and allocation plans, the Australi=
an=20
Communications Authority probably will defer any further increases in=20
spectrum availability in the eight service areas =0F"until at least 2003,=
=0F" Mr.=20
Alston said. =20

Meanwhile, the government has lifted obligations under the Telecommunicatio=
ns=20
Act of 1992 that would have required datacasters also to obtain carrier=20
licenses.  These actions will =0F"increase certainty for potential datacast=
ers,=0F"=20
he added.

The government hasn=0F't ruled out allocating datacasting licenses in regio=
ns=20
other than the eight specified service areas, =0F"once the channel planning=
 in=20
regional areas has been completed,=0F" Mr. Alston said.

Nigerian Sale Yields $855M For Three Cellular Licenses

A Nigerian auction of three cellular licenses concluded Friday, Jan. 19,=20
garnering $285 million for each license.  Spectrum auctions in Canada, New=
=20
Zealand, and Venezuela are ongoing.

The winning bidders in the Nigerian auction were Communication Investments=
=20
Ltd., Econet Wireless Nigeria Ltd., and MTN Nigeria Communications Ltd.  A=
=20
fourth license was reserved for state-run Nitel and its Mtel mobile phone=
=20
unit; the payment for that license also will be $285 million.  Five groups=
=20
bid on the licenses, which were awarded after three days of bidding.

In other international spectrum developments, a Canadian auction of=20
third-generation (3G) PCS (personal communications service) licenses opened=
=20
last week and generated $262.9 million Canadian (US$173.8 million) in bids =
by=20
Friday.  Seven companies are bidding on 62 licenses covering 16 markets.

In New Zealand, the first part of an auction for licenses in the 2 gigahert=
z=20
band is over after no new bids for management rights were submitted (TR, De=
c.=20
25, 2000).  A second phase of the auction is upcoming.

And in Venezuela, an auction on a third group of five wireless local loop=
=20
licenses continued with Empresa Nacional de Telecomunicaciones SA (Entel=20
Chile) and Digicel CA winning licenses with bids of $1.5 million and=20
$300,000, respectively (TR, Jan. 15).

BT To Prioritize Local Loop Unbundling in Top Exchanges

British Telecommunications plc has agreed to make unbundling the local loop=
=20
in the urban exchanges most sought by competitors a top priority, the Unite=
d=20
Kingdom=0F's Office of Telecommunications has announced. =20

Oftel, which held a Jan. 18 meeting to discuss solutions to collocation=20
problems often encountered by BT=0F's competitors, also has launched an=20
investigation into the costs of providing collocation space.=20

Although Oftel last year modified BT=0F's license to require local loop=20
unbundling, =0F"operators did not place as many firm orders for collocation=
=20
space as had been anticipated,=0F" it said (TR, Aug. 14 and Nov. 13, 2000).

Some operators that ordered collocation space last year have decided not to=
=20
pursue local loop unbundling, Oftel noted.  =0F"Other operators want to wai=
t=20
until their top priority sites become available, while others were concerne=
d=20
about collocation costs,=0F" it said. =20

Court Allows Mobile Phone Lawsuit To Continue

A U.S. District Court judge in Louisiana is allowing a plaintiff to go=20
forward with a lawsuit that says the wireless industry should be required t=
o=20
include headsets with mobile phones to protect against the risks of radio=
=20
frequency (RF) exposure.

The wireless industry had asked the court to dismiss the litigation on the=
=20
grounds that the Food and Drug Administration=0F's authority to oversee mob=
ile=20
phone safety preempts court involvement.  But Judge Ivan L.R. Lemelle of th=
e=20
U.S. District Court in New Orleans rejected that argument last week and=20
allowed the case (Garrett J. Naquin et al. v. Nokia Mobile Phones, Inc., et=
=20
al. case no. 00-2023) to proceed.  A separate lawsuit against the industry=
=20
has been in filed in Maryland (see separate story).

The lawsuit, which was filed last year, says the mobile phone industry has=
=20
known of the potential health risks of the devices and should be required t=
o=20
reimburse consumers who already have purchased mobile phones without headse=
ts=20
and to provide headsets to those who buy phones in the future.  It also see=
ks=20
unspecified monetary damages for anguish and medical monitoring.

The lawsuit originally was filed in state court in New Orleans but was move=
d=20
to federal court at the request of the wireless industry. =20

New Orleans attorney Michael Allweiss told TR he planned to amend the lawsu=
it=20
to add at least one more plaintiff.  He is asking the court to certify the=
=20
lawsuit as a class action.

Notes on the News. . .

At the House Energy and Commerce Committee, Jessica Wallace has been named=
=20
telecom counsel, and Chairman W.J. (Billy) Tauzin has tapped Nydia Bonnin t=
o=20
be deputy staff director.  Ms. Wallace was telecom counsel in Rep. Tauzin=
=0F's=20
personal office before he became chairman.  Ms. Bonnin previously was a=20
senior finance adviser to the National Republican Congressional Committee,=
=20
where she managed the NRCC=0F's major donors program and staff.  Before tha=
t Ms.=20
Bonnin was director-federal relations for Atlantic Richfield Co.

Gov. Gray Davis (D.) has appointed Geoffrey Brown to a seat on the Californ=
ia=20
Public Utilities Commission, subject to Senate confirmation.  He would=20
succeed Josiah Neeper, whose term expired Dec. 31, 2000.  Earlier this mont=
h=20
Gov. Davis appointed his lead energy adviser, John Stevens, to fill the sea=
t=20
on an interim basis (TR, Jan. 8, notes).  Mr. Brown is the public defender=
=20
for the city and county of San Francisco, a four-year elective office he ha=
s=20
won six times.

Wisconsin Gov. Tommy G. Thompson (R.) has appointed Robert Garvin to a seat=
=20
on the Wisconsin Public Service Commission, effective March 1, subject to=
=20
state Senate confirmation.  Mr. Garvin has been PSC Chairperson Ave M. Bie=
=0F's=20
executive assistant.  He previously held staff attorney and legislative=20
liaison posts at the commission.  He would succeed Commissioner John H.=20
Farrow, who recently asked the governor not to reappoint him when his term=
=20
expires in March.  Mr. Farrow plans to return to his faculty position at th=
e=20
Milwaukee School of Engineering.

Stanley T. Sigman has been named president and chief executive officer of=
=20
Southwestern Bell Telephone Co.  His most recent position at SWBT was senio=
r=20
executive vice president-services.  Mr. Sigman succeeds J. Cliff Eason, who=
=20
has retired after 30 years with parent company SBC Communications, Inc.=20

Kymata Ltd. has announced that Brendan Hyland will step down as chief=20
executive officer of the Scottish optical telecom system manufacturer.  Chi=
ef=20
Operating Officer Michael Hickey has been named interim CEO. =20

Aquis Communications Group, Inc., a Parsippany, N.J.=0F-based paging compan=
y,=20
has named Keith J. Powell president.  He was general manager of Adelphia=20
Business Solutions, Inc.

Duncan Lewis has been named president and chief operating officer of Global=
=20
TeleSystems, Inc. (GTS), a London-based international carrier.  Mr. Lewis w=
as=20
managing director and chief corporate development officer for Equant NV.  H=
e=20
succeeds Robert J. Amman, who will remain GTS=0F's chairman and chief execu=
tive=20
officer.  But after GTS completes its proposed restructuring (TR, Nov. 20,=
=20
2000), Mr. Amman will become non-executive chairman, and Mr. Lewis will be=
=20
the CEO.

Pedro Padilla has been named chief operating officer at Grupo Salinas, a ne=
w=20
Mexico City=0F-based management group with various telecom, Internet, broad=
cast=20
TV, and wireless messaging assets in Mexico.  He was chief executive office=
r=20
at the company=0F's Grupo Elektra affiliate.=20

Albert Cohen is the new chief operating officer at Tachion Networks, Inc., =
a=20
West Long Branch, N.J., communications network equipment manufacturer.  He=
=20
had been chief executive officer at Siemens AG=0F's packet switching unit.

Jeffrey D. Lin has been named chief financial officer at Zaffire, Inc., a=
=20
California optical network developer.  He was director and=20
manager-investments at Vulcan Ventures, the investment firm of Microsoft=20
Corp. co-founder Paul G. Allen.

John W. Gamble Jr. has been named senior vice president and treasurer at=20
Agere Systems, Inc., the microelectronics group spin-off of Lucent=20
Technologies, Inc.  He was VP and chief financial officer at Honeywell=20
International, Inc.=0F's industrial controls unit.  Kevin Pennington was na=
med=20
senior VP-human resources.  He was executive VP-administration at Excel=20
Communications, Inc.

Somera Communications, Inc., has named Brandt A. Handley vice=20
president-international sales.   He was VP-international sales at Walt Disn=
ey=20
Co.  Somera is a Santa Barbara, Calif., telecom equipment manufacturer.

Stephen Cardwell has been named director-national accounts at Touch America=
,=20
the broadband telecom subsidiary of the Montana Power Co.  He comes to Touc=
h=20
America from WorldCom, Inc.=0F's national account team.  Mark Tippett was n=
amed=20
director-carrier accounts. He most recently led Pathnet, Inc.=0F's dark-fib=
er=20
sales team.=20

Murray Simser has been named vice president-business development at Wireles=
s=20
Services Corp., a Bellevue, Wash., wireless platform manufacturer.  He was=
=20
senior VP-international operations and co-founder of eAssist Global=20
Solutions, a communications software manufacturer.

Loren Stokes was named vice president-research and development at Cierra=20
Photonics, Inc.,  a California fiber optics integration technology=20
manufacturer.  He was director-R&D at Hewlett Packard Co. spin-off Agilent=
=20
Technologies, Inc.=20

Wireless infrastructure operator Crown Castle International, Inc., has name=
d=20
John Binkley vice president and general manager of its new Illinois regiona=
l=20
unit.  He was VP/GM-Kentucky region.

Advanced Remote Communication Solutions, Inc., has named David A. Brooks=20
director-government markets for its Innovative Communications Technologies,=
=20
Inc., subsidiary.  Mr. Brooks previously was project director for British=
=20
Telecom Aeronautical and Maritime.

Timothy Lewis has been picked to lead a new wireless asset-tracking team at=
=20
QUALCOMM, Inc.  The unit will focus on providing wireless communications=20
technology to construction industry fleet-management operations.  Mr. Lewis=
=20
was vice president and general manager at Tracsat, Inc.=20

Dorothy McCarthy is the new head of telecom real estate initiatives at Glob=
al=20
Broadband, Inc., a New York City integrated communications provider.  She w=
as=20
managing director-national real estate at OnSite Access, Inc.=20

Regina M. Keeney, former FCC International Bureau Chief, has become a partn=
er=20
at the Washington, D.C., law office of Lawler, Metzger & Milkman.  Her=20
practice will focus on telecom legislative and regulatory matters.  She mos=
t=20
recently was chief policy counsel at Dell Computer Corp.=20

Lauren J. (Pete) Belvin and Barry P. Miller have become members of the law=
=20
firm of Wilkinson Barker and Knauer LLP.  Ms. Belvin joined the firm in=20
September 2000, leaving her previous post as senior majority counsel for th=
e=20
Senate Commerce Committee=0F's communications subcommittee (TR, July 10, 20=
00,=20
notes).  Mr. Miller will lead Wilkinson Barker=0F's intellectual property a=
nd=20
Internet practice group.  He had been with the suburban Washington law firm=
=20
of Shulman, Rogers, Gandal, Pordy & Ecker.  Wilkinson Barker also has hired=
=20
12 new associates, the firm announced.

Ten attorneys from the Washington, D.C., law firm Greenberg Traurig have le=
ft=20
the firm to join Akin, Gump, Strauss, Hauer & Feld=0F's telecom and informa=
tion=20
technology practice in McLean, Va.  Eric Cowan, Richard Rubin, and Marjorie=
=20
Connor were named partners; Glynna Parde and Joseph Triano were named=20
counsels; and Roger Cepeda, Brad Haque, Alex Konde, Jeffrey Neuman, and Fad=
i=20
Samman were named associates.

A New York City telecom/real estate law firm has joined forces with the New=
=20
York law office of Mintz Levin Cohn Ferris Glovsky and Popeo P.C.  Jeffrey =
A.=20
Moerdler, who has moved his private law practice to Mintz Levin, has become=
 a=20
partner and head of the firm=0F's  telecom and real estate sections.  He br=
ings=20
with him seven lawyers:  Stephen E. Friedberg and Pamela Caruso Yerman, who=
=20
will be partners; and associates Helen Allison, Lorette H. Dundas, Carolyn =
C.=20
Jones, Rhona J. Kisch, and C. Anthony Mulrain.=20

Pace A. Duckenfield has been named associate counsel at the United Telecom=
=20
Council, an association that represents the telecom and information=20
technology interests of critical infrastructure utilities.  He was staff=20
counsel at the Alliance for Public Technology.=20

The National Telephone Cooperative Association has named Aaryn Slafky=20
director-communications.  She was manager-public affairs and Web coordinato=
r.=20

The Wireless Communications Association International has named Joey R.=20
Weedon communications director.  He was deputy communications director for=
=20
the national Republican Governors Association.

Patricia Mathis has been elected to the board of COM DEV International Ltd.=
,=20
a Canadian wireless communications systems manufacturer.  She=0F's chief=20
executive officer of Webley Systems, Inc., and president of Mathis, a=20
communications planning and marketing consulting firm.

The current issue of the KMB Video Journal is titled Perspectives on Teleco=
m=20
Policies for the New Century =0F- What can A Bush Administration Consider? =
 The=20
program guest is Albert Halprin, partner at Halprin, Temple, Goodman &=20
Maher.  Contact Mike Beilis at KMB, 3882 Belle Vista Dr. E., St. Pete Beach=
,=20
Fla. 33706 or by phone at 727/367-2444, or get more information at=20
http://www.kmbvideojournal.com.

Regulatory & Government Affairs

The FCC has accepted the applications of three prospective bidders for its=
=20
auction of eight licenses in the =0F"guard bands=0F" surrounding public saf=
ety=20
spectrum in the 700 megahertz frequencies.  The sale is scheduled to begin=
=20
Feb. 13.  The Form 175 applications of Nextel Spectrum Acquisition Corp.,=
=20
Harbor Wireless LLC, and Pegasus Guard Band LLC have been accepted.  The=20
applications of Access Spectrum LLC and PTPMS II Communications LLC are=20
incomplete because of invalid attachments, the agency said.  Those two=20
applicants must correct the minor deficiencies and submit the require=20
up-front payments by Jan. 26. in order to participate in the auction. =20
Companies whose applications have been accepted also must submit up-front=
=20
payments by that time.  The licenses involved went unsold at an auction in=
=20
September 2000.

The Commercial Wireless Division of the FCC=0F's Wireless Telecommunication=
s=20
Bureau has extended the time to comment on the Real Access Alliance=0F's mo=
tion=20
for a stay of certain rules on access to multitenant buildings (TR, Jan.=20
15).  The division said comments now will be due Jan. 26 in Wireless=20
Telecommunications docket 99-217 and Common Carrier dockets 96-98 and 88-57=
. =20
The Wireless Communications Association International had requested the=20
extension.

The FCC=0F's Wireless Telecommunications Bureau is seeking comments on two=
=20
requests for waivers of the Commission=0F's construction rules governing 90=
0=20
megahertz band licensees.  The rules require major trading area (MTA)=20
licensees to provide coverage to at least two-thirds of their population=20
within five years of being granted a license.  Neoworld License Holdings,=
=20
Inc., is seeking an extension of the five-year deadline from Aug. 12, 2001,=
=20
to Dec. 31, 2002.  FCI 900, Inc., a subsidiary of Nextel Communications,=20
Inc., is seeking an extension from Aug. 12, 2001, to Aug. 12, 2004.  Commen=
ts=20
on the requests are due Feb. 1 and replies Feb. 8.  Comments on FCI 900=0F'=
s=20
request should reference DA 01-121 and comments on Neoworld=0F's request sh=
ould=20
reference DA 01-122.

The FCC=0F's Wireless Telecommunications Bureau is seeking comments on=20
applications to transfer wireless licenses from Price Communications Corp. =
to=20
Cellco Partnership (d/b/a Verizon Wireless).  Comments are due Feb. 16 and=
=20
replies Feb. 26 in Wireless Telecommunications docket 01-8.  Comments shoul=
d=20
reference DA 01-120.

The FCC=0F's Wireless Telecommunications Bureau is seeking comments on=20
applications to swap licenses filed by Cingular Wireless LLC and VoiceStrea=
m=20
Wireless Corp. (TR, Nov. 6, 2000).  Under the proposed transaction, Cingula=
r=20
subsidiaries would give PCS (personal communications service) spectrum in t=
he=20
Los Angeles and San Francisco markets in exchange for VoiceStream-controlle=
d=20
PCS spectrum in New York City, St. Louis, and Detroit.  Comments are due Fe=
b.=20
20 and replies are due March 2.  They should reference Wireless=20
Telecommunications docket 01-10 and DA 01-135.

The FCC has established a comment schedule for a rulemaking notice that see=
ks=20
comments on technology standards for public safety channels in the 700=20
megahertz band (TR, Jan. 15).  Comments are due 30 days after publication o=
f=20
the notice in the Federal Register and replies are due 15 days after that i=
n=20
Wireless Telecommunications docket 96-86.

The FCC has signed agreements with BoatU.S. and MariTEL to distribute=20
maritime mobile service identities (MMSIs) to operators of ships that aren=
=0F't=20
required to obtain individual licenses from the Commission because they don=
=0F't=20
have to carry a radio.  The action came after the FCC and the U.S. Coast=20
Guard developed a standard agreement to use with the private parties.  MMSI=
s=20
are nine-digit numbers assigned to vessels participating in the Global=20
Maritime Distress and Safety System.

The Satellite and Radiocommunications Division in the FCC=0F's Internationa=
l=20
Bureau has added the Brasilsat A2 satellite operated by Empresa Brasileira =
de=20
Telecomicacoes SA to its =0F"permitted space station list.=0F"  That list c=
overs=20
all satellites with which U.S. earth stations are allowed to communicate=20
without receiving special Commission authorization.  The division said the=
=20
Brasilsat satellite would be added to the list with conditions that include=
=20
its compliance with operational requirements.  The satellite is not=20
authorized for use to provide direct-to-home or direct broadcast satellite=
=20
(DBS) services, the division said last week in file no.=20
SAT-PDR-20000111-00047.  The authorization was granted under the framework=
=20
established in International Bureau docket 96-111 for considering requests=
=20
from non-U.S. satellite systems to serve the U.S.=20

The Telecommunications Division of the FCC=0F's International Bureau has ad=
ded=20
Time Warner Telecom of Hawaii LP as a party to a cable landing license held=
=20
by GST Telecom Hawaii, Inc.  The addition was made as a result of Time Warn=
er=0F'
s purchase of 12 fibers on GST=0F's =0F"Interisland=0F" fiber optic submari=
ne cable=20
system linking Hawaiian islands.  Under the Cable Landing License Act and=
=20
executive order 10530, the Division also granted the companies=0F' request =
to=20
modify the license to reflect the way the cable system actually was=20
constructed.  The requests were granted in file SCL-MOD-20001025-00036.

Then-FCC Chairman William E. Kennard last week released a report summarizin=
g=20
the agency=0F's efforts to help bridge the =0F"digital divide=0F" in develo=
ping=20
countries.  Connecting the Globe: Telecommunications Development 2000=20
chronicles the meetings, agreements, and plans for partnerships that the FC=
C=20
reached during its global initiative in 1999=0F-2000.  During his tenure, M=
r.=20
Kennard spearheaded an effort to assist his regulatory counterparts in othe=
r=20
countries in developing telecom markets.  The report is available online at=
=20
http://www.fcc.gov/ib/developinitiative.

The FCC=0F's Wireless Telecommunications Bureau has rejected allegations by=
=20
Pegasus Broadband Corp. that Northpoint Technology Ltd. and its subsidiarie=
s=20
violated the Commission=0F's ex parte rules when they lobbied the agency to=
 use=20
the Ku-band to operate a terrestrial wireless system.  The Commission=20
approved Northpoint=0F's request in December 2000 (TR, Dec. 4, 2000).  In a=
=20
memorandum opinion and order released Jan. 17, the bureau said that while=
=20
Northpoint representatives=0F' meetings with FCC officials were permitted u=
nder=20
the ex parte rules, the company should have filed copies of notices of thos=
e=20
meetings in the files of the relevant proceedings.

The FCC=0F's Wireless Telecommunications Bureau has denied Metrocall, Inc.=
=0F's=20
petition asking it to reconsider the approval of Arch Communications Group,=
=20
Inc.=0F's acquisition of Paging Network, Inc. (TR, May 1 and Sept. 18, 2000=
). =20
Metrocall had contended that Arch abdicated an impermissible level of contr=
ol=20
to its lenders as part of the transaction.  In an order on reconsideration=
=20
released Jan. 18 in Wireless Telecommunications docket 99-365, the bureau=
=20
dismissed the petition as untimely filed.

Bartholdi Cable Co., Inc. (formerly Liberty Cable Co., Inc.) has asked the=
=20
FCC to reconsider its order affirming an administrative law judge=0F's=20
decision.  The ALJ had denied the company=0F's 15 applications for private=
=20
operational fixed microwave service (OFS) facilities and impose a $1.425=20
million forfeiture for the company=0F's lack of candor in connection with t=
he=20
applications (TR, Dec. 18, 2000, notes).  Filing its petition in Wireless=
=20
Telecommunications docket 96-41, Bartholdi said the ALJ=0F's findings were=
=20
tainted and that the FCC=0F's actions were excessive.

The FCC has granted Mescalero Apache Telecom, Inc., a waiver of its rules=
=20
that will enable the carrier to receive high-cost universal service support=
=20
based on the average cost of the 950 access lines it has acquired from Valo=
r=20
Telecommunications of New Mexico, Inc.  Those access lines serve the=20
Mescalero Apache reservation in New Mexico.  Without the waiver, Mescalero=
=20
only would be eligible for per-line support at the level Valor received=20
before the acquisition.  Section 54.305 of the Commissions=0F's rules says =
that=20
a carrier acquiring exchanges from another carrier shall receive the same=
=20
levels of per-line support for which the acquired exchanges were eligible=
=20
before the acquisition.  The FCC cited low subscribership rates on the=20
reservation and a great disparity in the amount of support Mescalero would=
=20
receive with and without the waiver.

The Competitive Pricing Division of the FCC=0F's Common Carrier Bureau has=
=20
suspended for a day and added to an ongoing investigation a tariff revision=
=20
submitted by Citizens Telecommunications Co.  Citizens had proposed in tari=
ff=20
transmittal no. 93 to adjust its expanded interconnection service rates for=
=20
cross-connects, =0F"including the unbundling of the DS3-DS1 multiplexing=20
function.=0F"  The division said last week that the revision =0F"raises the=
 same=20
issues regarding rate levels, rate structures, and terms and conditions=0F"=
 as=20
those tariff transmittals already under investigation in CC docket 97-240.=
=20

The Commerce Department and several high-tech firms have formed the=20
Information Technology Information Sharing and Analysis Center (IT-ISAC) to=
=20
work on critical infrastructure issues.  In announcing the group=0F's forma=
tion,=20
Commerce Secretary Norman Mineta said Jan. 16 that IT-ISAC would =0F"enable=
 the=20
high-tech industry to take the lead in spotting potential threats to the=20
Internet and information infrastructures, sharing state-of-the-art Internet=
=20
and information infrastructure security measures, and responding in a more=
=20
coordinated way.=0F"  Listed among the group=0F's 19 =0F"founding members=
=0F" are AT&T=20
Corp., Cisco Systems, Inc., Nortel Networks Corp., and Microsoft Corp.

Illinois Commerce Commission Chairman Richard L. Mathias has asked colleagu=
es=20
on four other state utility commissions how to respond to recent remarks th=
at=20
SBC Communications, Inc., officials made to financial analysts.  Mr. Mathia=
s=20
says the remarks raise =0F"legitimate questions=0F" about information that =
company=20
officials previously presented to regulators in the five-state territory of=
=20
SBC subsidiary Ameritech Corp.  According to Mr. Mathias, SBC Chairman and=
=20
Chief Executive Officer Edward E. Whitacre Jr. told analysts late last mont=
h=20
that Ameritech=0F's service-quality difficulties stemmed from =0F"an outsid=
e plant=20
problem,=0F" citing lack of network capacity.  During an October meeting wi=
th=20
state regulators, Mr. Whitacre had blamed service-quality problems on a lac=
k=20
of qualified technicians (TR, Oct. 23, 2000).

Legislators in Indiana, Maine, Virginia, Minnesota, and Arkansas are among=
=20
the latest to introduce bills that would restrict the use of mobile phones=
=20
while driving (TR, Jan. 15).  In addition, a Mississippi measure would make=
=20
causing a traffic accident while using a wireless phone a misdemeanor subje=
ct=20
to a fine of up to $1,000.

Ireland=0F's Office of the Director of Telecommunications Regulation says t=
hat=20
eircom plc has agreed to modify its definition of =0F"available=0F" colloca=
tion=20
space.  The Irish carrier will take that definition into account =0F"when=
=20
planning development of space in its exchanges.=0F"  Eircom also has agreed=
 to=20
expand its list of equipment that competitors can deploy in its collocation=
=20
spaces.  Finally, eircom agreed to permit sharing of collocation space by=
=20
potential competitors.  The regulator requires eircom to make these changes=
=20
in its Reference Access Offer document by Jan. 31.

The South Korean Ministry of Information and Communications has granted an=
=20
international private leased circuit license (IPLC) to Korea Thrunet Co.=20
Ltd.,  a Seoul-based broadband service provider.  Korea Thrunet plans=20
initially to use the license for internal purposes.  Next year it will offe=
r=20
IPLC services via satellite and submarine cable to domestic and global=20
customers.=20

The United Kingdom=0F's Office of Telecommunications has announced that fou=
r of=20
the U.K.=0F's largest mobile network operators on the average complete 95% =
of=20
calls placed on their networks.  Six-month surveys, which were carried out =
in=20
consultation with Oftel and consumer groups, were performed by BT CellNet,=
=20
One2One, Orange plc, and Vodafone Group plc.

Industry News

Level 3 Communications, Inc., intends to raise as much as $3 billion throug=
h=20
the sale of common stock, preferred stock, debt securities, warrants, stock=
=20
purchase agreements, or depositary shares.  The Broomfield, Colo.=0F-based =
=0F"
carrier=0F's carrier=0F" revealed its plan in a =0F"shelf registration stat=
ement=0F"=20
filed with the Securities and Exchange Commission.  Further details will be=
=20
disclosed in future filings.  Level 3 will use the funds for network=20
construction, acquisitions, and other corporate expenses.

Sprint Corp.=0F's funding arm, Sprint Capital Corp. is preparing to raise $=
2=20
billion through the sale of senior unsecured debt securities.  The proceeds=
=20
will be used to refinance short-term debts.  The company did not give a dat=
e=20
for the sale.

CIENA Corp. intends to raise $1.5 billion through the sale of stock, bonds,=
=20
or other securities, the company said in a =0F"shelf registration statement=
=0F"=20
filed with the Securities and Exchange Commission.  The Linthicum, Md.,=20
telecom equipment maker will use the funds for capital expenditures,=20
acquisitions, and other corporate expenses.

American Tower Corp. says it is seeking to raise about $350 million through=
=20
an institutional private placement of senior notes.  It expects to complete=
=20
the offering later this month, subject to market conditions.  It says=20
proceeds from the offering will be used to finance the construction of new=
=20
towers, fund acquisitions, and for =0F"general corporate purposes.=0F"

Genuity, Inc., is postponing plans to raise funds through the sale of debt=
=20
securities while it assesses =0F"the current slowdown in economic activity=
=0F" and=20
information technology spending, the company said.  Instead, it will fund i=
ts=20
operations with money from cash reserves, bank loans, and its parent compan=
y,=20
Verizon Communications, Inc.

Net2000 Communications, Inc., a competitive local exchange carrier based in=
=20
Herndon, Va., plans to trim its workforce by 10% and delay some expansion=
=20
plans to save money.  The expected savings of $80 million in 2001 will enab=
le=20
the company to operate into the third quarter of 2002 without additional=20
financing, Net2000 said.

TruePosition, Inc., has filed a lawsuit alleging that SigmaOne Communicatio=
ns=20
Corp. is infringing on three patents related to TruePosition=0F's network-b=
ased=20
wireless location systems.  The lawsuit, filed in the U.S. District Court i=
n=20
Delaware, seeks damages and an injunction prohibiting SigmaOne=0F's further=
=20
infringement of the patents.  SigmaOne officials could not be reached for=
=20
comment.

InvestAmerica, Inc. (d/b/a Optica Communications, Inc.) has signed a=20
nonbinding letter of intent to buy optical networking equipment valued at=
=20
$675 million from Nortel Networks Corp.  The Utah-based start-up said it wi=
ll=20
deploy a 20,000-mile North American network during first quarter 2002.  It=
=20
plans to expand globally.

Oy Nokia and America Online, Inc., have entered into a licensing agreement=
=20
enabling AOL to develop and market Nokia=0F's WAP (wireless application=20
protocol) microbrowser =0F"with AOL enhanced features.=0F"  The companies s=
aid they=20
expected the Netscape-branded microbrowser to be used in a =0F"wide variety=
=0F" of=20
mobile devices.

British Telecommunications plc has raised $9.1 billion through the sale of=
=20
bonds in Europe, generating cash to repay short-term borrowings.  The bonds=
=20
were sold in four tranches with terms ranging from three to 15 years.

Qwest Communications International, Inc., has signed a contract to provide=
=20
network capacity in the U.S. to Cable & Wireless plc, a London-based global=
=20
telecom carrier.  Qwest, which said it sold about $90 million worth of=20
capacity to C&W last year, placed a $100 million value on the new contract.

Nippon Telegraph & Telephone Corp. subsidiary NTT Com has agreed to form a=
=20
data center joint venture with Shin Corporations Public Co. Ltd., a Thai=20
telecom conglomerate.  Each partner will hold a 47.5% stake, and Saha Patha=
na=20
Inter-Holding Public Co. Ltd. will have 5%.  The venture will be capitalize=
d=20
at 1.72 billion yen (US$14.5 million).=20

Lucent Technologies, Inc., is selling portions of its manufacturing assets =
in=20
Poland to APW Ltd., a Wisconsin electronics infrastructure manufacturer.  A=
PW=20
will acquire 215,000 square feet of Lucent=0F's global provisioning center =
in=20
Bydgoszcz, Poland, for an undisclosed sum.  APW agreed to offer jobs to all=
=20
300 of Lucent=0F's employees at the site.=20

A group of multichannel multipoint distribution service (MMDS) operators in=
=20
Latin America are creating an alliance to promote the industry.  The foundi=
ng=20
members of Latin American Networking serve more than 40.9 million household=
s,=20
or 36% of households in the region.

Pangea Ltd. says it will lease a 1,250-mile =0F"dark=0F" (unpowered) fiber =
link to=20
Arrowhead AB, a Swedish broadband communications provider.  The Bermuda-bas=
ed=20
=0F"carriers=0F' carrier=0F" will provide Arrowhead an =0F"end-to-end link =
between=20
Copenhagen [Denmark] and Stockholm [Sweden].=0F"  Arrowhead will use the fi=
ber=20
capacity to expand its reach throughout Scandinavian markets.

Global One has signed an interconnection agreement with Latinet, a broadban=
d=20
and Internet service provider.  The pact will enable Global One to provide=
=20
frame relay service in Ecuador and Panama. =20

360networks, a British Columbia=0F-based global network operator, has acqui=
red =0F"
dark=0F" (unpowered) fiber in Berlin and Munich, Germany, and Zurich,=20
Switzerland, from Carrier1 International S.A.  The purchase is part of a $1=
75=20
million contract signed last year in which the companies agreed to sell fib=
er=20
and capacity to one another between North America and Europe.

Advanced Radio Telecom Corp. of Bellevue, Wash., says that its ART Nordic A=
B=20
subsidiary will team up with a Swedish broadband communications company to=
=20
provide IP (Internet protocol) service in Norway.  ART Nordic will make=20
available its fixed wireless IP network  to Utfors Bredband AB of Stockholm=
,=20
which will use the system with its fiber optic infrastructure.=20

FCC Reauction

Net bids in the FCC=0F's ongoing reauction of 422 =0F"C=0F" and =0F"F=0F" b=
lock PCS=20
(personal communications service) licenses hit $16.8 billion at the end of=
=20
bidding Friday, Jan. 19 (TR, Jan. 15).  The action continued to slow down,=
=20
with only 27 new bids submitted in the 73rd round.

Verizon Wireless still led all bidders, offering $8.8 billion. It was=20
followed by Alaska Native Wireless LLC, which is partly owned by AT&T=20
Wireless Services, Inc., which bid $2.8 billion.  Salmon PCS LLC=0F-partly =
owned=20
by Cingular Wireless LLC=0F-bid $2.3 billion.

The highest bids continued to be for licenses in the largest market, New Yo=
rk=20
City, with Verizon Wireless the high bidder on two licenses there and Alask=
a=20
Native Wireless the top bidder on a third.

Thirty-seven bidders remained eligible after bidding was completed Jan. 19.=
 =20
The reauction has moved into a phase that requires bidders to be more activ=
e=20
in each round to retain their bidding eligibility.

In a related development, the FCC affirmed its decision last year to modify=
=20
its rules for C and F block auctions (TR, Aug. 28, 2000).

In an order on reconsideration released in Wireless Telecommunications dock=
et=20
97-82, the Commission denied five petitions for reconsideration of the rule=
s=20
changes, which allow large entities to bid on some licenses while reserving=
=20
others for small businesses known as =0F"designated entities=0F" (DEs).  Th=
e FCC=20
said the changes balanced the needs of both large and small carriers.

Infostrada Acquisition

The European Commission has approved Enel Holding SpA=0F's acquisition of=
=20
Infostrada SpA from Vodafone Group plc.  It said Jan. 19 that the transacti=
on=20
wouldn=0F't harm competition in the telecom and Internet markets. =20

Enel, an Italian telecom and electricity provider, intends to merge=20
Infostrada into Wind Telecomunicazioni SpA, an Italian telecom joint ventur=
e=20
of Enel and France Telecom.  The commission acknowledged that the merger=20
would create overlaps in the fixed telecom and Internet service markets in=
=20
Italy, but said =0F"the overlaps are not such as to lead to any creation or=
=20
strengthening of a dominant position.=0F"=20

Interconnection Dispute

The FCC has agreed to preempt the Virginia Corporation Commission in a=20
dispute over an interconnection agreement between WorldCom, Inc., and Veriz=
on=20
Virginia, Inc. (TR, Oct. 30, 2000 p.37).  WorldCom had asked the FCC to act=
=20
on the matter after the Virginia commission refused to arbitrate the terms =
of=20
the parties=0F' interconnection agreement. =20

The state commission had cited uncertainty over whether the immunity from=
=20
federal court review granted by the 11th Amendment to the U.S. Constitution=
=20
applies to such proceedings.=20

The Virginia commission had said it was concerned that arbitrating the=20
dispute would be deemed a waiver of its immunity under the 11th amendment. =
=20
The FCC released its decision late Jan. 19 in Common Carrier docket 00-218.=
 =20

Meanwhile, in a separate, undocketed order, the FCC also granted additional=
=20
discretion to its own arbitrator when it has preempted a state commission=
=0F's=20
authority over an interconnection dispute, as it did in the Virginia case.=
=20

What's Ahead. . .

JANUARY

23=0F-Comments are due to the FCC=0F's Wireless Telecommunications Bureau o=
n a=20
draft programmatic agreement that aims to streamline the review of antenna=
=20
collocations under the National Historic Preservation Act (TR, 1/8/01 p.21)=
. =20
Filings should reference DA 00-2907.  The FCC may take action on the final=
=20
agreement around Jan. 29.

23=0F-The FCC=0F's Wireless Telecommunications Bureau holds a bidding semin=
ar to go=20
over bidding procedures for the March 6 auction of licenses in the 700=20
megahertz band.  The bureau plans to hold a test of the package bidding=20
system Jan. 24=0F-26 (TR, 1/8/01 p.25).

24=0F-Comments are due to the FCC on two requests for waivers of its =0F"st=
udy=20
area=0F" definitions (TR, 1/8/01 p.21).  Replies are due Feb. 5, and filing=
s=20
should refer to Common Carrier docket 96-45.

26=0F-Comments are due to the Office of the U.S. Trade Representative on th=
e=20
effectiveness of several international telecom trade agreements (TR, 1/15/0=
1=20
p.32).  The USTR expects to complete its assessment of telecom trade accord=
s=20
by March 31.  For more information, call 202/395-9620.

26=0F-PENNSYLVANIA:  Administrative law judge=0F's decision is expected in =
a=20
proceeding to implement structural separation of Verizon Pennsylvania, Inc.=
=0F's=20
wholesale and retail operations (TR, 12/11/00 p.25).

28=0F-31=0F-The Association for Communications Enterprises holds its winter=
 carrier=20
forum in Palm Desert, Calif.  For more information, go to=20
http://www.ascent.org.

29=0F-New deadline for Verizon Communications, Inc., to submit to the FCC a=
=20
report on its compliance with a condition placed on the merger that created=
=20
the company (Bell Atlantic Corp. and GTE Corp.)  The original deadline was=
=20
Dec. 27, 2000.  The report must address Verizon=0F's compliance with a cond=
ition=20
governing its provision of unbundled network elements and line-sharing=20
agreements (TR, 12/25/00 p.35).

29=0F-Feb. 1=0F-The annual ComNet conference and expo is held in Washington=
.  For=20
more information, go to http://www.comnetexpo.com.

30=0F-The Federal Trade Commission and the Electronic Retailing Association=
 hold=20
a seminar in Tysons Corner, Va., to go over FTC rules regarding Internet=20
marketing.  For more information, call Eric London at the FTC at 202/326-21=
80.

30=0F-The Broadband Wireless Internet Forum holds a meeting in London.  For=
 more=20
information, go to http://www.bwif.org.

30=0F-The initial meeting of the FCC=0F's advisory committee on the 2003 Wo=
rld=20
Radiocommunication Conference is held in the Commission=0F's meeting room.

FEBRUARY

2=0F-The National Telecommunications and Information Administration holds a=
=20
workshop in Washington to discuss the 2001 Technology Opportunities Program=
. =20
It will hold a similar workshop in Denver on Feb. 6, and in St. Louis on Fe=
b.=20
8.  Registration information can be found on NTIA=0F's Web site: =20
http://www.ntia. doc.gov.

5=0F-The U.S. Court of Appeals in Washington will hear oral arguments in=20
National Exchange Carrier Association, Inc., v. FCC (case no. 00-1055).  NE=
CA=20
is challenging the FCC=0F's December 1999 decision rejecting NECA=0F's prop=
osed=20
modifications to the 1999 =0F"average-schedule=0F" Universal Service Fund f=
ormula=20
(TR, 10/9/00 p.36).

6=0F-New deadline for the Universal Service Administrative Co. to file at t=
he=20
FCC its financial projections for the second quarter of 2001.  Original=20
deadline was Jan. 30 (TR, 1/15/01 p.39).

7=0F-Comments are due to the United Kingdom=0F's Office of Telecommunicatio=
ns on=20
whether to impose additional conditions on Cable & Wireless plc=0F's operat=
or=20
license for certain international routes (TR, 1/15/01 p.32).

7=0F-Deadline for Telenor AS to exercise its option to sell its 49.5% stake=
 in=20
Esat Digifone to British Telecommunications plc for a 33% stake in Esat=20
Telecom Group plc (TR, 12/11/00 p.35).  Telenor and BT agreed to extend the=
=20
deadline from Dec. 7, 2000.

8=0F-The FCC holds a meeting.

8=0F-Section 275 of Telecommunications Act prohibits Bell operating compani=
es=20
from providing alarm monitoring services until this date (TR, 11/17/97 p.7)=
.=20
The Act grand-fathered alarm monitoring operations existing as of Nov. 30,=
=20
1995.

8=0F-FCC begins phasing in rate increases under a two-step methodology for=
=20
setting pole attachment rates based on =0F"usable=0F" and =0F"unusable=0F" =
space (TR,=20
2/2/98 p.33).

13=0F-The FCC=0F's Wireless Telecommunications Bureau holds an auction of e=
ight=20
700-megahertz band licenses that weren=0F't bought at the =0F"guard-band=0F=
" auction=20
(TR, 10/16/00 p.38).

NTCA Makes Push for MAG Plan, Lifting Caps on Universal Service

Policy-makers need to realize that even though rural telcos serve only a=20
small percentage of the telecom market, their operations cover nearly 40% o=
f=20
the nation=0F's land and, in many cases, they=0F're entering multiple lines=
 of=20
business.  That=0F's the message the National Telephone Cooperative Associa=
tion=20
is carrying to the FCC and Congress as it seeks to garner more federal=20
support for some of its pet projects.

On Capitol Hill, NTCA plans to revive its legislative push to eliminate cap=
s=20
on the amount that individual carriers are eligible to receive in universal=
=20
service support, says Chief Executive Officer Michael Brunner.  The=20
association is considering broadening that proposal to include a broadband=
=20
tax credit plan, he says.

At the FCC, the group=0F's most pressing concern is getting quick adoption =
of=20
the multiassociation group (MAG) plan for overhauling the interstate access=
=20
charge system for telcos operating under rate-of-return regulation, Mr.=20
Brunner tells TR.  An edited transcript of our conversation follows.

TR:  What are NTCA=0F's top priorities for the 107th Congress?  Should we e=
xpect=20
to see your proposal from the last Congress to lift the universal service c=
ap?

Brunner:  The answer is yes.  As you know, we were instrumental in working=
=20
with [Sen. Conrad] Burns [R., Mont.] in getting that bill introduced in the=
=20
last session.  Obviously that=0F's a priority again, as the Rural Task Forc=
e has=20
sort of come up with half a loaf in recommending an index cap.

We see the Rural Task Force plan as better obviously than the current=20
situation, but we see it causing a problem down the road.  For example, if =
a=20
lot of acquisitions occur=0F-and I think they will=0F-then there=0F's going=
 to be a=20
need to upgrade all those lines. =20

The current cap won=0F't be adequate to do that, and we hope the Commission=
,=20
under any circumstances, wouldn=0F't go below what the Rural Task Force is=
=20
recommending.

TR:  That effort garnered bipartisan backing from key U.S. senators last=20
session.  What=0F's your strategy for expanding congressional support for i=
t in=20
the 107th Congress?

Brunner:  One way to do that might be to go back to the drafting of the=20
Telecommunications Act of 1996, when Congress really understood that we hav=
e=20
to give equal weight to the twin goals of competition and universal service=
. =20
Our feeling is that this Commission and the past Commissions, perhaps, may=
=20
have given more weight to competition and less to universal service.

It=0F's real clear in the statute that Congress thinks those issues are equ=
ally=20
weighted, and whether or not people like it, things cost more in rural=20
America.  If we really want to bring broadband services to all Americans, w=
e=20
can=0F't do it without some kind of support. =20

And if Congress is saying on the one hand, =0F"Deploy advanced services,=0F=
" it=20
seems odd to say on the other hand, =0F"We=0F're going to limit this cap, l=
imit the=20
support.=0F"

Rep. Nathan Deal [R., Ga.] was our key guy in the House on this last year,=
=20
and Sen. Burns in the Senate.  We=0F're working with a lot of other people,=
 too,=20
to see if we can=0F't be more comprehensive this time around.

For example, another key component of our plan could be some kind of tax=20
credit or a low-interest [Rural Utilities Service] loan.  And rather than=
=20
have one bill address this part and one for that part, we may have all of=
=20
those wind up in one comprehensive package.

On the broadband tax credit plan, the idea is to develop. . .a bill that=20
would enable carriers to claim a fairly substantial credit for deploying=20
broadband services to rural areas.  We don=0F't want it to be technology-=
=20
specific, where you end up with something that seems to favor one technolog=
y=20
over the other.

I don=0F't want to be too specific because we=0F're still working with a nu=
mber of=20
our own members to work out the details.  We don=0F't have a perfect packag=
e=20
yet. . .and I don=0F't think it would be hugely expensive.  We realize no o=
ne=0F's=20
going to go for a big spending bill, especially with the economy sort of=20
turning right now, or potentially turning.

But we=0F're still moving forward on this.  Our annual meeting will be held=
 the=20
first week in February, and that=0F's when we=0F're really going to start h=
ashing=20
out some of these things and talking about some overall policy resolutions.

TR:  One thing you haven=0F't mentioned is a deregulatory approach to broad=
band=20
service deployment.  Why?

Brunner:  We really haven=0F't been drawn to that approach for a lot of rea=
sons,=20
one being that we think a broadband tax credit bill is a more targeted=20
approach that really gets at the issue.  If the policy-makers really want t=
o=20
deploy broadband services nationwide, and they say they do, this is the way=
=20
to help us to do it.

TR:  Staying on the congressional front, what=0F's NTCA=0F's reaction to Fr=
ed Upton=20
[R., Mich.], who has limited telecom experience, being named chairman of th=
e=20
House Energy and Commerce Committee=0F's telecommunications subcommittee?

Brunner:  We=0F're excited about Fred Upton being in that role.  He does ha=
ve=20
some rural parts to his district; in fact, some of our own commercial telco=
=20
members are up there=0F-Bloomingdale Telephone Co. of Bloomingdale, Mich., =
and=20
Climax Telephone Co., of Climax, Mich.

Also, the ratio now in the House is about 14 urban members to one rural=20
member.  So whenever you get a person with some rural territory in a key=20
telecom policy-making slot, NTCA is thrilled.  We think that Mr. Upton will=
=20
do a good job and hope he=0F'll be sensitive to NTCA=0F's issues.

TR:  I understand that you=0F've been consulting with members of Congress a=
bout=20
the MAG plan and that some senators have asked the FCC to put it on the fro=
nt=20
burner.  What kind of time line do you have in mind for action on the MAG=
=20
plan?

Brunner:  We want to move it quickly.  We=0F've spent a lot of time, as hav=
e=20
other trade associations, getting our members on board.  It was a grueling=
=20
process, and I think the product=0F's pretty good.  So our feeling, at this=
=20
point, is that we really want the whole thing adopted as is.

We=0F're not comfortable backing off any part of it.  If the Commission doe=
s=20
back off or review it, then we reserve the right to say, =0F"Stop, and let=
=0F's=20
look at it again.=0F"

The main thing is keeping the process moving.  It=0F's easy for things to g=
et=20
bogged down in the regulatory or congressional processes.  We have many=20
friends on Capitol Hill, mainly in the Senate, where so many members have k=
ey=20
rural areas in their state.  The main message right now is, =0F"Let=0F's ke=
ep the=20
MAG plan moving.=0F"

Most people think it=0F'll probably take six months to a year to get the wh=
ole=20
thing through.  The other wild card, to some extent, is the Rural Task Forc=
e=20
report, which is moving along on a fast track.  There=0F's some commonality=
=20
between those two.  Our dream=0F-although we thought it probably wasn=0F't =
super=20
likely=0F-was that the Commission would just simply adopt the MAG plan as i=
s.

TR:  What about the expected turnover at the FCC?  How do you see that=20
affecting the Com-mission=0F's consideration of the MAG plan?

Brunner:  It could go a bunch of different ways.  You could get someone=20
coming in who says, =0F"A lot of real smart people spent a lot of time on t=
his,=20
and rather than reinvent the wheel, I=0F'm more inclined to support it.=0F"

Or you could get someone else who says, =0F"I don=0F't understand all this,=
 and I=20
want to start from square one and take my time.=0F"  We just don=0F't know =
who the=20
players are going to be.  I expect some of the current Commissioners still=
=20
will be there.

TR:  Most believe Commissioner Michael K. Powell will be tapped to fill the=
=20
vacant chairman seat, at least initially.  Have you gotten any feedback fro=
m=20
his office about his position on the MAG plan?

Brunner:  Not really.  We=0F've visited the staffs of all the Commissioners=
, and=20
most of them weren=0F't real specific on [the plan].  So we certainly want =
to=20
give him and others the benefit of the doubt.  We hope they would view it=
=20
favorably.  I think everyone will respect the work that went into it, even =
if=20
they don=0F't agree with it.

TR:  Let=0F's talk about your recent white paper recommending that universa=
l=20
service =0F"high-cost=0F" support be =0F"nonportable=0F" [TR, Jan. 15].  Ho=
w did you come=20
to this conclusion, and where do you go with it?

Brunner:  What we=0F've got there is a study with some actual data.  It sho=
ws=20
that introducing competition in rural areas is ultimately going to lead to=
=20
less broadband technology deployment. =20

Our next step is to try to convince regulators that artificial competition=
=20
doesn=0F't work.  If there=0F's an actual market for more than one carrier,=
 then=20
indeed consumers might benefit.  But there aren=0F't great public benefits,=
 as=20
we see it, to artificially creating competition where markets don=0F't=20
ordinarily permit competition as a matter of course.

Our point is that sometimes the regulators try to take an urban solution an=
d=20
inject it into rural America.  It makes sense to induce competition in=20
downtown areas like Los Angeles or Chicago, where the average Bell company=
=20
has anywhere from 130 to 150 customers per mile.  But we only have four or=
=20
five or six per mile=0F-very small numbers.

We would argue that it=0F's hard for one carrier to really make it in these=
=20
markets.  And if they force a second one or a third one in, it splits up th=
e=20
business even more, and no one=0F's going to have the wherewithal to delive=
r=20
broadband services.

One of our main themes on Capitol Hill and at the Commission is that=20
policy-makers need to appreciate the fact that rural areas are different. =
=20
Most policy-makers, as you might imagine, have an urban background. . .Our=
=20
job is to continue to try to educate people about the differences between=
=20
urban and rural areas.

We=0F've done that with some success.  For example, we=0F've had several of=
 the=20
Commissioners come out and speak at our meetings, spend time with our=20
members, talk with them one-on-one.  [Commissioner Harold W.]=20
Furchtgott-Roth, for example, came out and visited a small telco with us.  =
We=20
really look for opportunities to give them a greater appreciation of these=
=20
kinds of things.

Going back to Congress, we also want to really caution people not to reopen=
=20
up the Telecommunications Act or to pass a new Act until some of the key=20
rural issues are resolved.  We=0F're now going on five years since passage =
of=20
the Telecommunications Act, and some of our members still can=0F't plan bec=
ause=20
they don=0F't know about [the outcome of] access charge reform.  As you kno=
w,=20
our members get better than 50% of their revenues from access charges.

The biggest decisions for the new Commission will be on high-cost support a=
nd=20
access charge reform.  Both the MAG and the Rural Task Force plans have=20
touched on that.

TR:  Switching gears to the incoming Bush administration, how do you forese=
e=20
the Department of Agriculture=0F's Rural Utilities Service [RUS] developing=
 over=20
the next few years?  Will there be major changes?

Brunner:  Actually, to be honest, no one knows.  My sense is that the RUS n=
o=20
longer is the political issue it used to be because when people look at it,=
=20
they=0F're seeing that the cost of that program is so minute.  It=0F's some=
where=20
around $6 million or $7 million in interest subsidies for about $600 millio=
n=20
in loans.

And everyone thinks it does work well; there=0F's never been a default.  So=
 I=20
don=0F't sense we=0F're going to have an effort, as was made in the Reagan=
=20
administration, to really cut back on some of these things.  I could be=20
totally wrong, but my sense is it has enough respect and support on both=20
sides of the aisle.

Plus, the lending no longer is simply for the same =0F"plain old telephone=
=20
service=0F"; it=0F's now for some new things.

TR:  Let=0F's talk about NTCA=0F's membership.  What kind of efforts are un=
der way=20
to accommodate some of your members=0F' non-ILEC [incumbent local exchange=
=20
carrier] operations?

Brunner:  Many years ago there were questions about how our members would=
=20
adapt to change in competition.  My sense is that they=0F're adapting quite=
=20
well, as almost all of them are in multiple lines of business.  They=0F're=
=20
becoming Internet service providers, many of them are in the cable TV=20
business, most of them have wireless or broadcast satellite operations, som=
e=20
are resellers, and many are becoming CLECs [competitive local exchange=20
carriers].

They=0F've gotten into multiple lines of business, so they are becoming, in=
 a=20
lot of ways, more than ILECs.  We=0F've broadened our approach to assist th=
em in=20
some other areas.  So it=0F's a very active membership, some more than othe=
rs.

We have a new initiative called C3A.  It=0F's really an effort to get membe=
rs=20
who are thinking more competitively to get together and perhaps aggregate=
=20
their businesses with things like volume discounts. =20

I=0F've been very pleased with our membership=0F's willingness to grow and =
change. =20
For a while I thought they just might want to keep doing things the same ol=
d=20
way that has always worked for them.  But they really are changing.

We=0F're not the biggest player.  We=0F're only about 5% of the industry, b=
ut it=20
really is a critical 5%.  We represent roughly 40% of the land in this=20
country, but it=0F's a unique and critical part.

We would just really hope that the policy-makers would make it a priority t=
o=20
understand that the 5% we serve is as important as the whole.  That=0F's=20
something that some people miss.

Executive Briefings

The New FCC? =0F- Speculation is rife that a decision on the FCC top spot i=
s=20
imminent, as FCC transition team advisers meet to discuss potential changes=
=20
at the agency.  (Page 3)

Biennial Regulatory Review =0F- The FCC asks its staff to prepare proposals=
 to=20
eliminate or streamline a broad range of rules, including those governing=
=20
intercarrier compensation for terminating telecom traffic, wireless licensi=
ng=20
terms and renewals, and international service tariffs for nondominant=20
interexchange carriers.  (Page 5)

FCC Gridlock? =0F- Although the departure of FCC Chairman Kennard leaves th=
e=20
agency temporarily with four members=0F-two Republicans and two Democrats=
=0F-
Commissioner Furchtgott-Roth doesn=0F't expect the agency to be deadlocked.=
 =20
(Page 6)

Ultrawideband Technology Testing =0F- Ultrawideband devices can likely oper=
ate=20
in spectrum between 3 and 6 GHz without harming incumbent users, including=
=20
fixed satellite service operators, according to NTIA test results.  But NTI=
A=20
says that steps to mitigate interference would probably be necessary.  (Pag=
e=20
7)

Mobile Phone Litigation =0F- Noted attorney Peter G. Angelos enters the leg=
al=20
fray against the wireless industry over the safety of mobile phones.  Mr.=
=20
Angelos files an amended lawsuit on behalf of a Maryland doctor who claims=
=20
that using a mobile phone caused his brain tumor.  (Page 8)

Spectrum Relocation Reimbursement =0F- NTIA proposes procedures under which=
=20
federal government spectrum incumbents would be reimbursed if they relocate=
=20
to other bands to make way for commercial users.  NTIA Administrator Greg=
=20
Rohde says the rules could bolster efforts to identify and allocate spectru=
m=20
for =0F"3G=0F" services.  (Page 9)

State Immunity =0F- The Fifth Circuit joins a chorus of appeals courts in r=
uling=20
that the U.S. Constitution doesn=0F't protect state utility commissions fro=
m=20
federal judicial review of their decisions regarding carrier interconnectio=
n=20
agreements.  (Page 11)

InterLATA Bid Redux =0F- Verizon officials are counting on new data to sati=
sfy=20
regulators=0F' concerns about its application to provide interLATA services=
 in=20
Massachusetts.  Verizon again asks the FCC to allow it to enter that market=
;=20
it withdrew its earlier application last month.  (Page 13)

Interactive TV Inquiry =0F- Although the market for high-speed interactive =
TV=20
services is in the early stages of development, the FCC hopes to stay =0F"a=
head=20
of the curve=0F" by collecting information on the status of the ITV market =
and=20
whether it should regulate it.  (Page 14)

Qwest-BellSouth Alliance =0F- It was the rumor du jour 21 months ago:  Bell=
South=0F'
s purchase of a 10% stake in Qwest meant the companies might merge.  Times=
=20
have changed, however, and BellSouth now is cashing in much of its Qwest=20
investment to raise $1 billion for other projects.  (Page 15)

Qwest Performance Data =0F- Qwest says it has improved its service to end-u=
ser=20
customers and other carriers in key areas=0F-including those that have come=
=20
under fire from consumers and regulators.  The company cites new data and=
=20
announces four permanent line-sharing pacts.  (Page 15)

NorthPoint Bankruptcy =0F- NorthPoint Communications doesn=0F't expect to e=
merge=20
from bankruptcy as an independent entity but has asked a bankruptcy court t=
o=20
allow a =0F"structured sale=0F" of its assets.  One analyst expects bids fr=
om=20
McLeodUSA, XO Communications, and interexchange carriers seeking local=20
broadband infrastructure.  (Page 16)

Reseller Discrimination Case =0F- A federal appeals court upholds a lower c=
ourt=20
decision directing AT&T to pay $2.1 million for discriminating against a=20
reseller in favor of its own retail customers.  (Page 17)

WorldCom Customer Settlement =0F- WorldCom agrees to pay $88 million to=20
customers who claim they were overcharged by being billed nonsubscriber=20
rates.  (Page 17)

Globalstar Trouble =0F- A skeptical teleconference audience confronts Globa=
lstar=20
Chairman and CEO Bernard Schwartz as he announces the company=0F's plan to=
=20
suspend payment on its debts.  Investors demand to know why they shouldn=0F=
't=20
force the company into bankruptcy.  (Page 18)

Asian Networks =0F- A Washington, D.C.=0F-based international telecom lawye=
r says=20
that =0F"creative financing=0F" is necessary to get capital for telecom=20
infrastructure projects in Asia.  He unveils a white paper recommending=20
combinations of funding methods such as vendor financing and export credit=
=20
agency support.  (Page 18)

Brazilian Wireless Merger =0F- Portugal Telecom plans to expand its Brazili=
an=20
presence by acquiring wireless operator Global Telecom, which operates=20
networks in the Parana and Santa Catarina states.  Those states are neighbo=
rs=20
to Sao Paulo, where Portugal Telecom already offers wireless service throug=
h=20
its Brazilian subsidiary, Telesp Celular Participacoes.  (Page 19)

Intelsat Privatization =0F- Intelsat CEO Conny Kullman says the group is ge=
aring=20
up for privatization by building technological and regional flexibility int=
o=20
its business plans.  (Page 19)

WorldCom-Intermedia Merger =0F- The transaction clears its final federal=20
regulatory hurtle as three FCC bureaus approve license transfers related to=
=20
the proposed transaction.  It still needs additional state regulatory=20
approvals, and WorldCom is facing a lawsuit from Digex minority shareholder=
s=20
seeking to block the transaction.  (Page 20)

Rhythms Cutbacks =0F- Rhythms NetConnect-ions intends to reduce its expecte=
d=20
losses this year by 15%, to $395 million, by cutting 450 employees=0F-or 23=
% of=20
its workforce=0F-and by suspending operations in about 20 of its smaller=20
markets. (Page 20)

Reciprocal Compensation =0F- Level 3 and SBC agree on a two-tiered reciproc=
al=20
compensation rate scheme designed to resolve disputes about payments for=20
terminating dial-up calls to Internet service providers.  (Page 21)

More Trouble for IXCs? =0F- The financial future of interexchange carriers=
=20
continues to be clouded by downward pressure on rates for voice long distan=
ce=20
service, analysts say.  That pressure will intensify=0F-and will begin to a=
ffect=20
data service, too=0F-as new entrants like Global Crossing and Level 3=20
Communications finish building new networks.  (Page 22)

700 MHz Band Auction =0F- Citing a host of concerns, Verizon Wireless asks =
the=20
FCC to delay until September the auction of spectrum in the 700 MHz band. =
=20
The auction currently is scheduled to begin March 6.  The FCC sets a Jan. 2=
4=20
deadline for comments on the request.  (Page 24)

Cellular License Revocation =0F- Judges on a federal appellate panel expres=
s=20
skepticism at a former cellular licensee=0F's argument that the FCC wrongly=
=20
revoked its license for falsely maintaining that all its partners were U.S.=
=20
citizens.  (Page 25)

CLEC Access Charges =0F- Many CLECs seem resigned to the FCC=0F's adoption =
of a =0F"
benchmark=0F" rate essentially capping the access charges they can levy on=
=20
interexchange carriers.  But they hope the FCC will take a cautious approac=
h,=20
recognizing that they often have higher costs than ILECs, particularly if=
=20
they serve rural areas.  (Page 26)

Service-Quality Reports =0F- The FCC=0F's proposal to reduce service-qualit=
y=20
reporting by ILECs gets a resounding thumbs-down as state regulators,=20
end-user interests, and competitive carriers argue the need for the data. =
=20
Even the ILECs=0F-which likely would benefit from the reductions=0F-object =
to=20
portions of the plan.  (Page 28)

NTIA=0F's Assessment =0F-  Spectrum management, including identifying and=
=20
allocating services for 3G services, is one of the key issues facing federa=
l=20
regulators in the coming year, says NTIA Administrator Greg Rohde.  (Page 3=
2)

NTCA=0F's Agenda =0F- CEO Michael Brunner says NTCA will make a big push to=
 get=20
more members of Congress on board with its plan to repeal caps on universal=
=20
service support and to approve a broadband tax credit bill.  At the FCC, he=
=20
says NTCA=0F's main concern is adoption of the MAG access charge plan.  (Pa=
ge =20
41)
Copyright 2001, Telecommunications Reports International, Inc. All rights=
=20
reserved.
dlaerialdayelecnews@aerial1.com, fmckenne@usta.org, johnf@cha.org, 