BloostonLaw Telecom Update
Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast
Vol. 4, No. 22 June 6, 2001
IN THIS WEEK'S ISSUE
Small CLEC Seeks
Partial Stay Of Recip. Comp. Order
CoreTel Asks D.C.
Circuit To Intervene
Committee Voices
Concern Over New IXC Charges
Illinois
Legislature Rewrites State Telecom Statutes
11th
Circuit Remands Florida Rights-of-Way Ordinances
FCC Clarifies Certain
Rules Regarding MAS Service
CTIA Asks FCC To
Revise Wireless Regulatory Fees
Pennsylvania PUC
Approves Verizon's Request
LAW & REGULATION
INDUSTRY TRENDS
CALL
FOR ACTION
Small CLEC Seeks Partial Stay Of Recip. Comp. Order
CoreTel
Says FCC's 10% Cap on Growth Eligible
For
Compensation, "New Market Bar" Provision
Will
Force Company To Go Out of Business
Core
Communications (CoreTel), an 11-employee competitive local exchange carrier
(CLEC) based in Annapolis, Md., has requested a partial stay of the FCC's
reciprocal compensation order on remand, pending judicial review. Specifically,
CoreTel requests that the FCC stay implementation of the "growth cap"
and "new market bar" on reciprocal compensation for Internet service
provider (ISP)-bound minutes that will become effective June 14. Under the
FCC's order, a cap will be imposed on total ISP-bound minutes for which a LEC
may receive compensation, equal to the number of ISP-bound minutes for which
that LEC was previously entitled to compensation, plus a 10% growth factor.
Further, the FCC added a flat bar on a carrier receiving any inter-carrier
compensation when it enters a new market--e.g., one in which it had not exchanged
traffic prior to April 2001, the date the Commission adopted the reciprocal
compensation order on remand. CoreTel sees these rules as the imposition of a
de facto "bill and keep" system.
CoreTel
also asks that the FCC act on its petition by June 7. The company says it is
seeking emergency relief because the growth cap and new market bar will
likely force CoreTel out of business in
at least three of the seven markets it serves or plans to serve. CoreTel is a
very small company, with year 2000 gross revenues of $2.82 million. It serves
approximately 50 ISPs from four data centers, from where it manages 2,800
modems and 2,000 digital subscriber line (DSL) circuits.
Essentially,
CoreTel helps small to medium-sized ISPs provide Internet connectivity without
investing in expensive data and telecommunications network equipment. CoreTel
argues that its entry into markets has been "substantially slowed by
Verizon's delays in supplying the necessary interconnection facilities."
These delays are the subject of a complaint before the Maryland Public Service
Commission, CoreTel says.
CoreTel
argues that the FCC's growth cap and new market bar rules "violate the
most fundamental principle of administrative law: Similarly situated parties
must be treated similarly." For example, it says, two CLECs that have
relied on FCC rules to formulate their business plans will face different
transition periods under the Commission's order. A large, slow-growing CLEC
will receive reciprocal compensation for all ISP-bound traffic it terminates.
But a small, fast-growing CLEC will receive reciprocal compensation for only a
fraction of its ISP-bound traffic--or, in the case of a new market entrant, no
reciprocal compensation at all. "The FCC's evident desire to avoid
opportunities for regulatory arbitrage and to limit distortions in the
operation of a competitive market also does not provide a reasoned basis for
discriminating against carriers with little or no existing ISP-bound
traffic," CoreTel says. It also argues that the "10%" figure for
the cap has no reasoned basis. CoreTel
says that the FCC simply took the aggregate projections of CLEC trade
associations which suggested a 7% to 10% growth for dial-up Internet traffic
nationwide, and rejected incumbent LEC projections of 40% growth nationwide.
The FCC "failed to provide the required evidence of a connection between
industry aggregate estimates of the growth of dial-up Internet access traffic
and firm-specific, market-specific projections of the growth of dial-up
Internet access traffic for a specific firm in a specific market," CoreTel
argues.
Further,
it says the FCC's process to arrive at the growth cap and new market bar rules
was fatally flawed. CoreTel argues that the Commission never "publicly
proposed" these rules in a Notice of Proposed Rulemaking or Public Notice
seeking comments after the U.S. Court of Appeals for the District of Columbia
Circuit remanded the agency's initial declaratory ruling on reciprocal
compensation issues. "The Commission never gave adequate notice that it
would consider a discriminatory transition scheme, such as the growth cap and
new market bar," CoreTel says.
The
company argues that in the absence of a stay it will suffer irreparable
harm. Even before judicial review can
be completed, it says, it likely will have to abandon its plans to serve three
new markets--Philadelphia, Pittsburgh, and New York--because it will not
receive any reciprocal compensation revenues in those markets. The company also
said that it would be forced to close one of its four data centers.
BloostonLaw
contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
CoreTel Asks D.C. Circuit To Intervene Before Recip. Comp. Order Takes Effect
At
our deadline, Core Communications (CoreTel) followed its request for partial
stay of the FCC's reciprocal compensation order (see separate story) with an
"Emergency Petition for Enforcement of Mandate" at the U.S. Court of
Appeals for the District of Columbia Circuit. Essentially, CoreTel argued that
by adopting an alternative rationale in its "Order on Remand," the
FCC failed to follow the court's instructions when it remanded Bell Atlantic v. FCC. The court had asked
the Commission to explain its rationale for concluding that Internet service
provider (ISP)-bound traffic was "interstate" rather than
"local" (BloostonLaw Telecom Update, April 25). CoreTel argued that
the Commission's reciprocal compensation order fails to comply with the D.C.
Circuit's mandate in three respects:
(1.) The
court directed the FCC to explain why extension of the Commission's so-called
"end-to-end" jurisdictional analysis to Section 251 (b) of the Telecommunications
Act "made sense in terms of the statute or the Commission's own
regulations." But on remand, the FCC's reciprocal compensation order
rejects application of Section 251 (b) and attempts to justify the reciprocal
compensation rules on entirely new statutory grounds under Section 201.
(2.) The
court upheld the FCC's view that reciprocal compensation under Section 251
(b)(5) is available only for "local" telecommunications. But on
remand, the FCC reversed this rule, holding that "all" telecommunications
were subject to that statute.
(3.) The
court instructed the FCC, as an "independent ground requiring
remand," to resolve whether calls to ISPs are "telephone exchange
service" or "exchange access"--with the former subject to
reciprocal compensation, and the latter not subject to it. But on remand, the
FCC decided that ISP-bound calls are yet another category of
telecommunications--"information access."
As
a result, CoreTel argued, the FCC's reciprocal compensation order on remand is
"plainly inconsistent" with the court's mandate in the Bell Atlantic case. CoreTel asked that the
D.C. Circuit, prior to the June 14 effective date of the reciprocal
compensation order, (1) enforce the mandate, (2) vacate the reciprocal
compensation order, and (3) issue a writ compelling the FCC to hold that
ISP-bound traffic is subject to Section 251 (b) reciprocal compensation.
BloostonLaw
contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
NARUC Consumer Affairs Committee Voices Concern Over New IXC Charges
State Regulators Want Customers To Have
Info
On
How To Avoid Paying New Monthly Fee
The Consumer Affairs Committee of the National Association of Regulatory
Utility Commissioners (NARUC) has gone on record opposing new
long-distance billing charges and the manner in which they have been imposed on
customers. The NARUC panel this week sent letters to the nation's major
long-distance providers, expressing its concern over the new charge appearing
on many telephone customer bills across the country this year and how some
long-distance companies implemented the charge without notifying their customers.
NARUC singles out AT&T for praise because the company gave customers
advance notice of the new charge and information on how to avoid paying the
monthly fee.
Customers of Sprint and AT&T are now being charged $1.50 per month if they receive and pay their long-distance charges with their local telephone bill, NARUC said. MCI WorldCom has not instituted this charge on a nationwide basis but is considering such a move. NARUC said that many customers are uninformed or even unaware of this new charge, making it doubtful they would understand the charge could be avoided by requesting a separate bill or online payment option. The NARUC Consumer Affairs Committee questions the rationale for the need for the separate line item charge and goes on to ask the long-distance companies to do a better job of informing their customers about it. The NARUC panel suggested that the companies send customers follow-up information with ways to avoid the new billing charge.
Long-distance companies cite increased costs for billing services provided by
former Bell local telephone companies. However, the committee of state
commissioners believes that changing costs of doing business cannot justify a
separate line item charge, which it states "amounts to a rate
increase." The NARUC committee further states that it "believes that
consumer information is vital in a competitive marketplace. Companies should compete
on the basis of business practices and customer relations in addition to
price." Some states require individual customer notifications before
implementing new charges such as this on customer bills. However those
state regulations do not necessarily apply to interstate long-distance
services, NARUC said.
BloostonLaw contacts: Ben Dickens and Gerry Duffy.
Illinois Legislature Rewrites State Telecom Statutes
To Open Local Networks
The
Illinois Legislature has rewritten the state’s telecommunications laws to open
local telephone networks to competition. Dominant carriers, such as
SBC/Ameritech and Verizon, must give competitors greater access to their
networks, according to the legislation, HB 2900. The measure recently passed
the Senate 45-2, and the House 112-5. It is expected to be signed by Gov.
George Ryan (R) in the near future.
.
Provisions
of HB 2900 include: (1) Local phone companies must restore outages within 24
hours or give customers up to $20 in credits per day, plus the use of a cell
phone; (2) Business customers will receive an automatic $90 million refund from
SBC/Ameritech; (3) SBC/Ameritech must provide competitors with more access to
phone lines; (4) Each violation of competition, service quality or other
Illinois Commerce Commission (ICC) rules could result in a maximum $250,000
fine for SBC/Ameritech and a maximum $30,000 fine for other incumbent local
exchange carriers (ILECs); and (5) Both SBC/Ameritech and Verizon must offer
high-speed Internet access to 80% of their customers by Jan. 1, 2005.
The bill also requires all ILECs to offer
residential customers a three-tiered rate package for local service, with rates
set by the ICC and capped for five years. Although rates have not been set,
Illinois lawmakers envision the following: (1) a basic plan offering dial-tone
and unlimited local usage for less than $10 per month; (2) an intermediate plan
offering dial-tone, unlimited local usage, choice of two vertical services, and
100 minutes of intraLATA (local access and transport area) toll calls for less
than $25 per month; and (3) an advanced plan offering all of the above plus
unlimited high-speed Internet access via digital subscriber line (DSL) or an
equivalent high-speed service for less than $100 per month. The Legislature has
until July 1 to send the bill to the governor.
BloostonLaw
contacts: Ben Dickens and Gerry Duffy.
11th Circuit Remands Florida Rights-of-Way Ordinances
The
11th U.S. Circuit Court of Appeals has ruled that some parts of
municipal rights-of-way ordinances requiring franchises to provide telecom
service are preempted by Florida law, but that the Telecommunications Act of
1996 provides a “safe harbor” from some restrictions on municipal rights-of-way
authority. In BellSouth v. Palm Beach,
the 11th Circuit affirmed, reversed, and remanded parts of a lower
court decision that upheld the rights-of-way ordinances of Palm Beach and Coral
Springs, Fla. BellSouth had argued that the ordinances should be voided in
their entirety because they violated the Telecom Act Section 253 (a) ban on
state or local barriers to entering the telecommunications market. While the 11th
Circuit acknowledged that Section 253 (a) prohibits barriers to entry, it
pointed out that Section 253 (c) offers municipalities an exemption or safe
harbor if they managed their rights of way in a neutral manner.
The
11th Circuit remanded the case to the lower court to determine
whether sections of the ordinances that are not preempted by Florida state law
violate Section 253 (a) because they "may prohibit or have the effect of
prohibiting the ability of any entity
to provide any interstate or intrastate telecommunications service." If
the lower court subsequently finds that any of these provisions do violate that
section of the Telecom Act, then the cities will have the opportunity to show
that the provisions fall within the safe harbor provided in subsection (c), the
11th Circuit said.
In
this decision, the 11th Circuit is at odds with a recent 9th
Circuit decision which found that several Washington state municipal ordinances
have the effect of regulating not only rights of way but telecommunications
companies themselves, in violation of Section 253 (c) of the Telecom Act
(BloostonLaw Telecom Update, April 25).
BloostonLaw
contacts: Ben Dickens and Gerry Duffy.
FCC Clarifies Certain Rules Regarding MAS Service
Responding to four petitions for reconsideration, the FCC last week clarified certain rules regarding the Multiple Address Systems (MAS) service. MAS is used primarily by the power, petroleum, and security industries for various alarm, control, interrogation, and status reporting requirements, as well as the paging industry for control of multiple paging transmitters in the same general geographic area. The service operates on 3.2 megahertz of spectrum in the 900 MHz band. This includes the 928/952/956 MHz bands, and an additional 20 channels in the 932/941 MHz band for public safety, federal government, and “private internal services.” The FCC previously decided to auction MAS channels over defined geographic areas, except for certain channels reserved for "private internal" operations.
The
FCC defined “private internal” as “a service where entities utilize frequencies
purely for internal business purposes or public safety communications and not
on a for-hire or for-profit basis.” It clarified that a company such as
Radscan, which provides alarm monitoring services, meets the eligibility
criteria for private internal service because its use of the frequencies are
purely for internal business purposes, and that neither its subscribers nor its
central station customers have access to any transmission capacity. Radscan
uses the MAS frequencies not as a direct source of revenue, but as a means of
internal communications to support its business, the FCC said. Further, the
Commission reinstated a provision that allows “non-profit, cost-shared use” of
the private frequencies. Thus, the FCC will permit the licensing of non-profit,
cost-shared systems in the private MAS bands by parties that otherwise would be
eligible for individual licensing in the private bands.
On
the other hand, the Commission declined to allow for-profit carriers to lease
excess capacity in the private MAS bands. Although the FCC recognized that
leasing excess capacity facilitates spectrum efficiency, it said that in this
particular instance, “such benefits can be achieved from non-profit,
cost-shared use” of the bands. Additionally, on its own motion, the Commission
amended its rules “to emphasize that grandfathered operations cannot be
modified in a manner that is inconsistent with our current rules. In this
connection, operators in the private internal bands are prohibited from
acquiring new frequencies for the purpose of expanding private carrier service
in the private internal bands and from changing the use of their frequencies in
any manner that violates our rules.”
Regarding
incumbents, the FCC decided to extend “the privileges of grandfathered
incumbents in the 928/952/956 MHz bands to transferees and/or assignees of
incumbents and their successors whose MAS operations remain unchanged.” In this
regard, the FCC said it would not prohibit the transfer and/or assignment of
licenses held by incumbents in the private internal MAS bands to entities
seeking to employ non-private internal uses. On its own motion, the Commission
clarified the rule that reads: “Any
station licensed by the Commission prior to July 1, 1999, as well as any
assignments or transfers of such station as of Jan. 19, 2000, shall be considered
incumbent.” The Commission said that
“assignments of the subject stations or transfers of control must have
been approved by the Commission and consummated as of Jan. 19, 2000, to be
eligible for incumbency status. Pro forma
transactions involving non-substantial changes will not affect the eligibility
status of an MAS operator.”
Additionally,
the FCC decided to add an Economic Area (EA)-like licensing area comprised of
the Gulf of Mexico for MAS. Thus, the licensing scheme for MAS includes 172 EAs
specified by the Commerce Department, and EA-like areas for Guam, the Northern
Mariana Islands, Puerto Rico, the U.S. Virgin Islands, American Samoa, and the
Gulf of Mexico. The Commission noted that the Gulf area has experienced an
increased demand for voice, data, and video services. But the FCC warned that
Mexico has primary use of the frequencies and the United States has secondary
use within a distance of 113 kilometers of its side of the common border.
In
light of concerns about interference, the FCC decided to allow mobile master
MAS stations in the 956.25-956.45 MHz band on a primary basis. And it will
permit them in the 952 MHz and on the site-based channels in the 941 MHz bands
on a case-by-case basis, if the 956.25-956.45 MHz frequencies are not
available. Further, the Commission reaffirmed its decision to allow mobile
operation on frequencies licensed by geographic area “to the extent that such
operation does not cause harmful interference to adjacent channel, site-based
licensees, and co-channel adjacent EA licensees.” But the agency clarified that
mobile operation for site-based licensees in the 959.85-960 MHz band will be
prohibited.
BloostonLaw
contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.
CTIA Asks FCC To Revise Wireless Regulatory Fees
In
a recent ex parte letter, the Cellular Telecommunications & Internet
Association (CTIA) asked the FCC to revise the proposed fiscal year (FY) 2001
regulatory fee schedule "to avoid imposing an improper bias against the
wireless industry." According to CTIA, the Commission overestimated the
wireless industry's proposed regulatory fee liability by underestimating the
number of commercial mobile radio service (CMRS) units at year-end. "Since
the Commission continues to apply a unit-based annual regulatory fee system to
the CMRS industry, a realistic number of year-end CMRS units must be used for
the denominator to avoid imposing an erroneously high CMRS unit charge,"
CTIA said.
Based
on the year-end data published in the FCC's Local Telephone Competition Report,
CTIA estimated that the Commission's proposed CMRS regulatory fee is nearly
11.1% too high. "Adjusting the
proposed $0.30 per unit CMRS regulatory fee to account for the number of
year-end subscribers actually reported to the Commission yields an FY 2001
regulatory fee of $0.2708 per unit, a reduction of at least $3 million,"
CTIA said.
The
association argued that the FCC's methodology is flawed because it places a
disproportionate burden on the fastest growing segment of the communications
industry, regardless of cost. CTIA said the Commission should modify its
regulatory fees and adopt a "zero-based" approach. "Furthermore,
the Commission should avoid penalizing carriers by increasing annual regulatory
fees for anticipated shortages caused by the Commission's failure to enforce
its fee schedule," CTIA said.
BloostonLaw
contact: Richard Rubino.
Pennsylvania PUC Approves Verizon's Request To Sell Long-Distance Service
The
Pennsylvania Public Utility Commission (PUC) today said it would recommend to
the FCC that Verizon be allowed to sell long-distance service in the state, so
long as the company agreed to several conditions to "fully prove its
market is open to competition." The conditions include Verizon agreeing to
a "permanent performance assurance plan with self-executing
remedies," and "increased penalties when its service fails to meet
established performance standards." The PUC vote was 3-2.
Under
the increased penalties provision, Verizon would pay $25,000 every time it
missed a standard beyond 90 days. And it must agree to apply performance
standards to its electronic billing system, which is used to bill competitors
using its network. It would pay $50,000 every time it violated a standard up to
30 days; $75,000 for violations extending to 60 days; $100,000 for violations extending to 90 days; and $100,000 for
each month beyond 90 days. Depending on the violation, Verizon would pay its
penalties to its competitors affected by the violation, or a portion to the
competitors and a portion to an escrow account for the independent verification
of its future performance. The permanent performance assurance plan would be
based on the New York model, which has been approved by the FCC. And Verizon would have to drop its appeal
before the Pennsylvania Commonwealth Court, which essentially argues that the
PUC lacks legal authority to impose performance standards. Verizon has 10 business days from today,
June 6, to either accept or reject these conditions.
The
PUC's approval does not give Verizon the authority to enter the long-distance
market; the FCC will make the final decision. So far, the FCC has granted such
authority in New York, Texas, Oklahoma, and Kansas.
BloostonLaw
contacts: Ben Dickens and Gerry Duffy.
RTF ORDER EFFECTIVE DATE: The text of
the FCC's "Rural Task Force" or "Rural High-Cost Reform
Order" was published in the June 5 Federal Register. The effective date of
the order is June 5, except for several sections that contain information
collection requirements and are, therefore, subject to Office of Management and
Budget Approval. Those sections are
36.605(c)(2); 36.611; 54.305(f); the amendments to 54.307(b), 54.313(b) and
(c), 54.314, and 54.315. The FCC
subsequently will publish a document in the Federal Register to announce the
effective date of those sections. Petitions for reconsideration may be filed 30
days from the June 5 effective date. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
***
NARROWBAND PCS RULES: The FCC's
notice of final rules for narrowband personal communications services (PCS) has
been published in the Federal Register, with an effective date of Aug. 3. As
reported previously, the FCC decided to channelize and license the 1 megahertz
of narrowband PCS spectrum held in reserve; rechannelize 712.5 kHz of
previously channelized spectrum for which licenses have not been auctioned; and
adopt a band plan that includes both nationwide and Major Trading Area (MTA)
licenses (BloostonLaw Telecom Update, May 9). Petitions for reconsideration may
be filed 30 days from the Aug. 3 effective date. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.
***
VERIZON REQUEST FOR RELIEF:
The FCC has asked for comments on Verizon's May 1 letter to the Commission
requesting relief from one of the conditions in the "Bell Atlantic-GTE
Merger Order." At issue is the condition that Verizon is to maintain its
separate advanced services affiliate for nine months after a "final and
non-appealable judicial decision…determines that the separate advanced services
affiliate must be deemed a successor or assign of the incumbent local exchange
carrier." Verizon argues that it is in the public interest to lift this
restriction because it will enable the company to deploy advanced services more
quickly and economically. Comments are due
June 14, with oppositions or responses due June 21. BloostonLaw
contacts: Ben Dickens and Gerry Duffy.
***
NON-PUBLISHED NUMBER LAWSUIT: The
Philadelphia, Pa., Common Pleas Court has dismissed a class action suit
alleging that Bell Atlantic (now Verizon) misrepresented the meaning of the
phrase “non-published telephone number” on its Web site. In Knipmeyer v. Bell Atlantic, plaintiffs
argued that “non-published” falsely implies that Verizon does not disclose such
numbers to anyone, including owners of toll-free numbers. Kevin and Joanne
Knipmeyer had paid Verizon for a non-published number that was not listed in
either the phone book or in directory assistance. But when Verizon bills the
owner of a toll-free number, it lists all phone numbers—including non-published
ones—that made calls to the toll-free number. Plaintiffs argued that they paid
for a service they did not receive. The court ruled that Verizon’s tariff
specifically defines the rights of customers who subscribe to the non-published
service: Omission of the customer’s telephone number from the directory and the
inability of outside callers to connect without knowing the customer’s phone
number. “Omission of the customer’s telephone number from bills to toll-free
number owners is not one of those rights,” the court said. “The Knipmeyers
essentially ask the court to expand their rights under non-published telephone
service beyond the rights specifically set forth in the tariff. The filed-rate
doctrine prohibits this court from expanding those rights and bars the
Knipmeyers’ claims,” the court concluded. BloostonLaw contacts: Ben Dickens and Gerry Duffy.
***
FCC GRANTS NDNC
PETITION: The FCC has
granted North Dakota Network Company's (NDNC's) petition for determination of
effective competition for the various North Dakota communities. NDNC had filed
a Petition for Special Relief requesting a finding of effective competition in
various North Dakota communities in conjunction with its showing of compliance
with Section 21.912 of the Commission's rules. NDNC's petition was unopposed.
The Communications Act and the Commission's rules provide that only the rates
of cable TV systems that are not subject to effective competition may be
regulated. One of the bases by which a cable system will be deemed subject to
effective competition is where a franchise area is: (1) served by two or more
unaffiliated multichannel video programming distributors, each of which offers
comparable programming to at least 50% of the households in the franchise area;
and (2) the number of households subscribing to multichannel video programming,
other than the largest multichannel video programming distributor, exceeds 15%
of the households in the franchise area. In the absence of a demonstration to
the contrary, cable systems are presumed not to be subject to effective
competition. BloostonLaw contact: Gerry
Duffy.
***
CALEA EXTENSION PETITIONS: In a May 31
Public Notice, the FCC requested comments on an additional list of some 120
wireline carriers that qualify for a preliminary extension of time to comply with
Communications Assistance for Law Enforcement Act (CALEA) capability
requirements. Unless revoked by the Commission or superseded by a final
determination on the underlying extension request, the additional wireline
carriers on the list are deemed to have a preliminary extension of the June 30
deadline for complying with CALEA Section 103. Comments are due June 11, and replies are due June 18.
BloostonLaw contact: Gerry Duffy.
***
VIRGINIA APPEAL: The Virginia
Telecommunications Industry Association has appealed a federal district judge's
decision that Virginia law prohibiting the commonwealth from barring
municipalities from providing telecommunications service was
"unenforceable under the Supremacy Clause of the Constitution"
(BloostonLaw Telecom Update, May 30). In Bristol
v. Earley, the city of Bristol, Va., had argued that the
Telecommunications Act of 1996 preempts the Virginia statute. The judge had
ruled that state law was in conflict with federal law and, therefore, void
under the Supremacy Clause. The FCC, in 1997 and 1999, declined to preempt
state laws barring municipalities from entering telecommunications in Texas and
Missouri, respectively. The Texas case was upheld by the U.S. Court of Appeals
for the District of Columbia Circuit, and the Missouri case is pending before
the 8th U.S. Circuit Court of Appeals. BloostonLaw contacts: Ben Dickens and John Prendergast.
Research Firm Has Rosy Projection for Cell Phones
Despite
the recent economic downturn, mobile phone manufacturers are expected to sell
500 million handsets this year, according to Gartner Dataquest. The research
firm says that wireless carriers, especially those in Europe, are gambling that
new handset sales will help them recover the billions of dollars they spent on
building high-speed networks. Further, Gartner noted that Nokia of Finland
extended its lead over other manufacturers in the first quarter of this year.
Nokia’s world market share increased to 35.3% from 33.9% in fourth quarter
2000. This is approximately three times the market share captured by
second-place Motorola (13.2%). Gartner also said that Germany’s Siemens AG (6.9%)
edged out Ericsson of Sweden (6.8%) for third place. Earlier this year,
Ericsson announced that it was getting out of the mobile phone business
(BloostonLaw Telecom Update, Jan. 31).
The
rosy projections by Gartner and other analysts suggest that mobile phone
production will not stifle deployment of third-generation (3G) wireless
services. In fact, some analysts
predict that Asia will overtake Europe as the top wireless market some time
this year, allowing manufacturers such as Samsung and Sony to challenge the
current market leaders. On the other hand, Cahners In-Stat Group has a less
optimistic forecast for 3G. Citing delays in handset production, high costs to
buy spectrum, and slow consumer acceptance, Cahners In-Stat Group says that
although the Japanese market will be the first to widely deploy 3G, there will
be no nationwide coverage until late 2002. And despite European commitments for
early 3G deployment, it will be mid-2003 before even moderate subscriber uptake
occurs, according to In-Stat. It also says that 3G service providers will not
see profitability until well after 2005.
***
BROADBAND DEPLOYMENT: U.S.
households with broadband Internet access nearly doubled in the last six
months, while homes with dial-up access fell, according to Statistical
Research. U.S. homes with digital subscriber line (DSL), cable modem and
DirecTV satellite connections rose to 9.4 million this month from 5.2 million
last November. Cable modems were 70 percent of the total, up from two-thirds in
November. But Statistical Research says that this growth is not significant,
given that broadband penetration had barely reached 2 million homes, or 2
percent of all U.S. homes. The total number of homes with Internet service is
55.1 million.
***
McCORMICK TO HEAD USTA: Effective July
1, Walter McCormick will become President of the United States Telecom
Association (USTA). He will succeed Gary Lytle, who was named Interim President
following Roy Neel’s departure earlier this year. McCormick was President of
the American Trucking Association, and he previously served as Republican Chief
Counsel for the Senate Commerce Committee.
***
CTIA CONTRACTS FOR HEALTH RESEARCH: The Cellular Telecommunications & Internet Association (CTIA) has announced three contracts to study the health effects of mobile phones. The value of the contracts--with laboratories in the United States, Germany, and Italy--is estimated at $1.5 million. The purpose of the studies is to repeat previous research into the effects of RF radiation emitted from cell phones, according to CTIA.
LAW
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659-0830
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Harold
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John A. Prendergast, 828-5540, jap@bloostonlaw.com
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