Telecommunications Reports - February 5, 2001

Verizon Wireless' Reauction Bids Create Buzz As Analysts Praise Carriers'
Activities in Sale
U.S. Carriers See Progress in Opening Markets But Ask USTR To Keep Pressure
on Laggards
USTR Delays Plea for WTO Probe Of Mexico, Keeps Options Open
Burns To Unveil `Tech Seven' Legislative Package; House, Senate Telecom
Panels To Add Members
Powell To Lead with Review Of FCC Operational Changes
Tauzin Demands Report on Critical Infrastructure
AT&T Execs See Hope of Truce In Long Distance Price Wars
Verizon Wireless is rolling out its two-way text messaging service,...
Versatel Absorbs VersaPoint, Cuts Workers, Writes Off Assets
E.spire Mulls Reverse Split To Meet Nasdaq's Conditions
Convergent To Cut Workforce, Close Offices
Early Talks with WRC-03 Nations Seen As Key for U.S. Success
Bureau OKs Satellite Operators For Intersatellite Communications
DoJ, FBI Want Foreign Control Of DT Limited by FCC Conditions
Intelsat Told To Disclose Privatization Info
Don't Exempt Foreign Agencies From Ex Parte Rules, Carriers Say
Unlicensed International Carriers Given 90 Days To Come Forward
FCC Delays 700 MHz Auction Again at Request of Industry
QUALCOMM Creates Platform To Spur Wireless Internet Apps
PCIA Drops Opposition To Lifting Spectrum Cap
France, Brazil Have Troubles Awarding Wireless Licenses
Telefon AB L.M. Ericsson has announced a $400 million network expansion
contract...
FCC Sets Arbitration Schedule For Interconnection Disputes
Pay-Per-Call Providers' Case Should Go to FCC, Court Says
Aerial v. Underground Facilities Is Topic of City-CLEC Debate
AeA Advises against Regulating Competitive Broadband Markets
Missouri PSC Faults SW Bell's InterLATA Bid
CLECs Tout Effect on Economy But Seek Help from Congress
Furchtgott-Roth's Departure Plan Sparks Speculation on Nominees
Court Upholds FCC Rules Giving ILECs Road to Pricing Flexibility
AT&T Corp. has won a multiyear $100 million broadband service contract...
Utah Bill Takes Aim at Cities Entering Telecom Business
Va. Regulators Tell Verizon Not To Cut Off CLEC's Customers
Oftel Extends BT Price Controls For Retail, Wholesale Services
Loral Scraps $3.5 Billion Plan For Direct-to-Consumer Service
European Commission Seeks Cybercrime Policy Harmonization
Psion plc and Motorola, Inc., say they are discontinuing a joint agreement...
Personnel
Regulatory & Government Affairs
Financial Briefs
Industry News
Wireless Industry Says Agreement Could Streamline Antenna Siting
What's Ahead. . .
Executive Briefings

Verizon Wireless' Reauction Bids Create Buzz As Analysts Praise Carriers'
Activities in Sale

The buzz on Wall Street last week in the wake of the FCC's reauction of 422 "
C" and "F" block PCS (personal commu-nications service) licenses focused on
the aggressiveness of Verizon Wireless, the nation's largest wireless carrier.

Industry observers also talked up the prices paid for three 10- megahertz
licenses in New York City.

Verizon Wireless agreed to shell out more than $4 billion-or nearly a quarter
of the entire $16.8 billion the auction netted-for just two New York City
licenses (TR, Jan. 29).  The additional 20 MHz of spectrum will give it 45
MHz in the nation's largest market.

Alaska Native Wireless LLC, which is 39.9%-owned by AT&T Wireless Services,
Inc., won the third New York City license with a $1.4 billion bid.

Verizon Wireless topped all bidding at the sale, which ended Jan. 26,
offering more than $8.7 billion for 113 licenses covering 150 million "pops"
(potential customers).

"It is very interesting that the company with one of the strongest spectrum
positions before the auction. . .has felt the need to be so aggressive,"
Lehman Brothers, Inc., analyst John M. Bensche said in a note to investors
last week.  "We commend Verizon for its boldness in the auction, where it
garnered spectrum over almost twice as many `pops' as the next-closest
bidder."

Mr. Bensche noted that Verizon Wireless and its founding companies "had been
quite conservative in their acquisition philosophy. . .This prior
conservatism makes the aggressive bidding all the more remarkable, and we
wonder how much of the `new' philosophy was transplanted into the venture by
Vodafone, the world leader in spectrum bullishness."

Verizon Wireless is a joint venture of Verizon Communications, Inc., and
Vodafone AirTouch plc.

"Verizon, with its voracious appetite, was the clear upset victor," said
Michael I. Rollins, an analyst with Salomon Smith Barney, Inc.  He had
predicted before the auction that the carrier would bid $3 billion to $5
billion on licenses.

"Although we understand that spectrum is an attractive resource, we were a
bit surprised at how aggressive the company was relative to others in the
auctions," Cynthia M. Motz, an analyst for Credit Suisse First Boston Corp.,
agreed in a note to investors.  She had expected Verizon Wireless to bid less
than $1.3 billion in the reauction.

"Based on their auction wins, we believe Verizon is unlikely to be an avid
participant in subsequent auctions," including the 700 megahertz band sale,
Ms. Motz added.

The FCC's Wireless Telecommunications Bureau last week postponed the 700 MHz
band auction from March 6 to Sept. 12 (see separate story).

Verizon Wireless officials have declined to comment on the reauction results,
citing the FCC's anti-collusion rules.  But Dennis F. Strigl, the carrier's
president and chief executive officer, acknowledged at the Comnet Conference
& Expo in Washington last week (see separate story) that the overall prices
paid at the sale were "extremely high."

Analysts speculated why Verizon Wireless had agreed to pay so much for the
New York City spectrum.  It could be that the carrier wanted to ensure
dominance in the wireless data market, or to guarantee that competitors-such
as Cingular Wireless LLC-didn't land the valuable frequencies, they theorized.

Or perhaps Verizon Wireless is closer than analysts believe to being tapped
out regarding its available spectrum in New York, they speculated.

"The company has been quite mum about exactly why it felt the need to bulk up
so much," Mr. Bensche said.  "Of course, it will be incumbent upon management
to be much more forthcoming about their view of the revenue and EBITDA
(earnings before interest, taxes, depreciation, and amortization) potential
around wireless data than they have been in the past as they seek to explain
the $8.8 billion increase in the debt load."

Indeed, Credit Suisse First Boston last week downgraded Verizon
Communications' stock from a strong buy to a buy, in part because of its need
to raise cash to pay for the spectrum and the costs of building its wireless
network.  The parent company has said it will lend the wireless unit the
money to pay for the licenses.  Standard & Poor's revised its outlook on
Verizon Communications to stable from positive, citing the auction debt as
one reason.

Whatever Verizon Wireless' reasons for snatching up the New York City
spectrum, analysts concede that licenses there are valuable for any carrier.
"In order to provide nationwide coverage in the United States, New York is
mandatory," noted Knox Bricken, an analyst at the Yankee Group.

Overall, Mr. Bensche said, the C and F block reauction proceeds equate to
$4.18 per "megahertz pop," just behind third-generation (3G) auctions in the
United Kingdom ($4.29 per MHz pop) and Germany ($4.68 per MHz pop) last year,
which raised more than $80 billion (TR, May 1, and Aug. 21 and 28, 2000).
Verizon Wireless' bidding worked out to $5.79 per MHz pop, Mr. Bensche said.

"We believe that biding was rational, and that an average of $4.18/pop/MHz
was a reasonable amount for carriers to pay for the spectrum available," Mr.
Rollins said.

Analysts Scrutinize Other Strategies

Here's a look at analysts' take on how the other largest carriers did at the
auction:

AT&T WIRELESS:  It didn't win any licenses separately but will benefit from
those won by its "designated entity" (DE), or small-business, partner Alaska
Native Wireless, which bid $2.8 billion for 44 licenses.

Through that alliance, analysts note, AT&T Wireless gained spectrum in Los
Angeles and New York, bringing its holdings to 45 MHz in those markets.  It
also added licenses in other major markets.

AT&T Wireless told analysts last week that the additional spectrum would
allow it to roll out a 3G system in 16 additional markets.  In all, the
carrier says, it will be able to deploy the 3G universal mobile
telecommunications system (UMTS) technology in 88 of the top 100 markets.

In addition, Mr. Bensche noted that DE affiliates or subsidiaries of two
other carriers with close ties to AT&T Wireless-Triton PCS Holdings, Inc.,
and Dobson Communications Corp.-also won a total of 28 licenses at the
auction.

CINGULAR WIRELESS:  The carrier has 85% equity in DE Salmon PCS LLC, the
number-three bidder at the reauction with $2.3 billion in bids on 79
licenses.  Analysts say Salmon won licenses in a number of markets where
Cingular needs to fill in holes in its footprint, including Minneapolis;
Denver; Portland, Ore.; Norfolk, Va.; Pittsburgh; and Richmond, Va.

It also won licenses that could shore up Cingular's spectrum position in
other key markets, including Los Angeles, Dallas, and Boston.

But it failed to win any spectrum in New York City-a key market.  Cingular
already has a 10 MHz block of spectrum in the Big Apple, thanks to a swap of
licenses with VoiceStream Wireless Corp. announced before the auction (TR,
Nov. 6, 2000).

Mr. Bensche said Cingular "should be comfortable" with that block until it
can acquire more spectrum in New York City in the 700 MHz band auction.  He
called Cingular-backed Salmon's decision not to remain in bidding for New
York City spectrum "an act of bravery on behalf of [Cingular] shareholders."

Ms. Motz also commended Cingular for its "disciplined" bidding via Salmon.  "
While the pressure was on for Cingular to win a New York license, it was not
enough for the company to be pressured into paying more than it was willing,"
she said.

Salmon officials have said they intend to use the licenses for their own
network, although they would have the right to use Cingular's name and might
establish roaming and operations agreements with the large carrier.

VoiceStream:  A VoiceStream subsidiary, Voice-Stream PCS BTA, bid $482
million for 19 licenses.  Its DE affiliate, Cook Inlet/VS GSM V P, offered
$506 million for 22 licenses.

The companies filled important VoiceStream footprint holes in the Carolinas,
including Charlotte and Greensboro in North Carolina and Charleston and
Columbia in South Carolina, analysts said.

VoiceStream also picked up licenses in Texas, the Pacific Northwest, and the
Midwest.  Its auction success, combined with its planned merger with
Powertel, Inc., and recent spectrum swap with Cingular, has helped it build a
nationwide footprint, Mr. Bensche said.

Ms. Motz said Cingular's and VoiceStream's auction results "could suggest
that the two intend to work closely together on favorable roaming
arrangements in the near future (since each has what the other needs already
built out)."

SPRINT PCS:  SprintCom, Inc., a Sprint PCS subsidiary,  dropped out of the
reauction.  But SVC BidCo L.P., a DE that is 80%-owned by Sprint PCS, won
five licenses for $281 million.  The licenses are in areas where analysts say
Sprint PCS had only 10 MHz of spectrum-Tampa and Orlando in Florida,
Cincinnati and Dayton in Ohio, and Norfolk, Va.

Analysts note that Sprint PCS also secured additional spectrum in a swap with
AT&T Wireless announced before the auction.  They say that because it has
such a strong spectrum position (30 MHz of spectrum in the majority of its
markets), they aren't surprised it wasn't more aggressive in the sale.

NEXTEL COMMUNICATIONS, INC.:  Nextel Spectrum Acquisition Corp., a Nextel
subsidiary, dropped out of the reauction when bidding got too high, as did
Connectbid LLC, a Nextel DE bidding partner controlled by cellular industry
pioneer Craig McCaw.  Analysts were not surprised.  They said the auction did
not afford Nextel a chance to secure a full national footprint.

"The prospect of holding only 10 MHz of PCS spectrum in a handful of markets
at high prices is not an ideal remedy to Nextel's current spectrum need," Mr.
Bensche said.

"With an average of 16 MHz of spectrum in the 800 MHz band to operate its
iDEN system, it would suit Nextel more to acquire a contiguous 10 MHz on a
nationwide basis rather than a piecemeal collection of properties,"  he said.

Analysts expect Nextel to continue acquiring 800 MHz and 900 MHz band
spectrum and say it also could pursue licenses at the 700 MHz band auction.  "
Whatever the strategy, the completion of the auction puts Nextel's
competition in a much stronger position to better compete in both the voice
and data markets, leaving Nextel at a disadvantage for future services," Mr.
Bensche said.

Meanwhile last week, Dana Frix, an attorney for San Antonio-based Allegheny
Communications, Inc., told TRthat company officials still were considering
their options for contesting the auction results.

Allegheny, which dropped out of the reauction before it was over when the
prices got too high, says the DE rules permitted large carriers to
participate through "shell entities" for licenses reserved for
entrepreneurs.  Allegheny failed to persuade the U.S. Court of Appeals in
Washington to block the reauction the day before it began in December 2000
(TR, Dec. 18, 2000).

The 35 winning bidders in the reauction have until Feb. 12 to submit down
payments, the FCC said in a public notice released last week.  The bidders
also must submit their "long-form" 601 applications, as well as form 602,
which includes ownership information, by that date.  The FCC has said it
would review ownership arrangements of winning auction bidders closely before
granting licenses.

Of the 422 licenses on the block in the reauction, 170 were reserved for
qualified DEs and 252 were open to all bidders.  Mr. Bensche noted that the
liberal capitalization rules for DEs allowed large companies to jump back and
forth between bidding on "open" and "closed" licenses, using bidding credits
for the open licenses through the DEs.

"In reality, this drove up the prices in the closed blocks to the same levels
as the open licenses being chased by the designated entities," Mr. Bensche
concluded.  "In fact, analyzing all of the markets in which at the close of
the auction one of the open licenses was won by a bidder with bidding
credits, we come to the conclusion that the closed blocks went for 9% more
than the open blocks!"

Meanwhile, last week bankrupt NextWave Telecom, Inc., whose reclaimed
licenses were snatched up at the reauction, filed its reply brief with the
U.S. Court of Appeals in Washington in its case against the FCC.

In its brief, NextWave repeated its argument that the cancellation of its
licenses was prohibited by the U.S. Bankruptcy Code.  Oral arguments are
scheduled for March 15 in NextWave Personal Communications, Inc., v. FCC
(case nos. 00-1402 and 1403).

-Paul Kirby

U.S. Carriers See Progress in Opening Markets But Ask USTR To Keep Pressure
on Laggards

Countries around the world are making progress in complying with open-trade
agreements affecting telecom services, but much more work needs to be done,
U.S. carriers have told the Office of the U.S. Trade Representative.

The carriers' statements about global telecom markets had familiar themes.
They raised issues similar to those that have dominated debates on opening
U.S. service markets to competition-disputes over pricing unbundled network
elements and policies on collocating competitors' equipment in incumbents'
facilities.

USTR recently asked for comments on the effectiveness of the World Trade
Organization's basic telecom trade agreement, the telecom trade provisions of
the North American Free Trade Agreement, and other telecom trade pacts.  It
plans to complete its annual review of the agreements by March 31.

Germany

Germany was a primary target of competitors' complaints about the progress of
market-opening efforts.  The Competitive Telecommunications Association said
the market conditions for competitors had "worsened" in Germany over the last
year.

"The intermingling of interests between the German federal government and
Deutsche Telekom [AG], which the German federal government controls in
numerous overt and subtle ways, remains a serious problem," CompTel said.

CompTel objected to "exorbitant" licensing fees that require an "up-front
payment of administrative costs projected over a 30-year period."  It charged
that Deutsche Telekom had delayed delivering services to competitors'
customers and imposed onerous conditions on collocating equipment in its
central offices.

Covad Communications Group, Inc., also complained of market conditions in
Germany, specifically the rates for unbundled local loops.  It said Deutsche
Telekom had proposed charging 34 deutsche marks ($16.25) per month for a
local loop, an increase of 33%.  Deutsche Telekom's online service unit
offers ADSL (asymmetric digital subscriber line) service for 49 deutsche
marks ($23.42) per month.

"In order to provide a comparable ADSL retail product in a sustainable
competitive market, a new entrant would have to charge an end user 49
deutsche marks, while paying Deutsche Telekom 34 deutsche marks per month for
a loop (in addition to apportioned payments for collocation, transport, and
OSS, as well as amortizing the increased nonrecurring loop charge of 357
deutsche marks [$170.69])," Covad said.

In addition, the competitor would have to amortize its own investments in
equipment and network infrastructure, as well as salaries and marketing
costs, it said.

Mexico

As USTR decided last week to wait on pursuing a complaint against Mexico at
the World Trade Organization (see separate story), U.S. carriers continued to
raise concerns about market conditions in Mexico.

WorldCom, Inc., said Mexico "unquestionably presents the most serious and
pressing concerns."  USTR's "persistent efforts to improve competitive
conditions in Mexico have resulted in some progress," it said, but it cited
some remaining problems:

(1)  The rule that gives the incumbent, Telefonos de Mexico SA de CV
(Telmex), sole authority to negotiate accounting rates with foreign
carriers.  Competitive carriers can't offer "market-based rates" for
international calls because Telmex has resisted reducing the "huge subsidies"
it receives from U.S. carriers and customers, WorldCom said.

(2)  The Mexican regulatory agency, the Comision Federal de
Telecomunicaciones (Cofetel), has refused to implement "flexible and
cost-oriented international termination rates" as an alternative to the
current system.

(3)  Cofetel has failed to regulate Telmex as a "dominant" carrier.

(4)  Cofetel's decision-making process lacks "transparency," and Telmex's
competitors don't have adequate input into the regulatory process.

CompTel said that "despite promises of real change, no real advances have
been made" in Mexico.  Telmex, it added, is failing to meet its obligation to
provide timely, nondiscriminatory, and cost-based interconnection.

CompTel viewed the decision to cut the rate for "on-net interconnection" to
1.25 cents per minute as a "positive step."  Telmex has challenged the rate
in court.  Telmex charges carriers a "resale" tariff rate of more than 9
cents per minute to terminate traffic in cities where the competitive carrier
doesn't have a network, CompTel said.

Spain

Spain's Ministry of Science and Technology has completed an initial review of
Telefonica S.A.'s "reference interconnection offer," Covad reported.  It said
it had several concerns with the terms of the offer.

Telefonica "offers only discriminatory collocation," it said, explaining that
Telefonica requires competitors to install equipment in separate caged
collocation spaces and restricts the types of equipment that can be
installed.  Covad also complained about Telefonica's slow provisioning
intervals for unbundled loops and lack of information on the condition or
availability of loops.

United Kingdom

Although the U.K.'s Office of Telecommunications has completed a series of
proceedings to open markets, the telecom environment there is "neither
stable, predictable, nor nondiscriminatory," Covad said.

British Telecommunications plc has refused to offer cageless collocation and
has limited the central offices that new entrants can access, it said.  Covad
said other new entrants had accused British Telecom of allocating
insufficient resources to provisioning unbundled loops.

France

Covad criticized France Telecom S.A.'s "highly problematic" practice of
refusing to sign any interconnection/operations agreement with a new market
entrant that doesn't hold an "L 33.1" telecom infrastructure license
already.  But the new entrant, Covad said, needs information in the draft
local loop access agreement to formulate the business plan required by the
license application.

Covad also faulted France Telecom's "discriminatory" collocation policies,
which forbid new entrants from collocating ATM (asynchronous transfer mode)
equipment and IP (Internet protocol) routers.  France Telecom also refuses to
provision for new entrants "spare" copper pairs (those that currently aren't
in use), Covad said.

France Telecom's pricing structure for unbundled loops, collocation,
transport, and electronic bonding to operation support system (OSS) functions
"clearly puts new entrants in a price-squeeze situation when compared to the
retail prices for DSL service offered by France Telecom's ISP affiliates,"
Covad concluded.

Peru

BellSouth Corp. focused on Peru, commending USTR's role in opening the
country's telecom markets to competition.  But it expressed concern about new
regulations under consideration in Peru.

Peruvian regulators plan to reduce the interconnection rate for wireless
carriers connecting with Telefonica del Peru's wireline network, BellSouth
said.  It voiced concern that new rates would be challenged and not put into
effect.  It also complained about the regulators' decision that the new
interconnection rates wouldn't apply to fixed-to-mobile calls.

Because the amount of fixed-to-mobile traffic exceeds the amount of
mobile-to-fixed traffic, mobile carriers would be "significantly harmed" if
the changes went into effect, BellSouth said.  It said the new arrangement
was "inconsistent with Peru's WTO commitments to prevent anticompetitive
practices" because it would benefit Telefonica del Peru.

AT&T Corp. raised similar concerns about Peru.  "Continued USTR involvement
remains necessary to ensure that Telefonica, as Peru's major supplier, is
required to provide `rates for all services at all levels that are
comparable, cost-oriented, reasonable, and nondiscriminatory,'" it said.

South Africa

AT&T objected to constraints on providers of value-added network services
(VANS) in South Africa.  Telkom South Africa Ltd., the incumbent telecom
operator, "continues to deny new telecommunications facilities to AT&T and
many other VANS suppliers," AT&T said.

It said the South African regulatory agency, the Independent Communication
Authority of South Africa, had proposed to require that at least 15% of
ownership and control of a VANS license be held by "historically
disadvantaged persons."  Such a requirement would "clearly violate South
Africa's WTO commitments to provide market access and national treatment to
foreign VANS suppliers," AT&T said.

Japan

To comply with the WTO's basic telecommunications service agreement, Japan
still needs to create an independent regulatory authority, CompTel said.  It
noted that the government still owns a "significant stake" in Nippon
Telegraph and Telephone Corp. (NTT).

CompTel complained that NTT employees often leave to work at the Ministry of
Posts and Telecommunications (MPT) for a few years and then return to NTT.
Those employees don't recuse themselves from par-ticipating in regulatory
actions regarding NTT, it said.

CompTel said MPT "must establish a clear and detailed regulatory
environment."  MPT needs to set guidelines on cross-subsidies and tests for
predatory pricing, transparency of accounts, and misuse of customer
information, CompTel said.

MPT oversaw splitting NTT into five companies in 1999, CompTel noted.  But
MPT doesn't regulate those carriers as "dominant," despite their significant
market shares, it added.  For example, local telecom service providers NTT
East and NTT West jointly control more than 90% of the nation's lines,
CompTel said.

CompTel also raised concerns about compliance with other points in the
reference paper and a May 1998 U.S.-Japan deregulation joint statement.  The
criticisms include the following:

(1) NTT levies "excessively high interconnect charges";

(2) NTT fails to provide access to ducts, conduits, and rights-of-way; and

(3)  Japan imposes "unnecessary and burdensome licensing conditions."

Taiwan

CompTel said Taiwan hadn't met its commitments outlined in the U.S.-Taiwan
1998 Accession Protocol.It faulted Taiwan for restrictive licensing
conditions and a lack of "transparency" in the regulatory process.

"With just six months to go before the telecommunications services market is
to be opened to all new entrants, [Taiwan's wireline regulations] requiring
an extraordinary investment of $1.2 billion in the Taiwan market and a
build-out of 1 million exchange lines-150,000 of which must be installed
prior to any service offering-remain in effect," CompTel said.

USTR Delays Plea for WTO Probe Of Mexico, Keeps Options Open

The Office of the U.S. Trade Representative still may ask the World Trade
Organization to investigate Mexico's compliance with a WTO agreement to give
foreign carriers' access to its telecom market.  But first USTR wants to give
Mexico more time to address U.S. concerns before pressing its case.

USTR declined last week to ask the WTO to convene a "dispute-settlement
panel" to address claims that Mexico has failed to implement its
market-opening commitments under the WTO's basic telecom service agreement.

USTR asked the WTO in December 2000 to convene such a panel.  But Mexico
blocked the initial request, as a WTO member country has the right to do.  A
second such request cannot be blocked.

USTR didn't make a second request for a dispute-settlement panel when WTO
officials convened Feb. 1, but that does not mean USTR has "dropped" the
case, a USTR spokeswoman said.  "That is not at all the case," she said.  "We
reserve the right to move forward."

She said a second set of WTO consultations with Mexico ended Jan. 16, and
USTR is "evaluating where we stand."  Although the parties have made some
progress in addressing U.S. concerns, several areas of disagreement remain,
the spokeswoman said.  The key concern, she said, is the level of
international settlement rates on routes to Mexico.

Industry sources also warned against reading too much into USTR's decision
not to move forward immediately.  "They're just giving [Mexico] some more
time to address the situation," one source said.  "It doesn't mean they can't
[seek an investigation] a month from now" at the next meeting of the WTO's
dispute-settlement panel in Geneva.

In addition, President Bush and Mexican President Vicente Fox plan to meet
Feb. 16, and sources said telecom topics could be on the agenda.  The meeting
would be "an excellent time [for Bush] to bring these important issues up,"
another source said.  And President Fox, who took office last fall, has said
he "understands the importance of a competitive telecom marketplace," the
source said.

In addition to Mexico's high international settlement rates, U.S. industry
also is concerned about other interconnection rates in Mexico that are "well
above cost" and the fact that there is "still no meaningful regulation of
Mexico's dominant carrier," the source said.

Burns To Unveil `Tech Seven' Legislative Package; House, Senate Telecom
Panels To Add Members

With the makeup of the House and Senate telecom subcommittees beginning to
take shape, lawmakers from both panels are preparing to launch the first
major telecom and Internet-related initiatives of the 107th Congress.

Leading the way in the Senate is communications subcommittee Chairman Conrad
Burns (R., Mont.), who plans to unveil his "tech seven" package of telecom
and Internet bills this week.  Sen. Burns, who dubbed his high-tech agenda
for the last Congress the "digital dozen," will reintroduce a few holdover
bills that weren't passed, as well as some "new surprises," his spokesman
told TRlast week.

Sen. Burns' digital dozen enjoyed considerable success last in the last
Congress, as nearly half of the bills became part of new telecom laws.  Those
successes include measures to privatize the international satellite
consortium Intelsat, designate "911" as the universal emergency telephone
number, permit direct broadcast satellite TV companies to retransmit local
broadcast station signals, legalize digital signatures, and set up a rural TV
loan guarantee plan.

Almost certain to be included in this year's package are bills to expand
deployment of broadband services using low-power TV spectrum, to ease
reporting requirements for small incumbent local exchange carriers, and to
lift the caps on universal service "high-cost" support, the Burns spokesman
said.

The other "top priorities" on Sen. Burns' agenda are bills to bolster online
privacy and to curb "spamming" (sending unsolicited commercial e-mail), the
spokesman said.  Sen. Burns also may address the process by which the
Internet Corporation for Assigned Names and Numbers (ICANN) selects Internet
domain name suffixes.  He might do so either through legislation or through
the subcommittee's oversight capacity.

Meanwhile, Sen. Burns' subcommittee has grown by three seats since the
previous Congress.  In handing out subcommittee assignments last week,
Commerce, Science, and Transportation Committee Chairman John McCain (R.,
Ariz.) gave the Democrats two extra seats on the panel and the Republicans
one more.  Both parties now have 10 members on the panel.

The new Democratic members are Barbara Boxer (Calif.) and John D. Edwards
(N.C.).  Sen. Edwards has said he would reintroduce a bill to give consumers
more control over how their telecom service providers could use their calling
records for marketing (TR,Nov. 8, 1999).

In a statement on the Senate floor last week, Sen. Edwards said, "During the
last Congress, I introduced the Telephone Call Privacy Act [S 1850] in order
to prevent phone companies from disclosing consumers' private phone records
without their permission.  I will be reintroducing this bill soon," he said.

Senate Republicans had five seats to fill on the communications
subcommittee.  The GOP picked up one seat from Sen. McCain's decision to
expand the panel and was forced to fill four more because of three election
casualties and the departure of William H. Frist (Tenn.) from the full
Commerce Committee (TR,Jan. 15).

The new Republican members on the communications subcommittee are Olympia J.
Snowe (Maine), Gordon Smith (Ore.), Peter G. Fitzgerald (Ill.), and freshmen
John Ensign (Nev.) and George Allen (Va.).

Tauzin Expands Telecom Panel

Meanwhile, efforts to organize the House telecommunications subcommittee were
held up by a dispute over whether to add seats to the full House Energy and
Commerce Committee.

Democratic leadership was pushing to add one more Democrat to the Commerce
Committee, which would narrow the balance of power on the committee to 30-26
in the Republicans' favor.  House Speaker J. Dennis Hastert (R., Ill.),
however, has proposed adding one more GOP and one more Democratic seat.

Final determinations on committee matters, including the jurisdiction and
membership of its subcommittees, will be made at an organizational meeting
set for Feb. 7.  "We'll be operating under the assumption that they are
adding a Democrat and a Republican" to the committee, Commerce spokesman Ken
Johnson said Friday, Feb. 2.

Despite the delay, Commerce Chairman W.J. (Billy) Tauzin (R., La.) said his
subcommittee assignments and selections for subcommittee chairmen had been
ratified by the Commerce Committee's Republican members.

Rep. Tauzin has proposed adding two more GOP seats to the telecommunications
subcommittee, which had 15 Republicans last session when it was called the
telecommunications, trade, and consumer protection subcommittee.  Assuming
committee approval for that expansion, new telecom subcommittee Republicans
will be its Chairman Fred Upton (Mich.), Michael Bilirakis (Fla.), Joe Barton
(Texas), Thomas M. Davis III (Va.), and John B. Shadegg (Ariz.).  Rep. Cliff
Stearns (R., Fla.), who was on the panel during the last Congress, will be
its vice chairman.

Commerce Committee Ranking Democrat John D. Dingell (Mich.) will wait for the
House leadership to agree on the size of the Commerce Committee before moving
to select new committee members and announcing his subcommittee assignments,
a Dingell spokeswoman said.  That could happen "early [this] week," she said.

The telecom subcommittee's first hearing of the 107th Congress is scheduled
for Feb. 8.  The hearing will focus on ICANN's recent selection of registry
operators for new top-level domains.

Powell To Lead with Review Of FCC Operational Changes

With a Republican administration in place for the first time since the
passage of the Telecommunications Act of 1996, GOP insiders appearing at last
week's Comnet convention in Washington said the political landscape was ripe
for overhauling the FCC.

Key congressional and FCC staffers predicted that federal policy-makers would
launch major efforts this year to (1) curb the Commission's authority to
impose "voluntary" conditions on merger applications, (2) update the agency's
traditional common carrier rules, and (3) pressure the FCC to accelerate its
decision making.

The Republican-heavy panel also saw spectrum- management issues-including the
identification of new spectrum for third-generation wireless services-topping
the Bush administration's telecom agenda.

Lauren J. (Pete) Belvin, an attorney at Wilkinson Barker & Knauer LLP, said
history proved that telecom policies inevitably would come to the forefront
of the Bush administration "whether the administration is deeply involved
with telecom or not."  Ms. Belvin is a former FCC and Senate staffer.

"Telecom [policy-making] happens," Ms. Belvin said, because "the market pipes
its tune, there's a reaction to it, and the FCC is at front and center."

Recently designated FCC Chairman Michael K. Powell's first order of business
will be to determine which of the Commission's operations are "messed up,"
said Peter Tenhula, Mr. Powell's senior legal adviser.  "We'll probably start
with initiatives that may not be regulatory or deregulatory but more
operational," Mr. Tenhula said.

During his first week as chairman, Mr. Powell received numerous complaints
about the slow pace of the FCC's decision-making process, Mr. Tenhula said.  "
Right now, 80% of the FCC's agenda is reactive instead of proactive, where it'
s responding to a petition for rulemaking or a [section] 271 application,"
Mr. Tenhula said.  "At the top of the chairman's agenda will be reforming the
operation of the Commission" and "expediting its decision making," he said.

Mr. Tenhula suggested that Chairman Powell also would reexamine whether
obtaining the authority to provide in-region interLATA (local access and
transport area) services still is an incentive to encourage the Bell
operating companies to open their local exchange markets to competition.
Under section 271 of the Telecommunications Act of 1996, the Bells must
satisfy a 14-point "competitive checklist" of market-opening requirements
before receiving the FCC's blessing to offer interLATA services.

"I'm sure that more [section 271 applications] are going to be filed in the
future, but whether or not [in-region interLATA service authorization] is a
yummy enough carrot anymore, I'm not sure," Mr. Tenhula said.  "At the time
of the Act, though, it sure looked yummy," he said.

A reexamination of the section 271 process couldn't come soon enough, said
Howard Waltzman, the recently named telecom counsel to the House Energy and
Commerce Committee.  Technology has "overtaken legislation," he said, "and
what has been happening in the marketplace has eviscerated many parts of the"
Act.

Policy-makers need to "reevaluate some of the core parts of the Act and
determine. . .whether or not they're hindering investment and innovation," he
said.

He predicted a groundswell of bipartisan support in the newly elected
Congress for limiting the FCC's role in reviewing merger-related license
transfers, as well as limiting its ability to impose conditions on section
271 and merger applications.

Congress will be looking at "what we can do to change the agency to make it
more efficient," Mr. Waltzman said.  "The biggest frustration with the way
the FCC implemented the telecom act under the Clinton administration was that
the processes were too slow," he said.

Asked to comment on the financial struggles of competitive local exchange
carriers (CLECs),  Mr. Waltzman said the CLECs' financial woes don't portend
an end to local exchange competition.  Cable TV providers and wireless
carriers also are deploying alternative local phone service, he noted.

Verizon's Strigl Has Spectrum Plan

In a keynote address at the Comnet conference, the head of Verizon Wireless
said that with the growth of the wireless data sector creating demand for
spectrum, federal regulators must adopt a consistent, market-based approach
to allocating frequencies.

"We need to ensure that the precious spectrum we have reaches its fullest
potential through a competitive and forward-looking policy," Verizon Wireless
Chief Executive Officer and President Dennis F. Strigl said.  "Marketplace
forces of fair and open competition should be the sole basis for awarding
spectrum, not artificial controls like caps on spectrum. . .or limitations
based on allowances or set-asides for various groups."

Regarding the wireless Internet, Mr. Strigl said that to be successful, U.S.
carriers must create "a unique Internet experience."  He added that his
company is not "replicating what is done on the desktop."

"Deep customization of both content and delivery" will drive the success of
the wireless Web, Mr. Strigl said.  Examples of this include alerts sent to
wireless devices that can notify their users when preselected stocks hit a
certain price or when schools are closed during inclement weather, he said.
Or users can access data such as weather or flight information.  Two-way text
messaging is another feature Mr. Strigl said he expected to help drive the
growth of the wireless data sector.

As for the devices themselves, he said, "we need compelling wireless
appliances."  He expects "nontraditional handsets" such as personal digital
assistants (PDAs) with voice capability to become more popular.  He stressed
the need for technical standards to promote the use of various devices.

Mr. Strigl said all major U.S. wireless carriers this year would be
aggressively forming alliances with applications providers and Internet
vendors in hopes of promoting the growth of mobile e-commerce.

He touted the potential of location-based services and vehicle-based
telematics.  However, he acknowledged the industry needs to protect
consumers' privacy when offering location-based services, and he said it must
encourage responsible driving when using telematic applications.

Tauzin Demands Report on Critical Infrastructure

House Energy and Commerce Committee Chairman W.J. (Billy) Tauzin (R., La.) is
demanding that the National Security Council provide his panel with a copy of
a 200-page critical infrastructure report that he says was required by law to
be transmitted to Congress by Jan. 15 but never arrived.

The lawmaker also is seeking further information about published reports that
former President Clinton waited until the end of his term before naming
members to the National Infrastructure Assurance Council, even though the
NIAC had been established by executive order in the summer of 1999.

"I am concerned that President Clinton waited until his last full day in
office to finally appoint the first group of members to this critical
council," Rep. Tauzin said in Jan. 25 letter to Richard Clarke, NSC national
coordinator-infrastructure protection and counterterrorism.

The executive order had called for the 30-member panel to propose and develop
new ways for the public and private sectors to cooperate on telecom and
information infrastructure issues (TR,July 19, 1999).

Rep. Tauzin has asked Mr. Clarke to turn over to the committee the names of
the last-minute NIAC appointees and to "indicate whether your office
recommended each of these individuals for a position on the NIAC and, if not,
specify the individual or entity that recommended such person."

In requesting a copy of the overdue infrastructure report, Rep. Tauzin also
questioned why the study "was, in fact, prepared but never signed by" former
President Clinton.  "Under the Defense Authorization Act of 2001, this report
was required to be transmitted to the Congress by Jan.15, 2001," he noted.

Rep. Tauzin originally had asked Mr. Clarke to provide the committee with the
information by Wednesday, Jan. 31.  But a committee spokesman said the panel
had decided to give the NSC "more leeway" in meeting that deadline "because
of transition issues" related to the change in presidential administrations.

AT&T Execs See Hope of Truce In Long Distance Price Wars

AT&T Corp. executives believe they're seeing at least a temporary cease-fire
in the long distance rate wars that have ravaged the revenue streams of
incumbent interexchange carriers (IXCs).  "Pricing still is aggressive, but
it is not setting new lows," AT&T Chairman and Chief Executive Officer C.
Michael Armstrong said Jan. 29 during a conference call with financial
analysts to discuss the company's year 2000 financial results.

Analysts warn, however, that any equilibrium in the IXC sector may be
temporary.  "Some have noted that long distance pricing has stabilized, which
recent data support," said Frank J. Governali, an analyst for Goldman, Sachs
& Co., in a report.  "But expecting long term `price stability' in long
distance in our view is not realistic."

Lower rates will spur greater demand, but demand growth won't be enough to
offset the lower rates, said Daniel P. Reingold, managing director-equity
research at Credit Suisse First Boston Corp.  The market will become more
competitive as Bell companies win approval to offer in-region interLATA
(local access and transport area) service, and new entrants like Global
Crossing Ltd. and Qwest Communications International, Inc., will continue
their incursions, Mr. Reingold said in a report.

Mr. Reingold has no rating on AT&T, but he gives WorldCom, Inc., a "hold"
rating because of its reliance on long distance revenue.  "Our concern runs
far deeper than price competition and [Bell company entry] in the voice long
distance business," he said.  "Rather, it runs to pricing in the long-haul
data-transport segment as well."

WorldCom's 2000 financial results, scheduled to be unveiled Feb. 8, are
likely to show the same weakness as those of Sprint Corp. and AT&T.  Last
week, Sprint reported a 17% decline in long distance operating income for the
fourth quarter of 2000 compared with figures for the year-ago quarter,
despite an 18% increase in long distance calling volumes.

AT&T's consumer services unit, which relies heavily on long distance revenue,
posted a 9.5% decline in year 2000 sales.  The long distance turmoil hit AT&T'
s business services unit, too.  Because of its reliance on revenue from voice
long distance services, the business unit's annual revenue increased only
3.3%, AT&T executives said.

But the price war didn't seem to hurt Verizon Communications, Inc., a
relatively new entrant in the interLATA service market.  Verizon's interLATA
service revenue increased $55 million in the fourth quarter, the company said
last week.

AT&T executives suggested that new competitors like Verizon would have more
effect on market share than on rates.  Low rates will continue to cause pain
because customers still are migrating to cheaper calling plans, but AT&T's
larger woe is the continuing loss of long distance subscribers to Bell
companies, wireless service providers, and other new rivals, executives said.

AT&T has tried to boost its sagging fortunes by offering local service.
Bundles of local and long distance service are thought to be popular with
consumers and profitable for carriers.  Verizon's success in the interLATA
service markets of New York stems largely from its dominance in that state's
local service markets.

But AT&T's efforts to compete as a local service provider are hamstrung by
the prices it must pay incumbent local exchange carriers for unbundled
network elements (UNEs), Mr. Armstrong said.  "If there is an open market, we
can compete," he said, noting that AT&T corralled 750,000 customers for its "
any distance" service in New York.  That state has one of the most open and
competitive local telephone markets in the nation, he said.

But in other states, AT&T's local-service efforts have fallen flat because of
UNE rates, Mr. Armstrong suggested.  "The way that the markets have been
opened is not operationally or economically viable," he said.  That leaves
AT&T dependent on its shrinking long distance business for revenue, and on
its cable telephony business as a way to break into local-service markets.

Verizon Wireless is rolling out its two-way text messaging service,...

Verizon Wireless is rolling out its two-way text messaging service, Mobile
Messenger, in more than 200 markets.  Subscribers with two-way text messaging-
capable phones can send and receive messages of up to 120 characters.  They
can either sign up for one of two rate plans or pay two cents for each
message received and a dime for each message sent.  One rate plan is $2.99 a
month and includes 100 free messages, while another is $7.99 a month and
includes 600 messages.  All messaging fees will be waived until April 1.

Versatel Absorbs VersaPoint, Cuts Workers, Writes Off Assets

Versatel Telecom International NV has absorbed what remains of VersaPoint-its
former joint venture with NorthPoint Communications Group, Inc.-after cutting
most of the workforce and halting many of the operations of the money-losing
business.  It said it would be writing off redundant assets.

Before NorthPoint's recent filing for bankruptcy protection (TR, Jan. 22), it
arranged sell its 50% stake in VersaPoint to Versatel for $6.5 million.  The
companies created the venture less than a year ago.

According to Versatel Chief Executive Officer Raj Raithatha, the company
remains committed to Versa-Point's strategy of deploying digital subscriber
line (DSL) service to compete against European incumbent network operators.
But VersaPoint focused on wholesale DSL markets and staked out a large
European territory that included France and the United Kingdom.

Versatel's focus is more narrow, offering retail service to business
customers in the Netherlands, Belgium, Luxembourg, and northwestern Germany,
Mr. Raithatha said.

Versatel is happy to take control of VersaPoint's assets, especially its
central office (CO) collocations in the Netherlands, where "space is at a
premium," Mr. Raithatha said.  "It was particularly important that we secure
the Dutch COs."

Still, many of VersaPoint's assets are redundant or are not crucial to
Versatel's plans, he said.  Of 286 VersaPoint workers, 200 will be laid off.
About 1,000 CO collocations that were planned or operational are being
abandoned because they lie outside Versatel's territory, Mr. Raithatha said.

The VersaPoint acquisition is a mixed financial bag for Versatel, which will
have to absorb VersaPoint's projected EBITDA (earnings before interest,
taxes, depreciation, and amortization) loss of $9.3 million.  Versatel will
take a charge of $4.6 million to account for the layoffs and the write-off of
redundant assets.

But Versatel will be able to redeploy the $70 million it had planned to
invest this year in VersaPoint.  With that additional money, Versatel won't
have to seek additional funding for at least two years, and by then it
expects to be profitable, Mr. Raithatha said.

E.spire Mulls Reverse Split To Meet Nasdaq's Conditions

The Nasdaq Listing Qualifications Panel has agreed to continue listing
e.spire Communications, Inc.'s securities on the Nasdaq National Market, but
the financially struggling carrier will have to boost its stock price if it
wants to stay there past April 2.

Under conditions set by the Nasdaq panel, e.spire must demonstrate a closing
bid price of $5 per share by April 2 and maintain its closing bid price at
that level for 10 consecutive trading days.  To accomplish that, e.spire is
considering a "reverse stock split," the company said.

The company also must complete a restructuring of its bond indebtedness by
April 2, the Nasdaq panel said.  If it accomplishes both those goals, the
panel would consider listing e.spire's stock under Nasdaq's "alternative
listing standards," requiring net tangible assets of at least $4 million.

E.spire will need additional funding to survive until April.  It is due to
run out of cash this month.  A spokeswoman said e.spire was "working 24/7" to
try to secure additional capital.

Meanwhile, e.spire said the U.S. District Court in Baltimore had dismissed
with prejudice a class action lawsuit against the company and some of its
former officers and directors.  The lawsuit alleged that e.spire had used
improper accounting methods to overstate its earnings for 1999.

"Having fought and won this case, we can turn our focus fully on building
shareholder value," said George F. Schmitt, e.spire chairman and acting chief
executive officer.

Convergent To Cut Workforce, Close Offices

Convergent Communications, Inc., plans to reduce its workforce by 22% and
close five offices in an effort to reduce its monthly losses by $3 million,
the telecom systems integrator has said.  Convergent, of Englewood, Colo.,
already has eliminated 11 offices by selling its PBX and key telephone system
businesses to Inter-Tel, Inc. (TR, Jan. 8, notes).

Convergent will boost its data service sales force from 85 people to 155
people as part of its new focus on the data business, said Joseph Zell,
president and chief executive officer.

Early Talks with WRC-03 Nations Seen As Key for U.S. Success

It's important for U.S. officials to consult with other nations as they
prepare for the International Telecommunication Union's 2003 World
Radiocommunication Conference (WRC-03), FCC officials and industry
representatives agree.

"One of the best ways of achieving a tremendous amount at WRC is. . .[by]
listening to our compatriots in other countries, listening to their thoughts
as to what should be done," Commissioner Susan Ness said last week at the
opening meeting of an industry advisory committee helping the agency draft
proposals for the WRC-03.

"And to the extent that we can work with these other countries to achieve
their goals at the same time we're trying to formulate our goals, we're going
to have a much more successful and less confrontational radio conference,"
Ms. Ness added.  She noted that WRC-03 would be the fourth such conference
since she became a member of the Commission.

Donald Abelson, chief of the FCC's International Bureau, agreed that the
lesson the FCC had learned from past conferences "is the sooner we get to
talk to our foreign colleagues and coordinate with them, the better our
proposals are."

Mr. Abelson said the advisory committee would be important because it would
help the FCC develop WRC-03 proposals it can present to other federal
agencies, such as the Commerce and State departments.

Those proposals eventually would be the subject of consultations with
regulators from other countries leading up to WRC-03.

Peter A. Tenhula, senior legal adviser to Chairman Michael K. Powell, agreed
that early planning was essential for a successful WRC-03.

Full Slate of Issues

Among the issues the advisory committee wants addressed at WRC-03 are (1)
spectrum for third-generation (3G) services, also known as International
Mobile Telecommunications-2000 (IMT-2000); (2) terrestrial wireless
interactive multimedia services; (3) spectrum sharing in the 40 gigahertz
band; (4) aeronautical mobile-satellite services; (5) public protection and
disaster relief; (6) interregional sharing issues for broadcasting satellite
services; (7) high-frequency broadcasting service; and (8) regulatory
procedures governing satellite networks.

Much of the advisory panel's work will be done by seven informal working
groups focusing on specific issues, said Brian Fontes, chairman of the
advisory committee and vice president-federal regulation at Cingular Wireless
LLC.  Mr. Fontes is a former FCC chief of staff who led the U.S. delegation
at the 1995 WRC.  Jennifer Warren, senior director-telecom trade and
regulatory affairs at Lockheed Martin Corp., is the panel's co-chair.

Many of the issues the panel will explore are contentious, Mr. Fontes said.  "
I know full well as a member of a competitive industry that there's a lot of
competition among the U.S. industry interests and that competition will rear
its head in various debates and discussions," he added.  "There are also
differences between government and industry about how spectrum should be
used."

But after all the issues have been debated, Mr. Fontes said, it's important
to reach a consensus-and to do so in time to allow consultations with other
countries.

"We're going to have to recognize where we each come from and how we best can
work cooperatively and constructively together," he said.  "No more do we
have the luxury of waiting to the last moment to achieve the U.S.
objectives.  We must be prepared well in advance."

Julie Garcia, director of the FCC's WRC-03 preparation team, said the agency
was listening to industry feedback about how to improve its conference
planning.  "This is an ongoing process," she said.  "We will continue to look
for ways that we can take the industry's view into account."

U.S. officials who participated in WRC-2000 last year felt that they were
successful on issues such as broadcasting satellite service and IMT-2000
planning (TR, June 5, 2000).

Bureau OKs Satellite Operators For Intersatellite Communications

The FCC's International Bureau has modified the licenses of 10 operators of
geostationary orbit (GSO) satellite systems, enabling them to provide fixed
satellite services in parts of the Ka-band.  The license modifications allow
them to operate intersatellite service links (ISLs) using that spectrum.

The bureau said that it could permit the operators to provide ISL services as
a result of decisions made at the 1997 World Radiocommunication Conference
(WRC-97) and in light of the operators' studies on sharing the ISL spectrum.
WRC-97 resolved technical issues regarding GSO satellite transmissions and
assigned the 65-71 gigahertz band for ISL use by fixed satellite service
(FSS) providers.  The FCC subsequently reserved that spectrum for
nongovernment use.

The bureau granted the ISL license modifications to PanAmSat Corp., Teledesic
LLC, Loral Corp., Hughes Communications Galaxy, Inc., Astrolink International
LLC, CyberStar Licensee LLC, EchoStar Satellite Corp., and WB Holdings 1 LLC,
GE American Communications, Inc., and Motorola, Inc.  In a series of "orders
and authorizations" released Jan. 31, the bureau assigned each operator a
frequency.  In some cases it also set system build-out "milestones" that
operators must meet to retain the modified licenses.

Section 25.145(f) of the FCC's rules states that a Ka-band GSO FSS licensee
must (1) begin construction of its first satellite within one year of grant,
(2) begin construction of the remainder within two years, (3) launch at least
one satellite into each of its assigned orbit locations within five years,
and (4) launch the remainder of its satellites by the date required by the
International Telecommunication Union.

The bureau also issued a Jan. 30 order modifying VisionStar, Inc.'s license
to launch and operate a satellite system in GSO to provide FSSs.  The bureau
gave VisionStar 500 MHz of additional downlink operating frequencies for
satellite-to-user transmissions, bringing its total to 1,000 MHz.

DoJ, FBI Want Foreign Control Of DT Limited by FCC Conditions

The U.S. Department of Justice and the Federal Bureau of Investigation say
they have reached an agreement with VoiceStream Wireless Corp. and Deutsche
Telekom AG that reduces the law enforcement, national security, and public
safety risks of DT's planned acquisition of VoiceStream.

In December 2000, the law enforcement authorities and the companies asked the
FCC to defer a decision on the transaction until the outstanding concerns
could be resolved (TR, Dec. 25, 2000).  DoJ and the FBI now say they won't
oppose the FCC's approving license transfers associated with the transaction
as long as the terms of their agreement with the carriers are conditions of
the approval.

In a petition filed with the FCC in International docket 00-187, DoJ and the
FBI said the agreement pays particular attention to the German government's
control or influence over DT.  DT says the government is not involved in its
operations.  The German government currently owns 60% of DT; its interest in
the combined entity would decline to about 45% after DT's acquisitions of
VoiceStream and Powertel, Inc.

Among other things, the agreement stipulates that DT shall not disclose
classified or sensitive information, subscriber information, or transactional
or call data to any foreign government.  It also requires DT officials to
notify the FBI and DoJ if a foreign government attempts to participate in
day-to-day management of DT or exercise control of it in a way that
interferes with the carrier's obligations to abide by the agreement.  The
agreement was reached Jan. 12.

"Although the agreement does not eliminate every law enforcement, national
security, or public safety risk posed by the proposed transactions, it does
reduce those risks while affording the companies treatment consistent with
other carriers in like circumstances," the FBI and DoJ said in their petition.

Intelsat Told To Disclose Privatization Info

The FCC's International Bureau has required Intelsat LLC to disclose certain
information-including its draft shareholder's agreement and bylaws-to parties
who agree to be bound by a protective order.

Intelsat LLC is the privatized entity slated to succeed the intergovernmental
organization Intelsat this spring.  On Dec. 18, 2000, it asked for
confidential treatment of "supplemental" information it was filing in the FCC'
s proceeding to determine whether the privatization complies with a U.S. law
passed last year (the Open-Market Reorganization for the Betterment of
International Telecommunications Act).

In its order released Jan. 29, the FCC required Intelsat LLC to file copies
of the most up-to-date versions of its novation agreement, distribution
agreement, and related documents within seven days after the March Intelsat
board of governors meeting.  The FCC also extended the deadlines for
commenting on the supplemental filing.  Comments now are due Feb. 22;
replies, March 5; and responses to replies, March 12.

Don't Exempt Foreign Agencies From Ex Parte Rules, Carriers Say

Only two carriers weighed in on the FCC's proposal to exempt foreign
regulators from rules requiring them to report on their communications with
FCC officials, but both vehemently opposed the plan.  They said the rules
protect regulated entities by making the FCC's deliberations "transparent."

Communications from the U.S. Department of Justice or the Federal Trade
Commission regarding "a telecommunications competition matter in a proceeding
which has not been designated for hearing and in which the relevant agency is
not a party or commenter" are exempt from the FCC's rules requiring parties
to report such ex parte communications.  In December 2000, the FCC proposed
widening that exemption to include "international and foreign governmental
bodies that exercise similar jurisdiction over relevant matters" (TR,Dec. 18,
2000).

In a rulemaking notice released in General Counsel docket 00-219, the FCC
cited increased globalization and international mergers as reasons for the
proposed rule change.  The FCC said the rule change would encourage "
effective, expedited, and consistent" communications among antitrust and
competition policy-makers.

The Competitive Telecommunications Association said extending the exemption "
would impair significantly both the due-process rights of parties
participating in affected proceedings as well as the FCC's ability to render
a decision based on a complete record."

Communications between the FCC and foreign regulators raise different
questions from those between the FCC and DoJ or the FTC, CompTel said.  It
argued that foreign regulatory bodies "operate under laws and regulations
that may embody substantially different competition goals" than the FCC
pursues, unlike DoJ or the FTC, which operate under a "complementary
statutory scheme."

Many foreign governments maintain interests or have close ties to "commercial
enterprises that may be affected by the FCC's decisions in merger cases," it
continued.

And Vodafone Group plc, through its business unit Vodafone Americas Asia
Region, Inc., said the rationale behind the rule change the FCC cited was
insufficient.  If the FCC wanted to communicate with foreign regulators "on
general methods of analysis, for example, or general approaches to evaluating
licenses transfers," those communications would not fall under ex parte
rules.  The rulemaking notice "does not explain why, in the context of a
specific proceeding, the ex parte rules hinder exchange of information," it
said.

Vodafone questioned whether the FCC has authority under the federal
Administrative Procedure Act to "afford foreign government agencies the same
treatment as [domestic] regulatory agencies."  The APA's "whole record" and
due-process safeguards that ensure that parties may comment on the entire
record of a proceeding are underlying principles of federal agencies' ex
parte rules, Vodafone said.  The APA makes an "express distinction" between
U.S. and non-U.S. government agencies, it added.

Vodafone acknowledged that there might be situations in which disclosure of
an interagency ex parte communication "is not advisable."  But it said the
FCC should address those situations case by case.

Unlicensed International Carriers Given 90 Days To Come Forward

The FCC's International and Enforcement bureaus have given carriers and
operators 90 days to turn themselves in if they've been offering
international services or facilities without proper authorization.  The
International Bureau doesn't "expect" to undertake enforcement actions
against violators that come forward and seek the required authorization, but
cases of noncompliance discovered after the three-month period will be
referred to the Enforcement Bureau, the two bureaus said.

Their actions were prompted by requests from "a number" of carriers for
authorization to provide international services, after they were already
doing so, the bureaus said in a Jan. 30 public notice.  They also cited
instances of companies' belatedly seeking permission to assign or transfer
control of their authorizations to provide international facilities or to
land submarine cables.

The 90-day period will begin on the date the public notice appears in the
Federal Register.  Once the notice is published, the International Bureau's
Telecommunications Division "will be extremely reluctant to grant requests
for nunc pro tunc approval [as though timely filed] of belatedly filed
applications," the notice says.

Section 214 of the Communications Act of 1934, as amended, requires carriers
to obtain FCC authorization before they begin providing international telecom
services.

FCC Delays 700 MHz Auction Again at Request of Industry

Major wireless carriers are praising the FCC's decision to postpone, for the
fourth time, an auction of spectrum licenses in the 700 megahertz band.  But
a group representing rural carriers and a major TV broadcaster say the action
wasn't necessary.

The decision to postpone the auction from March 6 until Sept. 12 was needed "
to provide additional time for bidder preparation and planning" and for other
auction administrative reasons, the FCC's Wireless Telecommunications Bureau
said in a public notice released Jan. 31.

The action came after Verizon Wireless and other large carriers cited a host
of concerns they said could dampen enthusiasm for bidding on the
frequencies.  In a Jan. 18 letter to the Wireless Telecommunications Bureau,
Verizon Wireless said carriers needed time to assess their spectrum needs and
form alliances between the reauction of "C" and "F" block PCS (personal
communications service) licenses and the 700 MHz band sale (TR,Jan. 22).  The
PCS reauction ended Jan. 26 (TR,Jan. 29; and separate story).

Large carriers had supported in comments Verizon Wireless' request for a
postponement; some asked for the auction to be postponed even longer than the
six months Verizon Wireless had requested (TR,Jan. 29).

Other reasons the industry cited in urging a delay included concerns that (1)
TV broadcasters occupy large chunks of the spectrum to be licensed and
additional time is needed to negotiate band-clearing agreements with them;
(2) companies need more time to prepare for package-bidding rules that will
be used for the first time in the auction; and (3) a high-level effort to
identify and allocate frequencies for third-generation (3G) services will
affect carriers' interest in the 700 MHz band.

Commissioner Harold W. Furchtgott-Roth opposed the postponement, noting that
the FCC already had missed a Sept. 30, 2000, statutory deadline for
depositing proceeds from the auction into the U.S. Treasury.  "I am
disappointed that the Commission has decided to postpone this auction once
again," he said in a statement.  "With each succeeding delay, the credibility
of our spectrum and auction-management policies becomes more suspect."

Commissioner Gloria Tristani, who dissented from the FCC's decision last year
to postpone the auction to this March, said she did not oppose the latest
delay.  She cited the short time frame between the C and F block auction and
the 700 MHz band sale.

"At this point, the scheduling problems before us are of a different nature
and largely of this agency's own making," she said.  "The challenges posed by
the early auction of 700 MHz spectrum need not be burdened further by
unfortunate administrative miscalculations.  The bureau asserts that this
delay is necessary to address these administrative matters."

Large Carriers Welcome Delay

Verizon Wireless President and Chief Executive Officer Dennis F. Strigl
praised the FCC's decision.  "I think the FCC made exactly the right move,"
Mr. Strigl said after a keynote address at the Comnet Conference & Expo in
Washington last week (see separate story).  He said the presence of TV
broadcasters in the band "will have a significant impact on the value of this
spectrum."  He added, "At this point, I can't tell you that the new spectrum
has high value."

Broadcasters are expected to vacate the spectrum (channels 60-69) as part of
their transition to digital TV, but they don't need to do so until 2006 at
the earliest.  The uncertainty over when the frequencies will be available
has created anxiety among wireless carriers considering bidding in the
auction.

Thomas E. Wheeler, president and CEO of the Cellular Telecommunications &
Internet Association, also praised the FCC's decision.  "We need to take a
quick breath before plunging into the next round of spectrum bidding so that
carriers can assess their spectrum needs and develop bidding strategies," he
said.

But several TV broadcasters and a group representing rural carriers opposed
any further delay.  They said that carriers had had plenty of time to prepare
for the auction and that further delay would be unfair.

"There didn't seem to be any justification for another delay," said Nancy
Udell, vice president-media relations for Paxson Communications Corp., the
largest incumbent broadcaster in the spectrum to be auctioned.  But "since
the FCC has spoken, we're ready to participate" in any band-clearing
negotiations, she added.

Brent Weingardt, an attorney for the Rural Telecommunications Group (RTG),
also criticized the postponement.  "There's little pretense that the
Commission only views auctions in terms of how much revenue they can
generate. . .and they're willing to assist larger companies, who are the only
ones that are going to be able to compete in that auction," he said.  "We don'
t see any other public interest in postponing it."

Mr. Weingardt said he didn't expect RTG members to participate in the auction
but said his group opposed a further delay on "principle."

Analysts Assess Effect

Wall Street analysts saw the auction delay as either positive or neutral for
carriers.  "The additional six months until the start of the auction gives
both the FCC and the potential bidders quite a bit of time to ready
themselves," said John M. Bensche, an analyst at Lehman Brothers, Inc., in a
note to investors.  "By September, the industry will hopefully have
appropriately addressed the various issues that remain surrounding the 700
MHz band and the auction can commence without further delay."

Michael I. Rollins, an analyst for Salomon Smith Barney, Inc., said the
delay, which he characterized as "widely anticipated," was "neutral" for
carriers because many had indicated little interest in the 700 MHz auction,
focusing instead on the C and F block sale.

Cynthia M. Motz, an analyst for Credit Suisse First Boston Corp., echoed that
view.  She doesn't expect the bidding for 700 MHz licenses to be nearly as
fierce as it was in the C and F block reauction and doubts that large
carriers such as Verizon Wireless, AT&T Wireless Services, Inc., VoiceStream
Wireless Corp. and Sprint PCS will be very active.  "This should hopefully
make for some attractive pricing for at least some of the licenses," Ms. Motz
said in a note to investors.

QUALCOMM Creates Platform To Spur Wireless Internet Apps

QUALCOMM, Inc., has developed an open software platform to help spur the
development of applications for the wireless Internet.  The binary run-time
environment for wireless (BREW) platform will enable developers,
manufacturers, and carriers to reduce software-development costs and speed
the delivery of data services to consumers, QUALCOMM said.

The BREW platform was developed for devices that use CDMA (code-division
multiple-access) technology but eventually will be available for use with
other technologies, a company spokesman said.  Consumers will be able to
update their BREW-enabled handsets by deleting old software and downloading
new programs.

"Compelling applications will generate consumer demand for wireless Internet
access, speeding the deployment of next-generation CDMA wireless services,"
said Paul E. Jacobs, QUALCOMM's executive vice president.

QUALCOMM has signed memoranda of under-standing with several wireless
carriers, manufacturers, and developers to use the platform, including
Verizon Wireless and Leap Wireless International, Inc., in the U.S., Korea
Telecom in Korea, and Pegaso PCS in Mexico.

QUALCOMM says BREW-enabled products are expected to be commercially available
in some regions in the third quarter of this year.  An investors note from
Lehman Brothers, Inc., said BREW would be rolled out in Japan first by KDDI
Corp.

QUALCOMM will charge carriers a fee to use BREW and will receive a portion of
fees paid by wireless device users for BREW applications.

PCIA Drops Opposition To Lifting Spectrum Cap

The Personal Communications Industry Association, which in the past has urged
the FCC on behalf of small carriers to continue to limit the amount of
spectrum wireless carriers may hold in any one market, has declared it "will
no longer play an active role" in the issue.

In a statement released last week, PCIA President and Chief Executive Officer
Jay Kitchen said the spectrum cap had been "tremendously successful."  But "
this issue has become moot as new spectrum is now available without
restrictions, leaving U.S. carriers a clear and open opportunity" to offer 3G
(third-generation) services, he added.

Mr. Kitchen also cited PCIA's "focus on the development of the mobile
convergence marketplace on a global level" as a factor in its decision to
discontinue its "active role in the spectrum cap issue."

Large carriers have urged the FCC to lift the cap, saying they need more
spectrum to keep up with the demand for wireless services.  The FCC has asked
for comments on whether it should remove the restriction (TR, Jan. 29).

France, Brazil Have Troubles Awarding Wireless Licenses

French telecom regulator Authorite de Regulation des Telecommunications (ART)
has decided to organize another "beauty contest" in hopes of attracting more
bidders for third-generation (3G) licenses.  In its initial attempt, only two
companies bid for four licenses on the block.  Brazil had similar problems,
postponing an auction of licenses Friday, Feb. 2, due to a lack of bidder
interest.

ART said last week that the two bids for the French licenses came from France
Telecom's Orange plc mobile phone service unit and Vivendi SA's Cegetel SA,
which owns French mobile phone operator Societe Francaise du Radiotelephone
(SFR).

Dropping out of the contest last week was French wireless carrier Bouygues
Telecom SA.  French utility Suez Lyonnaise des Eaux and Telefonica SA of
Spain had withdrawn from the running earlier (TR, Jan. 29).

ART is selling the four UMTS (universal mobile telecommunications system)
licenses for 4.95 billion euros ($4.6 billion) each.  It has planned to award
the licenses in June.

"A structuring of the market around two operators only could not be
considered," ART said in a statement.  It said that such an arrangement "
would not make it possible to satisfy the objectives of development of a
competitive market."

France is the latest European country to run into trouble selling 3G licenses
in recent months after the United Kingdom and Germany raised more than $80
billion auctioning such spectrum last year (TR, May 1, and Aug. 21 and 28,
2000).

Carriers and financial analysts have expressed concern that the high prices
paid for the licenses, as well as the costs of building out systems, will
make it difficult to recoup investments.

Brazil Looks for Bidders

In Brazil, telecom regulator Anatel announced that it was suspending its
planned auction of three licenses, which was scheduled to begin Feb. 6.  It
blamed the delay on a lack of bidders.  Anatel said additional auction rounds
to sell three licenses each would be held as scheduled Feb. 20 and March 13.
It said there were seven bidders each lined up for those rounds.

The decision to suspend the first auction round came after a Brazilian judge
earlier last week lifted an injunction that had forced the round to be
delayed from Jan. 30.  In other countries the following spectrum-related
developments occured:

In Canada, Industry Canada's auction of 3G PCS (personal communications
service) licenses generated $1.48 billion Canadian (US$991 million) in bids
for 52 10-megahertz licenses covering 16 markets.  Five of the original seven
bidders won licenses in the sale, which closed Feb. 1 after three weeks and
51 rounds.

Bell Mobility, Inc., led all bidders, offering $720 million Canadian (US$482
million) for 20 licenses, followed by Rogers Wireless, Inc., which bid $393
million Canadian (US$263 million) for 23 licenses.  TELUS Communications,
Inc., came in third, bidding $355 million Canadian (US$238 million) for five
licenses.

"The licensing of this spectrum is a crucial step in improving Canada's
information infrastructure," Canadian Industry Minister Brian Tobin said.  "
This will facilitate the development of new wireless telecommunications
services, bringing the Internet and other communications services, such as
e-mail and mobile commerce, closer to all Canadians."

In Singapore, the Infocomm Development Authority (IDA) said Jan. 30 that its
auction of fixed wireless broadband licenses would be postponed until after
the country's 3G auction in April or May.  The fixed wireless license sale
was originally scheduled for February, as was the 3G auction (TR, Jan. 8,
notes).  "A number of interested players have requested for more time to
reassess the market situation, as well as to explore alternative
technologies," the IDA said.

In Venezuela, telecom regulator Comision Nacional de Telecomunicaciones
(Conatel) Jan. 31 opened registration for an auction of LMDS (local
multipoint distribution service) licenses.  The licenses will be auctioned in
three blocks.  One block will have national coverage, while the other two
will provide regional footprints.  Separately, Conatel's auction of wireless
local loop (WLL) licenses continued last week.

Telefon AB L.M. Ericsson has announced a $400 million network expansion
contract...

Telefon AB L.M. Ericsson has announced a $400 million network expansion
contract with Turkcell, a Turkish GSM (Global System for Mobile
communications) service provider.  Ericsson said it would "upgrade and
develop" the Turkcell system.

FCC Sets Arbitration Schedule For Interconnection Disputes

The FCC has set the schedule for arbitrating disputes between Verizon
Virginia, Inc., and three other carriers over interconnection agreements.
The Commission said in a public notice last week that AT&T Communications of
Virginia, Inc., Cox Virginia Telecom, Inc., and WorldCom, Inc., may schedule
prefiling conferences now and submit requests for arbitration of their
interconnection agreements with Verizon within 30 days of the conference.

In the notice, the FCC instructed the arbitrator of the proceeding to set
dates for conferences and hearings on the matter.  The arbitration proceeding
will follow rules set out in the FCC's 1996 "local competition order" in
Common Carrier docket 96-98 (TR,Aug. 12, 1996).

The FCC recently agreed to preempt the Virginia State Corporation Commission'
s authority to arbitrate their interconnection pacts with Verizon (TR,Jan.
22, p. 39).  The state commission had refused to act in the matter, citing
uncertainty over whether acting would be deemed a waiver of its immunity from
federal court review under the 11th Amendment to the U.S. Constitution.

At the same time it agreed to preempt the Virginia commission, the FCC
addressed generic procedural issues concerning arbitrations conducted
pursuant to its preemption authority in section 252(e)(5) of the
Telecommunications Act of 1996.  In that undocketed Jan. 19 order, the FCC
designated the chief of the Common Carrier Bureau to arbitrate such disputes,
with assistance from the Common Carrier and Enforcement bureau staffs.

The FCC also granted the arbitrator additional flexibility in ruling on
disputed issues.  The arbitrator has discretion to "require parties to submit
new final offers, or adopt a result not submitted by any party, in
circumstances where the final offer submitted by one or more of the parties
fails to comply with the Act" or FCC rules, the Commission said.

It also said the arbitrator could, in some circumstances, offer an
alternative solution even when the final offers submitted by the parties
complied with the Act and with FCC rules.

Interim arbitration procedures adopted in the 1996 local competition order
allowed an FCC arbitrator in a carrier interconnection proceeding only to
issue arbitration awards that were proposed as a "final offer" by a party in
a proceeding.

Pay-Per-Call Providers' Case Should Go to FCC, Court Says

The U.S. District Court in New York City has dismissed a lawsuit alleging
that WorldCom, Inc., unlawfully blocked calls to pay-per-call "900"-number
services.  District Judge John G. Koeltl told a group of pay-per-call service
providers to take their complaints against WorldCom to the FCC.

The plaintiffs charged that MCI WorldCom, Inc. (now WorldCom) violated
sections 201 and 202 of the Communications Act of 1934.  Those provisions
require common carriers to provide services under "just and reasonable" terms
and forbid "unreasonable discrimination" in the provision of common carrier
services.

The plaintiffs also alleged that WorldCom violated FCC rules by not providing
sufficient notice before blocking their numbers.

In LO/AD Communications, B.V.I. Ltd. et al. v. MCI WorldCom, Inc. (case no.
00 Civ. 3594), the plaintiffs said WorldCom's actions were motivated by "
personal objections" to the content of their 900-number services.  The other
plaintiffs are International Dialing Services, Inc., Ashera, Inc., and
Telemedia, Inc.

WorldCom told the court it had discontinued service to the selected numbers
after discovering that the plaintiffs unnecessarily routed their customers'
calls over expensive international traffic routes.

WorldCom said customers believed they were making local calls and refused to
pay the unexpected international calling charges.  The company said its FCC
tariff allowed it to block calls "to prevent unlawful use of, or nonpayment
for, its services."

Citing the legal doctrine of "primary jurisdiction," Judge Koeltl found that
the FCC should hear the complaints first.  While federal courts have
concurrent jurisdiction with the FCC over litigation under the Act, the
doctrine "allows a federal court to refer a matter extending beyond the
conventional experiences of judges" to an administrative agency with more "
specialized experience, expertise, and insight," he noted.

Aerial v. Underground Facilities Is Topic of City-CLEC Debate

Municipalities and competitive local exchange carriers sparred last week over
whether the FCC should preempt several Ohio cities' authority over the
placement of telecommunications facilities.

Their debate centered on one question:  Does requiring a competitive local
exchange carrier (CLEC) to place its fiber lines underground, rather than on
aerial facilities where the incumbent's facilities are located, constitute "
discrimination" under section 253 of the Telecommunications Act of 1996?

Predictably, the two sides split on the issue.  CLECs said that subjecting
them to different requirements from those faced by incumbent local exchange
carriers constituted discrimination and created a "barrier to market entry"
by increasing CLECs' costs.  Section 253(a) bars state and local government
actions that prevent or have the effect of preventing any entity from
providing any interstate or intrastate telecom service.

Municipalities insisted that directing where telecommunications facilities
should be placed was within the scope of authority reserved to local
governments under section 253 of the Act.  According to section 253(c),
nothing in section 253 affects "the authority of a state or local government
to manage the public rights-of-way or to require fair and reasonable
compensation from telecommunications providers, on a competitively neutral
and nondiscriminatory basis."

Both sides presented their views in comments filed last week in Cable
Services docket 00-255.  In that proceeding, City Signal Communications,
Inc., had asked the FCC to preempt the underground telecom line requirements
of Cleveland Heights, Wickliffe, and Pepper Pike, Ohio.  It said the
municipalities' rules prohibiting new telecommunication facilities from being
placed on above-ground poles constituted an "effective prohibition on entry"
by increasing costs for new service market entrants.

AT&T Corp. said any disparity in cities' treatment of incumbent telcos and
CLECs gave the incumbents a "substantial cost advantage" over new entrants
and violated the FCC's requirements that cities manage rights-of-ways on a "
competitively neutral and nondiscrim-inatory" basis.  It said requiring City
Signal to place its facilities underground effectively prohibited it from
providing service, because the alternatives were (1) to pay the higher costs
of placing facilities underground, "rendering its service noncompetitive," or
(2) to engage in a protracted negotiation and litigation.

Level 3 Communications LLC said the FCC had "not hesitated" to use its
preemptive power "in cases involving treatment that could be viewed as
creating barriers to entry."  It cited a proceeding in CCBPol file 97-1 in
which the FCC preempted a Connecticut state regulation that prohibited non-
local exchange carriers from providing pay phone service (TR,Dec. 16, 1998).

In that proceeding, the FCC found that the restriction imposed additional
burdens and costs, "thus deterring the entry of potential competitors," Level
3 recalled.  It said the FCC should grant City Signal's requests under the
Connecticut pay phone "precedent."

The Ohio cities' reasoning behind the underground requirement isn't "
necessary to protect the public safety and welfare," Telergy Network
Services, Inc., said.  According to section 253(b), nothing in section 253
affects "the ability of a state to impose, on a competitively neutral basis
and consistent with [the Act's universal service provisions], requirements
necessary to preserve and advance universal service, protect the public
safety and welfare, ensure the continued quality of telecommunications
services, and safeguard the rights of consumers."

The Ohio cities had cited the "visual blight" caused by additional aerial
telecom facilities on poles.  But that reasoning does not meet the high
standard that the FCC has used for judging state's and localities'
regulations on matters of competitive neutrality, Telergy said.

"By definition, if it is necessary for City Signal to place its facilities
underground to protect the public, it must be necessary for the incumbent and
other existing providers to place their identical facilities underground as
well," Telergy said. "If the `visual blight' of which the cities complain is
to be eliminated, all aerial facilities would have to be placed underground."

Municipalities often use such regulations as a tactic to delay the entry of
CLECs into service markets, Adelphia Business Solutions, Inc., said.   Case
law, state legislatures, and "harsh realities of the competitive marketplace"
have "driven home the lesson that municipal delays prevent competitive
telecommunications companies from entering the market," it said.

A group of 50 municipalities from 13 states, including Denver; Santa Fe,
N.M.; Fort Worth, Texas; Detroit; and Tallahassee, Fla., defended the Ohio
cities' rights to set rules regarding the placement of telecom facilities.
The Act "expressly bars [the FCC's] preemption authority under section 253 on
matters relating to right-of-way management," they said.  "Such matters are
left solely to the jurisdiction of the federal courts," and the FCC has no
authority to grant City Signal's petition, they added.

City Signal hasn't made a showing of how the regulations requiring
underground installation constitute an "effective prohibition on entry," they
said.  "It has shown nothing with respect to the routes involved, the cost
for aerial v. undergrounding construction on each. . .or how any purported
cost increase compares against either the overall capital costs of the City
Signal system or the revenues which City Signal expects to derive from it."

Section 253 doesn't interfere with local government's authority to direct
where cables and wires should be installed, the city of Richmond, Va., said.
It recalled that in a 1996 order, In re Classic Telephone, Inc., the FCC
cited statements by Sen. Dianne Feinstein (D, Calif.) during the debate on
section 253(c).  Her statements dealt with the types of restrictions that
local governments could impose as part of their right-of-way management.

"Included among those was the ability to `require a company to place its
facilities underground rather than overhead, consistent with the requirements
placed on other utility companies,'" Richmond recalled.

The FCC "and numerous courts have confirmed that the Act does not, and was
not intended to, render local governments impotent with respect to
maintaining control over the use of public property," it concluded.

AeA Advises against Regulating Competitive Broadband Markets

The AeA (formerly the American Electronics Association) is advising federal
policy-makers to take a hands-off approach to regulating broadband service
markets with multiple providers.  As examples of competitive broadband
markets, AeA cites "residential areas served by cable, DSL [digital
subscriber line], and satellite providers."

In a report that was submitted Jan. 29 to the White House and Congress, AeA
also calls for more efforts at the federal level to promote competition in "
sectors (such as multitenant buildings) where there are bottlenecks to
competitive entry."

It says the FCC should "continue to show regulatory restraint with respect to
emerging services, given the fact that the market for such services, while
still nascent, is functioning in a competitive fashion."

Briefing reporters about AeA's policy positions, AeA President and Chief
Executive Officer William T. Archey said the organization's report got a "
favorable" reception when it was presented to top White House officials.  The
paper reflects the views of AeA member companies that participated in a
series of "town hall meetings" last year, Mr. Archey said.

The report also urges Congress to extend the current moratorium on new or
discriminatory Internet taxes and permanently ban the taxation of Internet
access services.  The moratorium, which began in 1998, will expire in October
absent congressional action.  The report also reiterates AeA's recent call
for federal preemption of state privacy laws affecting e-commerce or Internet
businesses (TR, Jan. 22).

Missouri PSC Faults SW Bell's InterLATA Bid

The Missouri Public Service Commission has decided against supporting
Southwestern Bell Telephone Co.'s efforts to obtain the FCC's permission to
provide interLATA (local access and transport area) service in the state, PSC
Commissioner Kelvin Simmons told TR.

SW Bell's planned application still could win the PSC's backing if the
company addressed the PSC's concerns, which include pricing and access to
unbundled local loops and transport, Mr. Simmons said.  The PSC plans to
deliberate on the request again as early as Feb. 6, although a final decision
won't be issued then, he added.

SW Bell intends to make changes to address the PSC's concerns, a SW Bell
official told TR.  He said SW Bell was confident that the PSC ultimately
would support the petition.

The FCC has the final say in determining whether a Bell company has met the
14-point "competitive checklist" of market-opening requirements in the
Telecom-munications Act of 1996.

But the Act directs the FCC to consult the U.S. Department of Justice and the
relevant state regulators before deciding.

CLECs Tout Effect on Economy But Seek Help from Congress

Competitive local exchange carriers (CLECs) have played a major role in
fueling the economic growth of the last decade, according to a new study by
the Association for Local Telecommunications Services (ALTS).

Still, Congress should consider legislation to help CLECs overcome the
impediments to competition imposed by incumbent local exchange carriers
(ILECs), building owners, municipalities, and the financial markets, ALTS
said.

The report, Local Competition Policy & The New Economy,was written by ALTS
Director-public policy research David A. Wolcott.  He links the growth of the
Internet to partnerships between CLECs and Internet service providers
(ISPs).  CLECs, he says, deliver about 60% of the local dial-up traffic to
ISPs in the U.S.  "It is a symbiotic relationship that has led to increased
competition in the two industries and has greatly impacted the virtual
explosion of the Internet in the United States," Mr. Wolcott writes.

Broadband technology is one of the "drivers that have fueled the explosive
economic growth of the last decade," he writes.  "Federal Reserve Chairman
Alan Greenspan, while not singling out the [Telecommunications Act of 1996]
or any other legislative initiative, has attributed much of the recent
productivity growth and deepening of capital markets to the communications
and information technology industries."

The study, however, raises a familiar list of complaints about actions of
ILECs, building owners, and municipalities that it says "frustrate the
emergence of full and effective competition."  It offers a list of
initiatives that Congress should consider so CLECs can continue fueling
economic growth.  Among the legislative initiatives the association advocates
to address its complaints about ILECs are the following:

(1) Separate ILECs into wholesale and retail units;

(2) Allow the FCC to impose steeper penalties for violating pro-competitive
directives;

(3) Require that "all combinations of network elements and full functionality
of the loop be provided to competitors";

(4) Extend collocation requirements to include "multifunctional" equipment;

(5) Affirm the FCC's pricing methodology for unbundled network elements; and

(6) Permit interconnection among CLECs collocated in ILEC facilities.

The ALTS study also targets building owners, with whom CLECs have been
feuding over the need for mandatory building access.  It asks Congress to
require building owners to "provide nondiscriminatory access to their
buildings while at the same time protecting the security of the building and
ensuring that competitors pay for the costs of installing equipment."

ALTS also takes aim at municipalities, which it says have caused "excessive
delay" by not promptly approving applications to use public rights-of-way.
It asks Congress to do the following:

(1) Ensure "expeditious intervals" for approving applications for access to
rights-of-way;

(2) Require franchise fees to be based on the actual costs of managing the
rights-of-way, not on a percentage of carriers' revenues;

(3) Bar cities from imposing "unreasonable" telecom and universal service
requirements on telecom carriers;

(4) Ensure that carriers have a private right of action in the courts to
enforce the rights-of-way provisions in section 253 of the 1996 Act; and

(5) Establish a process for obtaining rights-of-way across areas under
federal jurisdiction at cost-based rates and without "unnecessary
restrictions."

The study acknowledges that CLECs face "financial impediments" to fulfilling
the competitive goals of the 1996 Act.  "The current year will undoubtedly be
a critical time for CLECs," it says, noting that some financial analysts
predict half of all CLECs will file for bankruptcy protection or face
consolidation.

To help CLECs overcome their financial hurdles, Congress should consider
establishing programs to extend credit to eligible carriers to finance the
deployment of broadband services in rural areas, the study says.

ALTS points to the proposed Broadband Internet Access Act of 2001, introduced
in the House as HR 267 by Rep. Philip English (R., Pa.) and in the Senate as
S 88, introduced by Sen. John D. Rockefeller IV (D., W.Va.) (TR, Jan. 29).

ALTS also urges Congress to establish programs authorizing the use of "
financial incentives" for the deployment of broadband services to "targeted
urban and rural areas."

Furchtgott-Roth's Departure Plan Sparks Speculation on Nominees

FCC Commissioner Harold W. Furchtgott-Roth's decision not to seek
renomination to a second term on the Commission has touched off a new round
of speculation about who the Bush administration will appoint to the
Commission and when it will act to fill potential vacancies at the agency.

Many industry and congressional observers think the White House will act
quickly to fill the vacancy that was created by the resignation by former
Chairman William E. Kennard last month.  They point to the speed with which
President Bush tapped Commissioner Michael K. Powell to succeed Mr. Kennard
as chairman.  That announcement was made on the first business day after the
inauguration.

"I think they're moving quickly on it. . .and we could see something happen
in the next couple of weeks," former FCC Chairman Richard E. Wiley told TR
during a break at last week's Comnet conference (see separate story).

Mr. Wiley, who played a key role on the Bush administration's FCC transition
advisory team, said there might be a sense of urgency at the White House to
name at least one GOP Commissioner to give the Republicans a majority on the
Commission.

There currently are two Democrats on the five-seat FCC (Commissioners Susan
Ness and Gloria Tristani) and two Republicans (Commissioners Furchtgott-Roth
and Chairman Powell).  The Communications Act of 1934, as amended, prevents
any one political party from appointing more than a bare majority of FCC
Commissioners.

Mentioned as possible Bush administration Republican appointees to the FCC
are Patrick H. Wood III, chairman of the Texas Public Utility Commission, and
Kevin Martin, a former adviser to Mr. Furchtgott-Roth and a central figure in
the Bush administration's FCC transition team (TR, Jan. 22).  Earl Comstock,
a Washington attorney and former aide to Sen. Ted Stevens (R., Alaska), also
has been mentioned.

Mr. Wood was seen as a possible successor to Mr. Kennard before President
Bush tapped Chairman Powell for the top spot.  Mr. Martin, meanwhile, has
ties to the Bush administration beyond his work on the FCC transition team.  "
He's really paid his dues and earned his stripes with the White House by
helping out on the Florida ballot recount," a GOP congressional source said.

The White House also has the option of replacing Ms. Ness, who is serving a
recess appointment that expires at the end of the first session of the 107th
Congress (TR, Dec. 25, 2000).

There's also talk that the White House, along with nominating a new GOP
Commissioner, simultaneously will nominate a Democrat to replace Ms. Ness.
Democrats favor a "package deal" because it would make it easier for their
nominees to win approval by a Republican-controlled Senate, according to a
Senate source familiar with how the FCC nominations process works.

"It's still a free-for-all right now," the source says, as numerous lawmakers
float names of individuals they would liked to see nominated to the FCC.  "
They're also working industry, [congressional] leadership, and other members
of Congress for support, too," the source said.

Mentioned as possible Democratic nominees are House Energy and Commerce
Committee Minority Staff Director Andy Levin, who is being pushed by his boss
John D. Dingell (Mich.), and Michael I. Copps, assistant secretary of
commerce for trade development and a former chief of staff to Sen. Ernest F.
Hollings (S.C.).

Former National Telecommunications and Information Administrator Gregory L.
Rohde also is under consideration, sources say.

Meanwhile, Mr. Furchtgott-Roth says he'll remain on the Commission until a "
mutually agreeable departure date is worked out" with the Bush
administration.  Mr. Furchtgott-Roth's term expired last June; he can
continue at the agency until the end of the first session of the 107th
Congress, which is expected to occur this fall.

In a Jan. 31 statement announcing his decision, Mr. Furchtgott-Roth gave few
clues about his next move, saying only that "there comes a time when every
free market advocate in government must fulfill his dream by returning to the
private sector.  For me, that time has arrived."

His tenure at the Commission drew praise from two House telecom Republicans.
Energy and Commerce Committee Chairman W.J. (Billy) Tauzin (La.) says Mr.
Furchtgott-Roth will be "greatly missed," and Rep. Charles (Chip) Pickering
(R., Miss.) lauded his efforts "to ensure that the FCC was an independent
agency accountable to consumers. . .and not an extension of the executive
branch."

Court Upholds FCC Rules Giving ILECs Road to Pricing Flexibility

A federal appeals court says it's reasonable to use the number of carriers
collocating equipment in an incumbent's wire centers as "proxy" measures for
determining the levels of local competition.  The FCC uses that proxy to
determine whether an incumbent local exchange carrier should be freed from
some pricing regulations.  The U.S. Court of Appeals in Washington last week
rejected WorldCom, Inc.'s argument that the FCC's criteria for granting ILECs
pricing flexibility didn't measure competition accurately and were unlawfully
arbitrary.

The case centered on the FCC's 1999 pricing-flexibility order in Common
Carrier docket 96-262.  The order allowed ILECs regulated under its price-cap
regime to gain greater flexibility in setting rates for interstate services
if they met certain competitive "triggers" (TR, Aug. 9, 1999).

For example, ILECs can win relief from some pricing rules if the FCC finds
that unaffiliated carriers have collocated facilities in a certain percentage
of the ILEC's wire centers and that at least one collocator is
facilities-based.

In its Feb. 2 ruling in MCI WorldCom, Inc., et al. v. FCC (case no. 99-1395),
the court found that the FCC "made a reasonable policy determination" that
the number of collocating comptitors was a reasonable proxy for the level of
competition in a particular market.  Judge David B. Sentelle wrote the
opinion; he was joined by Judge A. Raymond Randolph and Chief Judge Harry T.
Edwards.

The judges didn't specifically endorse the use of collocation as a proxy,
even allowing that "it may well be that collocation is a poor measure of
market share."  But they noted that the FCC had not relied on market share as
"the be-all and end-all" of competition.  They agreed with the FCC that "the
presence of sunk investment, and the resulting potential for entry into the
market, can limit anticompetitive behavior by LECs."

In oral arguments last December, the judges expressed frustration bordering
on exasperation at WorldCom's inability to present an alternative means of
measuring competition (TR, Dec. 4, 2000).  AT&T Corp. and Time Warner
Telecom, Inc., also were petitioners in the consolidated case.

The judges concluded that because they found the FCC's proxy model "
reasonable," there was no basis on which to require the FCC "to conduct a
more searching analysis of competition before granting pricing flexibility."
They cited a 1980 case before the circuit court in Washington, D.C., U.S. v.
FCC.

"Someone must decide when enough data is enough.  In the first instance, that
decision must be made by the Commission. . .To allow others to force the
Commission to conduct further evidentiary inquiry would be to arm interested
parties with a potent instrument for delay," the judges quoted.

The judges rejected WorldCom's claim that the pricing-flexibility order
violated FCC precedent because much of the relief it provided to ILECs was
typical of that given to carriers that are regulated as "nondominant."
WorldCom argued that the FCC should be precluded from granting such relief
without conducting the same kind of competition analysis that it does when
determining if a carrier should be considered nondominant.

The appeals court disagreed, saying the pricing flexibility order did not
grant LECs "all the regulatory relief afforded nondominant carriers."  It
noted that carriers that obtain regulatory relief under the
pricing-flexibility order still must file tariffs, a requirement that is "not
insignificant."

The appeals court also dismissed WorldCom's argument that the FCC was
arbitrary and capricious in authorizing regulatory relief by metropolitan
statistical area (MSA).  It said the FCC had considered other options when
devising its rules and called WorldCom's objections "at bottom. . .a
difference in policy preferences. . .[and] not a sufficient basis on which to
upset the FCC's determination."

The judges relied on similar reasoning in dismissing WorldCom's objections to
the triggers the FCC established.  The court called these objections "no more
than policy differences."  It said the FCC had made "rational
legislative-type judgments" that it is "empowered to exercise and we are
required to respect."

AT&T Corp. has won a multiyear $100 million broadband service contract...

AT&T Corp. has won a multiyear $100 million broadband service contract from
MerchantWired, which provides network services to retailers, the company has
announced.  MerchantWired, of Indianapolis, will resell AT&T's frame relay
and asynchronous transfer mode services to merchants.  It also has plans to
resell AT&T's virtual private network, Internet protocol, and digital
subscriber line services.

Utah Bill Takes Aim at Cities Entering Telecom Business

Utah state Rep. Greg Curtis (R.) plans to introduce a bill to regulate
efforts by municipalities such as Provo that are getting into the
telecommunications business, a legislative staff member has told TR.

The city of Provo recently bought a local cable TV company, Provo Cable, and
is competing against an AT&T Broadband cable TV system.  Rep. Curtis' bill
would authorize state regulation of such government-owned telecom businesses.

Provo is building a high-speed broadband system to bring advanced telecom
services to every resident of the city, Michael Mower, Provo's
director-community and governmental relations, told TR.

Mr. Mower said AT&T's cable TV system provides services only to select
businesses and portions of the city.

The legislative staff member said lawmakers were concerned about Provo's
owning its own telecom company because the state constitution bars the state
from regulating cities.

That would mean that the Utah Public Service Commission wouldn't be able to
regulate a municipal telecom company.  The text of Rep. Curtis' bill wasn't
available as of TR's news deadline.

Mr. Mower hopes legislators understand that the process of leveling the
playing field "goes both ways," he said, and that huge corporations hold some
advantages over city-owned systems.

Va. Regulators Tell Verizon Not To Cut Off CLEC's Customers

The Virginia State Corporation Commission has enjoined Verizon Virginia,
Inc., from "unreasonably disconnecting" customers who switch to competitor
Cavalier Telephone LLC for their local exchange service.

Cavalier asked the SCC for help last September, claiming that Verizon "
unlawfully interrupted service" to hundreds of customers who chose to migrate
to Cavalier. Verizon acknowledged that "premature disconnections" led to 66
service outages but said 43 of those customers were reconnected by the day
after the disconnections were reported to Verizon.

The Virginia commission found that although the number of premature
disconnections was "unacceptable," there was no evidence that Verizon's
disconnections were intentional.  "Nevertheless," the SCC said, "we cannot
condone this inattention to customer service."

The SCC directed the companies to file monthly reports, beginning Feb. 12,
detailing any further unwarranted disconnections of service.

Oftel Extends BT Price Controls For Retail, Wholesale Services

British Telecommunications plc (BT) is facing an increased level of
competition "but continues to have market power" in the provision of
residential telephone service, the United Kingdom's Office of
Telecommunications (Oftel) has announced.  Oftel said it would extend
existing BT price controls-which had been scheduled to expire in August-for
an additional year.

Oftel will continue to review the level of competition that BT faces in the
U.K. in order to assess whether residential price controls will be necessary
beyond 2002.

David Edmonds, Oftel's director general-telecommunications, said Feb. 1 that
extending the price control regime was necessary to protect consumers.  "
Oftel will carry out a review of the calls market to assess the impact of
carrier preselection, indirect access, local loop unbundling, and mobile
substitution," he said.  "As competition increases and prices fall, the case
for retail price controls diminishes."

Oftel also said it would keep price controls on wholesale network
interconnection rates that BT charges competitive carriers.  Those controls
will be extended until October 2005.

Loral Scraps $3.5 Billion Plan For Direct-to-Consumer Service

Loral Space & Communications Ltd. is scrapping plans to deliver high-speed
Internet service directly to consumers over a $3.5 billion network of
satellites and optical fiber.  "Despite the feasibility of Loral's plan, we
have concluded that we do not have the in-house skills to develop the
marketing resources to competitively deploy such a system," Bernard Schwartz,
Loral's chairman and chief executive officer, said at a Feb. 1 Merrill Lynch
& Co. satellite conference in New York.

"Data delivery directly to the consumer entails packaging content, engaging
in e-commerce, providing consumer premises equipment, and acquiring and
caring for subscribers, and it is better left to others," Mr. Schwartz said.
"Furthermore, given the crowded field of players, we didn't see a way to
sufficiently differentiate our product from the others entering the
direct-to-consumer field."

Under a plan unveiled last February, Loral had intended to complete its
network this year and eventually offer service to 10 million homes and small
businesses.  Loral surmised that digital subscriber line and cable modem
services wouldn't satisfy consumers' demand for bandwidth.  But Loral has
been stung recently by its investment in Globalstar Telecommunications Ltd.,
which uses satellites to offer global mobile telephony.  Loral owns 38% of
Globalstar, which is near bankruptcy (TR, Jan. 22).

Instead of venturing into direct-to-consumer services, Mr. Schwartz said
Loral would "stick to what we do best and where we already hold a strong
leadership position-the development of satellite technologies and hardware
and the provision of high-quality, value-added transport services."

European Commission Seeks Cybercrime Policy Harmonization

The European Commission is developing a plan to harmonize the
cybercrime-fighting efforts of European Union member nations with those of
other countries.  It has asked for comments on how to do so "without
hindering the rapid development of e-commerce in the EU, and respecting the
fundamental right to privacy."  Comments are due March 23.

It wants to launch an EU forum for representatives of law enforcement
agencies, telecom and Internet service providers, and consumer groups to
discuss issues related to cybercrime.  The first step will include naming
forum representatives from those sectors.  Relevant documents and comments
will be published on a forum Web site.

The commission has delivered a cybercrime policy planning document to the
Council of Europe and European Parliament.  On March 7 it will hold a public
hearing on issues addressed in the planning document.  Parties who wish to
submit a statement at the hearing must request an "invitation" to do so by
Feb. 20.

Psion plc and Motorola, Inc., say they are discontinuing a joint agreement...

Psion plc and Motorola, Inc., say they are discontinuing a joint agreement to
develop wireless devices as Motorola continues a streamlining of its
operations.  Motorola said it would focus on a wireless smart phone to be
launched in 2002 based on the platform developed by Symbian Ltd., an alliance
of companies including United Kingdom-based Psion and Motorola.  Motorola,
which owns 21% of Symbian, said it would continue to take an active role in
planning the future of the alliance.

Personnel

Commissioner Harold Furchtgott-Roth, who has announced plans to leave the FCC
(see separate story), has promoted his two legal advisers.  Rebecca Beynon
will be senior counsel, and Bryan Tramont will be senior legal adviser.

The Idaho Senate unanimously has approved Gov. Dirk Kempthorne's (R.)
nomination of Dennis S. Hansen (R.) to a second six-year term on the state's
Public Utilities Commission.  Hansen, who first was appointed to the
commission by Gov. Phil Batt (R.), is also the PUC's president.  Before
appointment to the commission, Hansen was an accountant with Monsanto Co. of
Soda Springs and served in the state Senate from 1987 to 1995.

Joel I. Klein has been named chairman and chief executive officer of
Bertelsmann, Inc., the corporate services arm of German media company
Bertelsmann AG.  Mr. Klein was assistant attorney general-antitrust for the
U.S. Department of Justice from October 1996 to September 2000.  He will
oversee Bertelsmann's U.S. operations and advise the company on legal,
strategic, and governmental issues.

The law firm of Steptoe & Johnson LLP has merged with the United Kingdom law
firm of Rakisons.  The U.S. practice will continue under its name, and the
U.K. practice will be known as Steptoe & Johnson Rakisons.  Lon Bouknight
will be global chairman, and Tony Wollenberg will be managing partner of the
London practice.  Danny Preiskel and Alfred Mamlet will head the London and
U.S. telecom practices, respectively.  David Judah in London and Stewart
Baker in Washington will lead a new technology, Internet, and media group.

Richard R. Roscitt has been named chairman and chief executive officer of ADC
Telecommunications, Inc., a Minneapolis-based telecom equipment maker.  Mr.
Roscitt was president of AT&T Corp.'s business services group.  He succeeds
William J. Cadogan, who is retiring.  ADC also named Lynn Davis president and
chief operating officer.  Mr. Davis was president of ADC's broadband
connectivity group.

Robert E. Randall is the new chief executive officer at TeraGlobal
Communications Corp., a San Diego-based manufacturer of telecom network
software.  He was executive vice president and chief operating officer at
FirstWorld Communications Corp.  Mr. Randall succeeds interim CEO William
Reddersen, who will remain on the board.

Alamosa PCS Holdings, Inc., has said President and Chief Operating Officer
Jerry Brantley left the company.  In addition, Chief Technology Officer Tony
Sabatino and regional vice presidents now report to David Sharbutt, the
company's chairman and chief executive officer.

Frederick M. Lax has been named executive vice president and chief operating
officer at Tekelec, Inc., a California telecom network equipment
manufacturer.  He was VP and general manager at Lucent Technologies, Inc.'s
messaging solutions unit.

Nextel Communications, Inc., has promoted Scott E. Hoganson to senior vice
president-sales operations.  He previously was president of the carrier's
Midsouth area.  Nextel also has promoted Linda Marshall to VP of the Midwest
region.  Ms. Marshall previously was president of the company's Great Lakes
area.

Jean-Francois Deschamps has been named senior vice president-global service
operations at Global One, a France Telecom Group affiliate.  He was assistant
VP-product management data services.

Vincent M. Oddo has been named executive vice president and chief information
officer at Network Telephone Corp., a Pensacola, Fla.-based integrated
communications provider.  He was executive VP and CIO at Gabriel/TriVergent
Communications, Inc.

Frank D. Brilliant has joined Arch Wireless, Inc., as vice president of the
paging carrier's newly created Business Solutions Group.  He previously was
vice president-sales at BizRate.com.

AOL Time Warner, Inc., has named John Buckley vice president-corporate,
effective March 12.  He was senior VP-communications at Fannie Mae.

NewSouth Communications Corp., a Greenville, S.C., integrated communications
provider has promoted Lori Reese to the position of vice president-government
affairs.  She was director of that unit.

Lucent Technologies, Inc., has named Barbara Gasper vice president-investor
relations, effective Feb. 12.  She held that title at Raytheon Co.  Ms.
Gasper succeeds John DeBono, who will lead investor relations at Agere
Systems, Inc., the Lucent microelectronics unit that will be spun off later
this year.

Michael G. Donahoe has been named senior general counsel and vice
president-corporate development at DataVoN, Inc., a Dallas-based network
services provider.  He most recently was VP-legal at CapRock Communications
Corp., which late last year was acquired by McLeodUSA, Inc.

Lucent China has named Michael Kwan chief operating officer.  He was
president at Lucent Technologies Qingdao Telecommunications Systems, Ltd., a
51% Lucent-owned joint venture in China.

John Joyce was named chief operating officer at Ambient Corp., a powerline
telecom technology manufacturer.  He was president at ABB Financial
Consulting, Inc., and senior vice president at ABB Financial Services, Inc.
Wilfred Kopelowitz was named Ambient's chief financial officer.  He was
corporate controller at Amdocs Corp.

Harold Gowl is the new chief operating officer at Wisor Telecom, Inc., a
Rockville, Md., maker of operation support systems.  He was president and
chief executive officer at Newcomm Net, a competitive local exchange carrier.

Research in Motion Ltd. has appointed Larry Conlee chief operating
officer-engineering and manufacturing.  Mr. Conlee previously was at
Motorola, Inc., where he was a corporate vice president for various groups
and divisions.

NeTune Communications, Inc., has named Richard J. Agostinelli to the new
positions of chief operating officer and chief financial officer.  He was
chief executive officer and president-continental graphics at Continental
Graphics Holdings, Inc.  NeTune is a Culver City, Calif., provider of
broadband communications services to the motion picture and TV production
industries.

JP Systems, Inc., a Dallas-based developer of wireless-enabling technology
and services, has named Tim D. Torno chief financial officer.  Mr. Torno was
CFO and vice president-finance and secretary for Ultrak, Inc.

Philip Veneziano was named chief financial officer at Everest Broadband
Networks Corp., a Fort Lee, N.J.-based provider of broadband services to
multitenant buildings.  He was senior vice president-financial operations at
Juno Online Service, Inc.  Christopher Dalrymple was named Everest Broadband'
s general counsel.  He was associate counsel at Interliant, Inc.

Howard N. Levitas has joined the Industrial Telecommunications Association as
chief information officer.  Mr. Levitas was previously manager-applications
development at Verizon Connected Solutions, Inc.

Telefon AB L.M. Ericsson has hired Ase Lindskog as director-press relations
in its external relations group and Ola Rembe to the same position in the
public relations and special interest media group.  Mr. Lindskog is a former
journalist, financial analyst, and secretary general of the Swedish Society
for Financial Analysts.  Mr. Rembe was director-corporate communication and
PR at Jobline International.

Maureen O'Connor is the new executive director at the Maryland Coalition for
Telephone Competition, a consumer group whose industry members include AT&T
Corp. and Winstar Communications, Inc.  She's founder of O'Connor Public
Relations, LLC.

The National Cable Television Association has promoted Director-state
telecommunications policy Rick Cimerman and Director-public affairs David
Pierce.  Both were promoted to senior director.

San Diego-based ideaEDGE Ventures has hired Hans Davidsson as a managing
partner.  Mr. Davidsson was vice president-Internet applications and
solutions at Telefon AB L.M. Ericsson.

The  Universal Service Administrative Co. has elected Allan T. Thoms vice
chairman of its board of directors.  Mr. Thoms is the chairman of the Iowa
Utilities Board.  Frank Gumper, vice president-public policy development at
Verizon Communications, Inc., was reelected USAC's chairman and Cheryl
Parrino was reelected chief executive officer.

Former U.S. Deputy Attorney General Ronald D. Lee has been elected partner in
Arnold & Porter's Washington, D.C. law office.   He'll focus on the
regulatory and public policy legal issues of telecommunications, computer
security, and encryption.  Mr. Lee from 1987 to 1994 practiced law at the
firm's Washington and Los Angeles offices.

Dale Hatfield, former chief of the FCC's Office of Engineering and
Technology, has joined Fantasma Networks, Inc., as a technical adviser.  Mr.
Hatfield will advise the Mountain View, Calif.-based wireless video
networking technology provider on ultrawideband technology.  He also is
director of the Interdisciplinary Telecommunications Program at the
University of Colorado at Boulder.

San Diego-based AirFiber, Inc., says Brett Helm, its newly hired president
and chief operating officer, will join its board of directors along with
Marcel Gani, chief financial officer of Juniper Networks, Inc.

Wireless Online, Inc., says Neil Cox, president of SecurityLink, will join
its board of directors.

Regulatory & Government Affairs

DT Services, Inc., and 4MTV Corp. separately have asked the FCC to grant them
"exempt telecommunications company" (ETC) status under the Public Utility
Holding Company Act of 1935 (PUHCA), as amended by the Telecommunications Act
of 1996.  The PUHCA effectively prevented utility companies from providing
telecom services, but the Act made it possible for them to do so either by
acquiring or holding interest in an ETC.  DT is a subsidiary of Dominion
Resources, Inc., a registered holding company under PUHCA.  4MTV is a private
Nevada-based corporation, and plans to offer broadband Internet and other
network services. Comments on DT's request are due in Network Securities file
ETC 00-53 by Feb. 9, and replies are due Feb. 16.  Comments and replies on
4MTV's request are due Feb. 19 and 26, respectively.  They should refer to
ETC 01-01.

The FCC is seeking comments on requests by Amana Colonies Telephone Co. and
South Slope Cooperative Telephone Co. for waivers of its "study area"
definitions.  One of the requested waivers would enable Amana (d/b/a
Hickorytech and Heartland Telecommunications of Iowa) to alter its Iowa study
area to remove a telephone exchange it is transferring to South Slope.  The
other waiver would enable South Slope to include that exchange, which serves
about 1,500 lines, when calculating its universal service support.  A study
area is the geographical area over which universal service support is
calculated.  Comments and replies on both requests are due Feb. 19 and March
1, respectively.  Filings should refer to Common Carrier docket 96-45.

The FCC's Wireless Telecommunications Bureau is seeking comments on a request
by an intergovernmental public safety agency for a rule waiver to allow it to
use eight radio frequencies allocated for non-public safety use in Chicago.
Comments on the DuPage Public Safety Communications request are due Feb. 20
and replies are due Feb. 27.  Parties should reference DA 01-264.

The North American Numbering Council will discuss plans for a performance
review and a "requirements document" for the North American Numbering Plan
administrator, among other topics, during its Feb. 20-21 meeting.  The NANC
meeting will begin at 8:30 a.m. in Room TW-C305 of the FCC's headquarters in
Washington.  Contact Cheryl Callahan at 202/418-2320 for more information.

The FCC's Wireless Telecommunications Bureau is seeking comments on requests
for frequency coordination certification in the 800 megahertz and 900 MHz
private land mobile radio service (PLMRS) public safety pool frequencies.
The International Association of Fire Chiefs, Inc., and the International
Municipal Signal Association (IAFC/IMSA) are seeking certification in the 800
MHz and 900 MHz bands, while the American Association of State Highway and
Transportation Officials (AASHTO) is seeking certification in the 800 MHz
band.  Comments are due Feb. 21 and replies March 8.  Comments on the
IAFC/IMSA request should reference DA 01-152, while comments on the AASHTO
request should reference DA 01-151.

The FCC is seeking comments on five petitions for declaratory ruling from
companies partly owned by VoiceStream Wireless Corp. asking the FCC to permit
Deutsche Telekom AG to take an indirect ownership interest greater than 25%
in those companies.  DT would gain such an ownership interest as a result of
DT's planned acquisition of VoiceStream (see separate story).  The German
government owns 60% of DT.  Comments are due Feb. 22 and replies March 8.
Comments should reference DA 01-280 and International docket 00-187.

The FCC is seeking comments on the National Exchange Carrier Association,
Inc.'s proposed revisions to the average schedule universal service formulas
for the period from July 1, 2001, to June 30, 2002.  On Dec., 28, 2000, NECA
submitted proposed changes to formulas for average schedule interstate
settlement disbursements.  Comments and replies are due March 5 and 26,
respectively.  They should refer to Accounting Safeguards file 01-16.

The FCC is seeking comments on Western Wireless Corp.'s request that the FCC
designate it an eligible telecommunication carrier for the purpose of
receiving universal service funding for serving the Pine Ridge Reservation in
South Dakota.  Comments are due 30 days after the notice seeking comment is
published in the Federal Registerand should refer to Common Carrier docket
96-45.  Replies are due 15 days later.

The FCC says five bidders have qualified to participate in the reauction of
eight licenses for the 700 megahertz "guard bands" surrounding public safety
spectrum, which is scheduled to begin Feb. 13.  The licenses were offered but
unsold at an auction last September.  The qualified bidders and their upfront
payments are Access Spectrum LLC ($156,000), Harbor Wireless LLC ($110,000),
Nextel Spectrum Acquisition Corp. ($156,000), Pegasus Guard Band LLC
($161,000), and PTPMS II Communications, Inc. ($161,000).  Companies that
make larger upfront payments can bid more in the auction.

The FCC has affirmed its decision that economic area (EA) licensees are not
required to make "progress payments" to incumbent SMR (specialized mobile
radio) service operators that are involuntarily relocated from the upper 200
channels of the 800 megahertz band.  Instead, the FCC said, EA licensees can
wait until a relocation is completed before picking up the costs.  In a third
order on reconsideration in Private Radio docket 93-144 released Feb. 2, the
FCC denied a petition filed by the American Mobile Telecommunications
Association, which had sought reconsideration of a 1999 decision
restructuring the licensing framework for the 800 MHz band SMR service.

The FCC has noted that Southwestern Bell Telephone Co. will no longer be
required to submit performance measurement data for its Kansas and Oklahoma
operations.  That requirement was one of the conditions of the FCC's approval
of the merger between parent company SBC Communications, Inc., and Ameritech
Corp.  When it approved the merger, the FCC established a "carrier-to-carrier
performance plan" that required the merged company to report the monthly
results of 20 performance measurements for the telco operations in each of
the states in its service territory (TR, Oct. 11, 1999).  The FCC last month
determined that the Kansas and Oklahoma telcos had opened their markets to
competition and approved them to offer in-region interLATA services,
effective March 7, under section 271 of the Telecommunications Act of 1996
(TR, Jan. 29).  SBC will submit its final performance measurements report
under the plan on March 20.

The New Jersey Board of Public Utilities has asked the FCC to rule on its
request for authority to implement certain number-conservation measures,
including 1,000-number block "pooling" and number rationing.  The New Jersey
regulators last summer requested permission pursuant to an FCC order that
introduced a plan for national pooling and encouraged states to apply for
authority to conduct pooling trials until the national rollout began (TR,
March 20, 2000).  Despite receiving comments on the board's request last year
(TR, Aug. 14, 2000), the FCC has not yet issued a decision in the matter.  In
its recent petition in Common Carrier docket 96-98 and Network Security file
L-00-95, the board asked the FCC immediately to approve its request so it can
implement the conservation measures "before further depletion of finite
numbering resources."

The Michigan Public Service Commission has asked the FCC for authority to
conduct 1,000-number block "pooling" in two metropolitan statistical areas
(MSAs).  In its "number optimization" order last year in Common Carrier
docket 99-200, the FCC announced a plan to conduct nationwide pooling (TR,
March 20, 2000).  It also encouraged states to seek authority to begin
pooling until the FCC announces a national rollout schedule.  The Michigan
PSC last week asked for authority to conduct 1,000-number block pooling in
the Detroit and Grand Rapid MSAs, to order sequential number assignment, and
to maintain "NXX" rationing for six months after the implementation of
area-code relief measures.

In a joint petition, Golden West Telephone Cooperative, Project Telephone
Co., and Range Telephone Cooperative have asked the FCC's Common Carrier
Bureau to reconsider its decision designating Western Wireless Corp. as an
ETC (eligible telecommunications carrier) for the purpose of receiving
federal "high-cost" support in Wyoming (TR, Jan. 8).  They said they hadn't
received notice that the areas covered by the ETC designation could include
parts of their exchanges.  They also argued that ETC designation must
correspond with the entire study area of the incumbent telco.  In a separate
petition, Chugwater Telephone Co., Range Telephone, and RT Communications,
Inc., also sought reconsideration or clarification of the order.  They argued
that the Wyoming legislature should be given time to pass a pending bill (HB
0052) that would authorize the state Public Service Commission to make ETC
designations itself.

Regionet Wireless Licensee LLC said it opposed a petition asking the FCC to
reconsider its recent decision to freeze the processing of new applications
in the automated maritime telecommunications systems (AMTS) as it considers
switching from site-based licensing to geographic licensing.  Warren C.
Havens has filed a petition for reconsideration of a "fourth report and order
and third notice of proposed rulemaking" adopted last year in Private Radio
docket 92-257 (TR, Nov. 20, 2000).

The FCC's Enforcement Bureau is proposing a $5,000 monetary forfeiture
against Verizon Florida, Inc., for violating Commission rules by operating an
air-ground station without agency authorization.  Verizon told the FCC that
it operated the station without authorization between Sept. 1, 1999, and
March 10, 2000.  The notice of apparent liability was released Feb. 1 in file
no. EB-00-TS-148.

The FCC's Wireless Telecommunications Bureau says its policy of permitting
applicants one extra business day to file applications under its jurisdiction
is no longer in effect.  In a public notice released Feb. 1, the bureau said
it was clarifying that all applications for wireless telecom services filed
since Feb. 12, 1999, have been deemed filed on the date received by the
Commission.  The FCC began providing an extra day for those filing Common
Carrier applications requiring fees when it moved the filing location to a
bank in Pittsburgh in 1990.

The Market Disputes Resolution Division of the FCC's Enforcement Bureau has
granted a request by Texcom, Inc., (d/b/a Answer Indiana) to withdraw a
complaint it had filed against SBC Communications, Inc.  Texcom had said SBC
improperly collected payment for termination of SBC-originated traffic on
Texcom's network.  The companies settled the matter during private
negotiations.  The division agreed to dismiss the complaint with prejudice in
Enforcement Bureau file 00-MD-12.

New Skies Satellites N.V. has asked the FCC's International Bureau to clarify
or reconsider a recent order that granted Telesat Canada's petition to add
the Anik F-1 satellite to the Permitted Space Station List.  New Skies said
clarification was needed so all parties understand (1) "that additional
authorization would be necessary before Anik F-1 would be allowed to provide
narrowband services to any C-band earth stations operating in the United
States that are smaller than 4.5 meters in diameter," and (2) "the Commission'
s rationale for concluding that operations from adjacent orbital locations
will be protected."

Pegasus Development Corp. is asking the FCC's International Bureau to
reconsider a recent decision to grant Loral CyberStar, Inc., authority to
launch and operate two satellites in the geostationary satellite orbit (GSO)
to provide fixed-satellite service (FSS) in the Ka-band.  In a petition for
reconsideration filed Jan. 19, Pegasus said the International Bureau's order "
relies on a stale and inapplicable record. . .A refreshed record will
demonstrate that there currently exists a shortage of available Ka-band
orbital locations, that Loral has sufficient access to other orbital
resources, and that the public interest would be better served by making the
67-[degree] W.L. orbital location available for the second-round Ka-band
applicants," Pegasus said.

The Rural Health Care Division of the Universal Service Administrative Co.
recently sent 50 letters committing funding to health care providers in rural
areas.  The program funds discounts on telecom services for eligible rural
hospitals and other health care providers.  USAC has committed more than $7
million to 613 health care providers during the second year of its "
telemedicine" program.

The Federal Trade Commission is supporting a Web site
(http://www.consumer.gov/sentinel) offering statistics on Internet fraud,
identity theft, and tips on avoiding online frauds and deceptions.  The FTC
said more than 80 public and private organizations contribute consumer
complaints to the multiagency Consumer Sentinel database, which law
enforcement officials use to share data about fraud.

House Ways and Means Committee Republican Philip S. English (Pa.) introduced
a bill, HR 267, to extend tax credits to carriers that deploy high-speed
Internet facilities in rural and underserved areas.  The legislation has more
than 50 co-sponsors.  It's a companion to S 88, which was introduced last
month by Sen. John D. Rockefeller IV (D., W.Va.) (TR, Jan. 29).

Rep. Rodney P. Frelinghuysen (R., N.J.) introduced legislation that would
require carriers to get written consent from customers before obtaining their
wireless location information.  The Wireless Privacy Protection Act, HR 260,
would direct the FCC to adopt such rules within six months of enactment.

House freshman Michael Honda (D., Calif.) plans to form a bipartisan wireless
caucus to focus exclusively on issues related to third-generation (3G)
wireless technology.  More details about the caucus will be released "within
the next few weeks," a Honda spokesman told TRlast week.  Rep. Honda's
initiative would be the second congressional caucus that's focused on
wireless issues.  Last year the Congressional Wireless Telecommunications
Caucus was formed by Reps. Albert Wynn (D., Md.) and Charles (Chip) Pickering
(R., Miss.) and Sens. Byron Dorgan (D., N.D.) and Sam Brownback (R., Kan.)
(TR, April 17, 2000).

A push to repeal the 3% federal excise tax on telephone bills has been
revived in the Senate by Finance Committee Chairman Charles E. Grassley (R.,
Iowa).  The tax "is outdated, unfair, and complex" for consmers and phone
companies," the lawmaker said Feb. 1 when introducing the Help Eliminate the
Levy on Locution Act (HELLO), S 234.  Sen. Grassley added,  "It cannot be
justified on any tax policy grounds."

Celtronix Telemetry, Inc., has asked a federal appeals court to review the
FCC's decision to implement a debt-restructuring plan for licensees in the
218-219 megahertz service, which was formerly called the interactive video
and data service (IVDS) (TR, Dec. 18, 2000; and Jan. 8, notes).  In a
petition for review and notice of appeal (case no. 01-1021 and 01-1022) filed
with the U.S. Court of Appeals in Washington, Celtronix argued that the
Commission's action was unlawful, arbitrary, and capricious.

Washington state Rep. Richard DeBolt (R.) has introduced legislation to
provide tax incentives for companies seeking to deploy advanced telecom
services in rural areas.  HB 1239 would exempt from taxation any sales to or
by telecom companies for machinery, equipment, or tangible personal property
used to build telecom infrastructure in rural areas.  Telecom company
machinery, equipment, or facilities used to provide advanced telecom services
to rural areas would be exempt from the use tax.  Telecom companies also
would be eligible for tax credits equal to 50% of their costs of constructing
telecom structures or facilities, or acquiring machinery or equipment.  HB
1239 awaits consideration by the House Technology, Telecommunications, and
Energy Committee.

Illinois legislators are considering a bill to rewrite the telecom provisions
of the state's Public Utilities Act, which expires July 1. The bill (HB 492
and SB 134) would freeze rates, with a cap on future linked to the rate of
inflation.  It also would deregulate optional services, such as call waiting
and Caller ID.

Hawaii state Rep. Calvin K.Y. Say (D.) has introduced legislation to amend
the state franchise tax to include the revenues of telephone, telecom, and
cable TV businesses.  Those businesses would have to pay 2.5% of their gross
receipts for the preceding calendar year.  The bill, HB 1180, awaits
consideration by the House Consumer Protection and Commerce Committee and the
House Finance Committee.

The North Carolina Utilities Commission has ordered the North American
Numbering Plan administrator (NANPA) to release two "NXX" codes in the "980"
area code to BellSouth Telecommunications, Inc.  NXX codes are blocks of
10,000 sequential phone numbers.  BellSouth had requested the NXX codes for
two large business customers, Duke Energy Corp. and Microsoft Corp.  But the
application for numbers in the new area code didn't meet FCC guidelines
regarding "months to exhaust," the NCUC said, so the NANPA had denied the
request.  The NCUC directed BellSouth to assign the phone numbers to the two
customers sequentially and stated that the numbers would be subject to
reclamation if not used within the period allowed by industry guidelines.
The 980 area code is scheduled to be activated as an "overlay" of the "704"
area code April 1.

The Australian government has created an E-Security Coordination Group to
assess the nation's telecom- and information-infrastructure security needs.
The National Office for the Information Economy is the group's lead agency.  "
In addition to focusing on security standards, the group will work on
incident reporting, awareness raising, and skills shortages," the government
announced Feb. 2.  It also formed a critical infrastructure priorities
subcommittee, led by the Commonwealth Attorney General's Department, to carry
out critical infrastructure threat and vulnerability assessments.

Financial Briefs

The Amsterdam Exchange intends to add KPNQwest NV to the AEX Index, a listing
of the exchange's top 25 companies, KPNQwest said.  KPNQwest is a joint
venture of Qwest Communications International, Inc., and Royal KPN NV, the
Dutch national carrier.

XO Communications, Inc., will seek to raise as much as $2 billion through the
sale of common stock, preferred shares, depositary shares, warrants, or debt
securities under a "shelf registration statement" filed with the Securities
and Exchange Commission.  Further details of the fund-raising effort will be
revealed in future filings.  XO intends to use the funds to pay for network
expansion, operating losses, and possible acquisitions.

Telecom Italia SpA has raised $1.85 billion through the sale of convertible
bonds in Europe.  The Italian carrier intends to use the proceeds to
refinance existing debt.

Nortel Networks Ltd., a subsidiary of Nortel Networks Corp., intends to raise
$1.5 billion through the sale of senior unsecured notes.  Nortel, a
Toronto-based telecom equipment maker, intends to use the funds for loans to
its affiliates and other corporate purposes.  The company expects to complete
the transaction this month.

Leap Wireless International, Inc., said QUALCOMM, Inc., had agreed to provide
it with $125 million to support the carrier's purchase of licenses in the FCC'
s reauction of "C" and "F" block PCS (personal communications service)
licenses, which ended last month (see separate story).  Under terms of a
senior secured credit facility, QUALCOMM will transfer to Leap a $125 million
auction discount voucher previously issued by the FCC.  Leap will repay the
money within five years.

Tellabs, Inc., has agreed to pay $181 million cash for Future Networks, Inc.,
a cable modem maker based in Alpharetta, Ga.  Tellabs, of Lisle, Ill., said
the acquisition would fill gaps in its portfolio of cable modem and cable
telephony products.  The companies expect to complete the transaction this
month.

Lafayette Communications LLC has signed a definitive agreement to acquire
licenses for 10 megahertz of spectrum from subsidiaries of Carolina PCS I
Limited Partnership for an undisclosed price.  The spectrum covers nine basic
trading areas serving about 3.5 million people in the entire state of South
Carolina.

Industry News

The Organization for the Promotion and Advancement of Small
Telecommunications Companies is holding a March 28 seminar to discuss
opportunities to purchase Bell companies' rural exchanges.  OPASTCO said Bell
companies, including Qwest Communications Corp., may sell "upwards of 20
million lines" in the next five years.  The OPASTCO seminar will be held at
the Hyatt Regency at the Dallas/Fort Worth Airport.  For more information,
contact Tiffani Belk at 202/659-5990.

The Ordering and Billing Forum's Vendor Demo 2001 will be held Aug. 27-29 in
Seattle.  The OBF is an industry group sponsored by the Alliance for
Telecommunications Industry Solutions.  The International Engineering
Consortium will co-host the event.  Call 312/559-3328 or visit
http://www.atis.org or http://www.iec.org for more information.

The Alliance for Telecommunications Industry Solutions and the
Telecommunications Industry Association have begun developing the operating
principles and procedures for a new industry-led body that will act as a "
gatekeeper" for terminal equipment standards.  The FCC late last year
selected ATIS and TIA to sponsor the Administrative Council for Terminal
Attachments (TR, Nov. 13 and Dec. 25, 2000).  The council will oversee the
development of standards to replace the detailed technical criteria in part
68 (equipment) of the FCC's rules.  Parties wishing to be notified of the
first council meeting should forward their contact information, including an
e-mail address, to Megan Hayes (mhayes@atis.org).

Consumers Union, publisher of Consumer Reports magazine, and TeleBright Corp.
have formed an alliance that will allow consumers to compare prices and
offerings of mobile phone service plans online.  Consumer Reports Online
(http://www.ConsumerReports.org) is using TeleBright's IntelliRate technology
to offer the service.

Verizon Communications, Inc., is ending its telephone rental service, the
company told TR.  The changes affect only former GTE Corp. telcos.  The
former Bell Atlantic Corp. telcos already had terminated their rental
programs before the merger with GTE that formed Verizon.  The company will
bill customers for rental phones through May 2001, a spokesman said.  Rental
customers will own the phones when the billing cycle is completed.

BellSouth Corp. will exit the payphone business over the next two years,
selling or scrapping about 143,000 public phones, the company said.  Pay
phone usage has declined dramatically since 1998 and the business has become
less profitable, BellSouth noted.  "Our customers are opting for the new
technology options we provide, including wireless telephones and interactive
pagers," said Charles B. Coe, BellSouth's president-network services, in a
statement.  BellSouth said it would take two years to exit the business so
that its pay phone location providers would have time to find an alternative
to BellSouth service.

SigmaOne Communications Corp. says a patent-infringement lawsuit filed
against it by TruePosition, Inc., is "totally without technical merit and
motivated strictly by commercial considerations."  TruePosition's action,
filed in U.S. District Court in Delaware, claims that SigmaOne infringed on
three patents related to its network-based wireless location systems (TR,
Jan. 22, notes).  SigmaOne has decided to counter sue.  "We believe that our
counter suit will produce an unequivocal declaration that TruePosition's
patents have no relation to, and are not infringed by, SigmaOne's technology
and that, in addition, the patents are invalid," said SigmaOne President Mark
Licht.  "SigmaOne will also aggressively enforce its own intellectual
property rights in the field of wireless location technology."

Sprint Corp. has completed the transition of 95% of the circuits covered by
the FTS2001 federal government telecom service contract, according to Anthony
G. D'Agata, vice president and general manager of Sprint's government systems
division.  Qwest Communications International, Inc., has challenged the
General Service Administration's award of "bridge contracts" to Sprint and
AT&T Corp. to cover government agency customers who haven't completed the
transition from FTS2000 to FTS2001 (TR, Dec. 18, 2000, p. 38).  Mr. D'Agata
cited the need to obtain approval for an additional function required by one
agency customer as contributing to the transition delay.  He also cited
agencies' concerns about the year 2000 computer bug early in the transition
period, which discouraged them from making changes in their telecom systems.

Lucent Technologies, Inc., has won a two-year, $129 million contract to
provide broadband network equipment to Sprint Corp.  Lucent said it will
deploy its Stinger DSL (digital subscriber line) platform in about 1,000
Sprint central offices in the U.S.  Sprint will use the equipment for its ION
(integrated on-demand network) service.

Sprint PCS and Unplugged Games, Inc., have signed an agreement for Unplugged
Games to provide its wireless games service on the carrier's wireless Web.
Sprint PCS also has signed an agreement with Tribune Media Services that will
give Sprint PCS subscribers to access to entertainment content from Tribune
Media Services' Zap2it.com Web site.

Global Crossing Ltd. of Bermuda has completed the Pan American Crossing
network segment linking the U.S. and Mexico to Central America and the
Caribbean.  It's the latest step in deployment of the company's global fiber
optic system, which is scheduled to be finished by mid-2001.  Activation of
the Pan American Crossing makes Global Crossing "the first company to
directly link California, Mexico, and Panama," Global Crossing said.

Certicom Corp., a provider of mobile e-business security software and
services, has opened a European office in London.

Telefon AB L.M. Ericsson is forming a separate company to focus on mobile
Internet networks and applications.  The company will be called Ericsson
Internet Applications and Solutions AB.

Asia Global Crossing Ltd., Digital Telecommunications Phils, Inc. (Digitel),
and Broadband Infrastructure (BI) Group have launched Digitel Crossing, a
40:40:20 joint venture in the Philippines.  Digitel Crossing has plans to
build a terrestrial fiber optic network that will connect in early 2002 with
Asia Global Crossing's undersea network.  Under the terms of the agreement,
Digitel and BI Group will buy network capacity from Asia Global Crossing.

QUALCOMM, Inc., has announced that it has prevailed in three patent
opposition proceedings in Korea and Europe.  The proceedings were initiated
by Motorola, Inc.  The Korean Intellectual Property Office upheld two
QUALCOMM patents, the European Patent Office upheld a third.  In another
development, SnapTrack, Inc., a QUALCOMM subsidiary, was awarded a patent
from the U.S. Patent and Trademark Office for its wireless location and
asset-tracking technology.

Vodafone Group plcs' United Kingdom affiliate has extended the roaming
capabilities of its Globalstar mobile satellite phone customers from the U.K.
to North America.  It now offers its customers "roaming agreements with 272
networks" on both sides of the Atlantic, said Paul Donovan, Vodafone U.K.'s
managing director.

Oy Nokia of Finland has signed a $186 million contract to upgrade the
wireless communications infrastructure of PTK Centertel Sp. z.o.o. of
Poland.  Nokia will upgrade PTK Centertel's GSM (Global System for Mobile
communications) network and will deploy GPRS (general packet radio service)
infrastructure.

Rogers AT&T Wireless has selected Ericsson Canada, Inc., as exclusive
supplier for its third-generation wireless network.  The contract is the "
largest ever awarded to Ericsson in Canada," Ericsson said.

Wireless Industry Says Agreement Could Streamline Antenna Siting

The FCC, the Advisory Council on Historic Preservation (ACHP), and a
telecommunications working group that includes historic preservation
officers, federal officials, and industry representatives have formulated a
programmatic agreement designed to streamline the review of antenna
collocations under the National Historic Preservation Act (TR, Nov. 27, 2000;
Jan. 8, notes, and Jan. 29).

The agreement comes on the heels of the advisory council's decision in
November 2000 to revise rules that the industry maintains make it difficult
to site antenna towers.  The new regulations were adopted after a court
challenge alleged voting irregularities in the council's 1999 adoption of the
original rules, which implemented section 106 of the National Historic
Preservation Act (TR, Aug. 14 and 28; and Sept. 11, 2000).

Like many industry officials, Robert L. Hoggarth, senior vice
president-government relations for the Personal Communications Industry
Association, has problems with the ACHP's rules.  But he says he hopes the
programmatic agreement on collocations-and perhaps other issues-can help
speed the antenna-siting process.  Mr. Hoggarth discussed the agreement with
TR.  An edited excerpt of the conversation follows.

TR:  What's your complaint with the process used to adopt the rules that the
ACHP approved last November?

Hoggarth:  The new rules, in our view, were originally promulgated-or at
least an attempt was made to promulgate them-back in 1999.  The current
version that the ACHP passed in the fall was essentially the same rules that
they attempted to adopt in early 1999.

TR: So in your view, the rules that were approved last November and took
effect in January are pretty much the same as those adopted in 1999?

Hoggarth:  The original revisions that took place in early 1999 never legally
went into effect because they were incorrectly promulgated.  This latest
effort on the part of ACHP was an attempt to cure the early illegalities.
The shortened rulemaking process was, in many respects, a way to rubber-stamp
the original rules.  While it did provide an opportunity for the industry to
suggest changes, not many of those were accepted by the ACHP.

TR:  What problems does the wireless industry have with the rules themselves?

Hoggarth:  The key to the wireless industry is speed to market.  And the
latest applications of the advisory council rules by state authorities and by
the federal government have created additional potential for real delays for
the industry in the processing of new antenna-site requests.

TR: Why have the rules hurt the antenna-siting process?  Is the wireless
industry asking to be treated differently from other industries?

Hoggarth:  No.  What's happened is the new process has upped the ante with
respect to the level of review by state and local authorities.  The challenge
that the industry has found is that in implementing those rules, many state
historic preservation officers and many other stakeholders have used it as an
opportunity to almost step in and take an approval role, as opposed to an
advisory role. . .It's the FCC that approves the antenna sites as opposed to
the state historic preservation officers or the ACHP.

TR: So you see the ACHP as trying to have a greater role than it's allowed
under the law?

Hoggarth:  Correct.  Our goal is to make sure that historic preservation
issues are addressed and that they're looked at in a responsible way.
Resources should be devoted to those sites that are going to present real
challenges for cultural and historic preservation, as opposed to the creation
of an additional bureaucracy that does nothing but cause more pressure and
work for state and local authorities, significantly increase the processing
cost for carriers and tower companies, and delay the approval of those
facilities.

TR:A telecom working group has drafted a programmatic agreement to streamline
the antenna collocation process.  What's the purpose of such an agreement?

Hoggarth:  The efforts to come up with a collocation agreement, as well as
previous efforts of the telecommunications working group, were attempts to
address the overall industry concern about the ACHP rules and processes.

Our goal was to bite off manageable chunks of the problem so we could resolve
some things in the very short term and provide immediate benefits to the
historic preservation community and the industry.  This is a billion-dollar
issue overall, with respect to compliance, speed of service delays, and
additional obligations, both at the state and local levels.

And collocation is one way to take a significant chunk out of that
billion-dollar burden.  Since last summer there have been active negotiations
on issues such as delegation and collocation, in an effort to resolve some
short-term, immediate goals.  A group within the telecommunications working
group established by the ACHP reached consensus on a collocation proposal.

But what arose in the late fall was significant concern on the ACHP's side as
to how to implement any agreement reached by the telecommunications working
group.  As a result, the ACHP authorized negotiations between the ACHP and
the FCC to reach a programmatic agreement with respect to the collocation of
new antenna facilities on existing structures and buildings.

A general consensus was reached in the fall as to what that would look like.
The latest efforts, with respect to the programmatic agreement, focus on the
real desire-on the part of both industry and government-to have a specific
agreement that has some teeth to it, that has some consistency to it, that
everyone can be willing to abide by. . .

The negotiations have become very complicated.  We at PCIA and the tower
industry have been working with the ACHP, the FCC, and the state historic
preservation officer community to reach agreements on language that satisfies
the goals of preserving historic properties in a responsible manner.

TR:  So the devil is in the details, it seems.  PCIA asked the FCC to amend
the draft agreement it sought comment on last month.  So did the Cellular
Telecommunications & Internet Association.

Hoggarth:  Certainly from our industry's perspective, the draft agreement
that was put on public notice is not our ideal.  It's simply a matter now of
word-smithing, and we want to make sure that the appropriate administrative
rules are observed.

TR:  Ideally how would a programmatic agreement streamline the collocation
process?

Hoggarth:  What it would do is allow the industry to put antennas on existing
facilities without individual review, thereby minimizing the impact on the
environment by limiting the number of new towers that go up.

The programmatic agreement will have very specific parameters in which the
historic preservation community will be assured that new facilities will go
through a process of review.  There'll be assurance that the existing
structure on which the collocation is taking place already has undergone a
measure of review, or that any significant site changes created by
collocation will be appropriately reviewed by local authorities.

TR:Under this streamlined approach, what percentage of antennas no longer
would have to undergo review by historic preservation officials?

Hoggarth:  Our hope is that, as a result of the programmatic agreement, we
would eliminate 80% to 85% of the reviews by state and federal authorities.

The present system anticipates significant review of literally every new
antenna that's sited in a community.  And with collocation, that's simply not
necessary.

TR:  Is there a sense for how many antennas that 80% to 85% represents?

Hoggarth:  No, it's hard to say.  What we're trying to do is create a system
that not only ensures that current sites remain in place and aren't subject
to review, but also that going forward a large number of new sites will be
collocations.

TR:  Where has the opposition come from to the collocation agreement?

Hoggarth:  The concerns expressed by the historic preservation community
center around language that ensures that there are no significant loopholes,
and we certainly agree with that.

TR:  Isn't it also correct that some historic preservation officers have been
concerned that they won't have the same review authority on collocations that
they currently have?

Hoggarth:  I think the concern is a combination of that, plus just a
lack-of-control issue, which says, "My goodness, I don't have the opportunity
to review what sort of sites are going to go up."

The reality is that the wireless industry is expanding so significantly and
so greatly that historic preservation officers simply don't have the time to
review every new project.

They simply don't need to review every one of them, given the lack of adverse
impacts from so many of these collocations.

TR: In addition to collocation, what are some of the wireless industry's
other regulatory concerns that are being discussed by the telecom working
group?

Hoggarth:  They involve such things as the time periods in which reviews are
required.  They involve the role of the FCC and the role of the industry in
terms of application reviews, the use of authorized consultants to conduct
the reviews, and the role of the ACHP v. the role of the state historic
preservation officers.  Literally all aspects of the advisory council's rules
are touched on.

TR:  ACHP officials have said they'd like to vote at their meeting in March
on a broader programmatic agreement that includes many of these issues in
addition to collocation.  Do you think that's still realistic?

Hoggarth:  There are various expectations that folks are bringing to the
table.  The reality is that we thought collocation was something that could
be resolved in a 60-day time frame, and it's now taken four months.  And that'
s just one issue that we thought we had broad consensus on within the
telecommunications working group.

As a result, it's just a practical view that a broader programmatic agreement
is going to take a lot of hard work.  I can't give you any predictions on
time, because if we're fortunate and if things break the right way, we might
be able to accomplish things sooner rather than later.

But I'm optimistic.  It's going to take a tremendous amount of work over the
next year to actually bring something to fruition.

We continue to work on individual issues with the ACHP.  We've established
very positive working relationships with the NCSHPO organization, and we are
building relationships with various tribal representatives as well, so that
we can really address all aspects of cultural and historical preservation.

What's Ahead. . .

FEBRUARY

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

7-Comments are due to the United Kingdom's Office of Telecommunications on
whether to impose additional conditions on Cable & Wireless plc's operator
license for certain international routes (TR, 1/15/01 p.32).

8-Section 275 of Telecommunications Act prohibits Bell operating companies
from providing alarm monitoring services until this date (TR,11/17/97 p.7).
The Act grandfa-thered alarm monitoring operations existing as of Nov. 30,
1995.

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

14-CONNECTICUT:  The Connecticut Department of Public Utility Control plans
to issue its final decision on whether to require Southern New England
Telephone Co.'s video service subsidiary to continue providing cable TV
services in the state (TR, 1/29/01 p.44).

14-New deadline for submitting comments to the FCC on its most recent order
aimed at conserving telephone numbers.  Replies are due March 7 (TR, 1/29/01
p.35).  Filings should reference Common Carrier dockets 99-200 and 96-98.

15-NEW JERSEY:  Deadline for Verizon New Jersey, Inc., to file a new
alternative rate regulation plan with state regulators (TR, 1/8/01 p.23).

15-IRELAND:  Grant proposals are due to Ireland's Department of Public
Enterprise as part of its plan to make $3.6 million available to community
groups for communications technologies (TR, 12/4/00 p.30).

19-CALIFORNIA:  Comments are due to the Public Utilities Commission on Cap
Gemini Ernst & Young's reports on Pacific Bell's operation support systems
(OSSs).  The commission plans to issue a draft decision on the reports April
6, and a final decision May 24 (TR, 12/25/00 p.4)

20-22-The Consortium for School Networking holds a tele-com and Internet
conference in Washington.  For more information, call 202/624-1740 or go to
http://www.k12schoolnetworking.org.

22-The FCC holds a meeting.

22-Comments are due to the FCC on its notice of proposed rule-making
concerning the allocation of third-generation wireless frequencies
(Engineering and Technology docket 00-258).  Replies are due March 9 (TR,
1/29/01 p.35).

22-Comments are due to the FCC on its proposal to reallocate 27 megahertz of
spectrum transferred from federal government to private use (Engineering and
Technology docket 00-221).  Replies are due March 26 (TR, 1/29/01 p.35).

23-The Alliance for Public Technology holds an advanced services policy forum
at the National Press Club in Washington.

25-28-The National Association of Regulatory Utility Commissioners holds its
winter committee meetings in Washington, D.C.  For more information, call
202/898-2214.

26-Comments are due to the FCC on the federal-state joint board's
recommendations regarding the Rural Task Force's plan for reforming the
universal service support mechanism (TR, 1/29/01 p.35).  Replies are due
March 12 in Common Carrier docket 96-45.

26-Comments are due to the FCC on the MAG (multiassociation group) proposal
for overhauling interstate access and universal service support mechanisms
(TR, 1/29/01 p.35).  Replies are due March 12.  Comments on those aspects of
the MAG proposal that would increase or modify data-reporting requirements
are due to the Office of Management and Budget by March 26.

27-28-Lucent Technologies, Inc., and the Association for Local
Telecommunications Services sponsor a competitive carrier regulatory summit
in Washington.  For more information, call 800/765-9222.

MARCH

1-2-Credit Suisse First Boston holds a wireless Internet conference in
Tokyo.  For more information, go to http://www.csfb.com/conferences.

5-6-Law Seminars International holds a "Local Telecommunications
Infrastructure" conference in Atlanta.  For more information, call
206/621-1938 or 800/854-8009.

Executive Briefings

Verizon Wireless' Bidding - The buzz on Wall Street in the wake of the FCC's
reauction of 422 "C" and "F" block PCS licenses focuses on the aggressiveness
of Verizon Wireless.  Industry observers also talk up the prices paid for
three 10 MHz licenses in New York City.  (Page 3)

USTR Review - Countries around the world are making progress in complying
with various telecom-munications trade agreements, but much more work needs
to be done, U.S. carriers tell USTR.  They raise concerns similar to those
that have dominated the debates about telecom competition in the U.S.  (Page
5)

Mexican Market - The U.S. Trade Representative still may ask a World Trade
Organization panel to investigate Mexico's compliance with a WTO agreement to
give foreign carriers access to its telecom market.  (Page 7)

Comnet Convention - Key congressional and FCC staffers predict that federal
policy-makers will launch major efforts this year to curb the Commission's
authority to impose "voluntary" conditions on merger applications, update the
agency's traditional common carrier rules, and pressure the FCC to accelerate
its decision making.  (Page 9)

Critical Infrastructure - House Energy and Commerce Committee Chairman Tauzin
demands a copy of a critical infrastructure report that he says the law
required be sent to Congress by Jan. 15 but that never arrived.  (Page 10)

Long Distance Rate War - AT&T execs believe they're seeing at least a
temporary cease-fire in the long distance rate wars that have ravaged the
revenue streams of incumbent IXCs.  "Pricing still is aggressive, but it is
not setting new lows," AT&T Chairman Mike Armstrong says.  Analysts, however,
say any truce is likely to be short-lived.  (Page 11)

VersaPoint Breakup - Versatel absorbs what remains of VersaPoint-its former
joint venture with NorthPoint-after cutting most of the workforce and
canceling many of the operations of the money-losing business.   (Page 12)

World Radio Conference - It's important for U.S. officials to consult with
other nations as they prepare for the ITU's 2003 World Radiocommunication
Conference, FCC officials and industry representatives agree.   (Page 13)

Satellite Licenses - The FCC's International Bureau modifies the licenses of
GSO satellite system operators to allow them to use Ka-band spectrum for
intersatellite service links.   (Page 14)

DT-VoiceStream Merger - The Justice Department and FBI say they have reached
an agreement with VoiceStream and Deutsche Telekom that reduces the law
enforcement, national security, and public safety risks of DT's planned
acquisition of VoiceStream.   (Page 14)

Ex Parte Rules - Two carriers vehemently oppose the FCC's proposal to exempt
foreign regulators from requirements to report on their communications with
the FCC.  They say the rules protect regulated entities by making the FCC's
deliberations "transparent."  (Page 15)

Spectrum Cap - PCIA, which in the past has urged the FCC on behalf of small
carriers to continue to limit the amount of spectrum wireless carriers may
hold in any one market, declares that it "will no longer play an active role"
in the issue.   (Page 16)

700 MHz Auction Delay - Major wireless carriers praise the FCC's fourth delay
of a 700 MHz band auction.  But rural carriers and a major TV broadcaster
criticize the move, saying it was unnecessary.   (Page 16)

Wireless Internet Applications - QUAL-COMM develops an open software platform
to help spur the development of applications for the wireless Internet.
(Page 17)

Spectrum Dilemma - French and Brazilian telecom regulators have more troubles
awarding wireless licenses. France decides to organize another "beauty
contest" in hopes of attracting more bidders for 3G licenses after only two
companies bid for four licenses on the block.  Brazil postpones an auction of
wireless licenses because of a lack of interest by bidders.  (Page 18)

Interconnection Arbitration - The FCC sets the schedule for arbitrating
disputes between Verizon and three other carriers over interconnection
agreements.  The FCC says that AT&T, Cox, and WorldCom may now file requests
for arbitration and that the Common Carrier Bureau chief will preside over
the proceedings.  (Page 20)

Pay-Per-Call Case - A federal district judge dismisses a lawsuit alleging
that WorldCom unlawfully blocked calls to pay-per-call "900"-number
services.  He tells a group of pay-per-call service providers to take their
complaint against WorldCom to the FCC.  (Page 20)

Equipment-Placement Debate - Municipalities and CLECs spar over whether the
FCC should preempt several Ohio cities' authority over the placement of
telecom facilities.  The debate centers around one question:  Does requiring
a CLEC to place its lines underground, rather than on poles where the
incumbent's facilities are located, constitute discrimination?   (Page 21)

Missouri InterLATA Bid - The Missouri PSC decides against supporting SW Bell'
s bid to provide interLATA service in the state.  It could change its mind if
the company addresses the PSC's concerns about issues such as pricing and
access to unbundled loops.   (Page 21)

AeA's 2001 Agenda - The former American Electronics Association advises
federal policymakers to take a hands-off approach to regulating broadband
service markets with multiple providers.   (Page 22)

ALTS' Wish List - CLECs are major players in fueling economic growth, ALTS
says.  But Congress needs to consider legislation to help CLECs overcome the
impediments posed by ILECs, building owners, municipalities, and the
financial markets.  (Page 23)

FCC Commissioners - Harold W. Furchtgott-Roth's decision not to seek
renomination to a second term on the Commission sparks a new round of
speculation about who the Bush administration will appoint to the FCC and
when it will fill potential vacancies at the agency.  Some think the White
House will act quickly to fill the seat left open by former Chairman Kennard'
s resignation.  (Page 24)

Pricing-Flexibility Rules - A federal appeals court says the FCC acted
reasonably in counting the number of carriers collocating equipment in an
incumbent's wire centers to determine the level of local competition.  The
U.S. Court of Appeals in Washington rejects WorldCom's argument that the FCC'
s criteria for granting LECs pricing flexibility don't accurately measure
competition and are unlawfully arbitrary.  (Page 25)

City-Owned Telecom Businesses - Utah state Rep. Greg Curtis plans to
introduce a bill to authorize state regulation of city-owned telecom
businesses, such as the broadband service offerings Provo is planning to
provide through its newly acquired cable TV system.  Without the bill, the
PSC couldn't regulate such businesses.  (Page 26)

BT Price Controls - Oftel acknowledges that BT faces increased competition in
the provision of residential voice service but extends price controls for a
year because of BT's continued "market power."  It also extends controls on
competitive carrier interconnection charges.  (Page 27)

Fighting Cybercrime - The European Commission launches an initiative aimed at
harmonizing the cybercrime policies of its member nations with those of other
countries.  (Page 27)

Loral's Retreat - Loral Space & Communications scraps plans to deliver
high-speed Internet service directly to consumers over a $3.5 billion network
of satellites and optical fiber.  "We do not have the in-house skills to
develop the marketing resources to competitively deploy such a system," CEO
Bernard Schwartz says.  (Page 27)

 Antenna Collocations - Rob Hoggarth of PCIA hopes an agreement hammered out
by the FCC, the Advisory Council on Historic Preservation, historic
preservation officers, and wireless industry reps can streamline the review
of antenna collocations under the National Historic Preservation Act.   (Page
35)
Copyright 2001, Telecommunications Reports International, Inc. All rights
reserved.