Dial Zero
A look at what's surprising, silly, scary or stupid in telecommunications and data

Friday, November 28, 2008

Bell Canada purchase deal in doubt

The $42 billion takeover of BCE Inc., Canada's largest phone company, was thrown into doubt Wednesday when the company warned that it might not be able to meet the conditions of the merger agreement.

BCE, the parent of Bell Canada, said that accounting and valuation firm KPMG has notified the company and its purchasers that based on its preliminary analysis, current market conditions and the amount of debt being used to fund the deal, it won't be able to deliver them a solvency opinion -- an express condition to closing the merger.

BCE stock fell 34% on Wednesday. The deal, on the cusp of becoming one of the largest leveraged buyouts, was scheduled to close Dec. 11.

The company said it disagrees with KPMG's conclusion and will review the methodology used by the valuation firm. Since the conclusion is preliminary, KPMG could reach a different conclusion by the deal's closing date.

"BCE today enjoys solid investment-grade credit ratings, has $2.8 billion of cash on hand, a low level of midterm debt maturities and continues to deliver solid operating results," BCE Chief Executive George Cope said. "The company disagrees that the addition of the LBO debt would result in BCE not meeting the technical solvency definition."

Struck in June 2007 at the apex of the buyout boom, the BCE transaction capped a yearlong flurry of deals during which nine of the 10 largest leveraged buyouts were struck. Led by Providence Equity Partners and Ontario Teachers' Pension Plan, the deal would place the Canadian telecom company in private hands.

This is just the latest snafu for a BCE deal that has already survived several challenges. Aspects of the company's corporate governance had to be changed to win approval by Canadian regulators. Existing BCE bondholders also filed a lawsuit to block the deal and took the case all the way to the Supreme Court of Canada, which ultimately sided with the company.

In July, BCE, the buyers and the banks renegotiated the deal, effectively reducing the purchase price and delaying the closing date until December. As part of this new deal, Bell Canada suspended its dividend until year-end, a move that has led to a shareholder lawsuit against the company.

It is unusual for a merger pact to require a solvency certificate as a condition of closing. Banks typically require such certificates to finance a transaction, but BCE had put this condition in place because it wanted to protect itself from complaints by existing BCE bondholders about the company's new, debt-heavy capital structure.

A collapse would likely benefit the financing banks, led by Citigroup, Deutsche Bank, the Royal Bank of Scotland and Toronto Dominion. The lenders, which have agreed to provide roughly $34 billion in debt to fund the LBO, stand to have billions of dollars in losses if they back the deal. That's because they would have to try to resell the bonds and loans into a debt market trading near record lows, or else hold them on their balance sheets. If the deal closed, Citigroup, which was bailed out by the federal government this week, would be on the hook for $11 billion in financing.

Less clear are the sentiments of the buyers' group, which also includes Merrill Lynch & Co.'s private-equity unit and Madison Dearborn Partners. Although the buyers have maintained publicly that they want to complete the transaction and have lined up the capital to fund it, the world has changed drastically since they originally struck the deal and renegotiated it in July.

Over the past week, as Citigroup's stock cratered, BCE investors grew nervous over the likelihood of the deal closing, and the stock had traded about 25% below the takeover price of $34.90 a share. But news of the US government bailout of Citigroup had boosted shares of BCE, which closed Tuesday in 4 p.m. New York Stock Exchange trading at $31.28, a roughly 10% discount to the deal price. In trading Wednesday, BCE shares tumbled $10.65, or 34%, to $20.63. (info from The Wall Street Journal)

Wednesday, November 26, 2008

NYC cops feuding with feds over wiretaps

A long-running rivalry between New York City police and Justice Department officials over how to keep the nation's largest city safe from terrorist attack has devolved into a feud over the use of national security surveillance wiretaps, with both sides accusing each other of endangering national security.

A letter from New York City Police Commissioner Raymond Kelly to Attorney General Michael Mukasey expresses frustration at what he describes as the Justice Department's slow and cautious handling of national security wiretapping requests in terrorism cases and says the delays could put the city in danger.

A letter from Attorney General Michael Mukasey to New York City Police Commissioner Raymond Kelly says Kelly's accusations are incorrect and alarming and says the Justice Department is trying to stay within the law while protecting New York City from terrorism.

In letters exchanged last month Kelly and Mukasey jousted over how officials from the Justice Department and Federal Bureau of Investigation handle requests made by New York City police for warrants to conduct national security surveillance. The Justice Department is the clearinghouse for the requests, which must be approved by the court that administers the Foreign Intelligence Surveillance Act, the federal law that oversees government national-security eavesdropping.

Kelly complained that Justice officials are overly cautious about submitting requests to the FISA court, that there is poor communication between Justice and FBI officials in New York and Washington, and that there are unacceptable time lags in handling NYPD's requests.

Despite Mukasey and Kelly discussing the matter on the phone in July and a subsequent visit to New York by top officials from Justice's National Security Division, Kelly's letter on Oct. 27 expresses frustration about continuing problems. "Consequently the federal government is doing less than it is lawfully entitled to do to protect New York City, and the City is less safe as a result," Mr. Kelly wrote.

Mukasey, a former federal judge in New York City, responded with a letter Oct. 31 defending the Justice Department's handling of New York's wiretapping requests and accusing Kelly of leveling inaccurate and alarming charges. "In effect, what you ask is that we disregard FISA'S legal requirements, which are rooted in the Constitution. Not only would your approach violate the law, it would also in short order make New York City and the rest of the country less safe."

The dispute has gotten the attention of members of Congress from New York. Rep. Peter King, a Republican, said "the Justice Department is being too cautious here and is putting New York at risk." The accusation from the NYPD runs counter to the reputation the Bush administration has developed among civil-liberties groups, which say the administration is too willing to allow eavesdropping that threaten Americans' civil liberties. Mr. Mukasey has spent much of his time since taking over as attorney general a year ago defending the Justice Department from such charges. (info from The Wall Street Journal)

Tuesday, November 25, 2008

Samsung avoids cellphone ban with last-minute patent deal


InterDigital and Samsung settled two long-running patent-infringement lawsuits Monday, just before a US International Trade Commission decision on whether to recommend banning imports of Samsung's high-speed cellphones.

InterDigital has received $1.5 billion from its wireless patents, mostly from licensing fees and royalties. It has issued licenses covering technology in iPhones and BlackBerrys.

But the company has struggled to sign up other makers such as Samsung and Nokia, which it has also sued.

The case before the ITC covered a high-speed broadband technology called 3G used in Samsung's Blackjack II and Instinct phones.

Engineers who went on to found Qualcomm developed InterDigital's patents in the 1980s, when InterDigital set out to offer wireless telephony in rural areas. InterDigital never became a major player in telecom equipment but holds an array of patents for wireless technologies, and now makes semiconductors.

According to a statement issued late Monday, the Samsung settlement, which runs through 2012, also covers an earlier technology known as 2G, for which Samsung last year posted a $167 million bond. The companies didn't release the value of the settlement, which requires Samsung to choose one of two payment options within the next 45 days. Both companies have agreed to drop all litigation and arbitration once InterDigital receives its first payment.

InterDigital last year filed a similar infringement case against Nokia, the largest maker of 3G phones. A judge is set to hear evidence in May 2009 and rule in August, with the full ITC ruling due by mid-December. InterDigital won a $253 million payment from Nokia in 2006. (info from The Wall Street Journal)

Monday, November 24, 2008

Kodak sues cellphone makers

Eastman Kodak, which has increasingly turned to its patent portfolio in search of profit, said it sued Samsung and LG for infringing Kodak patents in camera phones.

Kodak has reached licensing deals with most rival makers of digital cameras as well as most makers of camera phones. Earlier this year it announced an agreement with Nokia.

Kodak said the patents cover technology related to capturing images, data compression and storage, and a method for previewing motion images. A Kodak spokesman said the company had negotiated with Samsung and LG, but hadn't been able to reach an agreement.

"Our digital-camera technology is different from the one used by Kodak. We haven't infringed upon Kodak's related patents," said LG spokesman Choi Jun-hyuk. "We'll actively deal with the case."

Samsung spokeswoman Hae Won Choi said: "Samsung is committed to protecting and respecting intellectual-property rights. The company forbids infringement and unauthorized use of such intellectual property. Samsung plans to respond actively to this litigation and will remain committed to serving our customers by ensuring that accurate and reliable delivery of our products is not compromised in any way."

Kodak said it filed suit in US District Court in Rochester and filed a complaint with the US International Trade Commission. Kodak is seeking undisclosed damages and an injunction prohibiting Samsung and LG from importing and selling any infringing products.

Kodak receives between $250 million and $350 million a year in revenue from its intellectual-property portfolio. That contributes a significant portion of Kodak's income. (info from The Wall Street Journal)

Friday, November 21, 2008

Verizon employees peeked at Obama's cellphone records

Verizon Wireless disclosed Thursday that several of its employees accessed and viewed President-elect Barack Obama's personal cellphone account, and said it will discipline workers for the privacy breach. The company discovered the unauthorized account access this week and said it related to an account that has been inactive for several months. The device on the account was a standard feature phone, rather than a smartphone with advanced email and data capabilities.

"We apologize to President-Elect Obama and will work to keep the trust our customers place in us every day," said company chief exec Lowell McAdam.

The company said it has put all employees with access to the account on leave, with pay, as it sorts out which of those workers accessed the account without a justifiable business purpose. Those who did not have a good reason to view the account will be punished.

Cellphone companies have had other challenges protecting customer records in recent years. They have had to contend, for example, with third-party data brokers who illegally obtain customer records – sometimes by posing as employees of the cellphone company – and then sell them. They are sensitive to such privacy breaches, mindful that their subscribers could easily switch to rivals if they feel their personal information isn't secure. (info from The Wall Street Journal)

Thursday, November 20, 2008

More about the clueless idiots at AT&T

On Tuesday I talked about how AT&T had tortured my elderly parents with DSL installation delays, and when the technician finally showed up, he disconnected their alarm dialer causing my mother to have to endure hours of alarm shrieking. I also mentioned how back in 1985, I was told that AT&T would take a long time to become adept at operating in a marketing-based world, without gorvernment protection against competitors.

Yesterday I talked about how the Yellow Pages publishers are losing advertisers for the printed books, and not making up for it with online directories.

The two tales of woe come together nicely.

A few days ago I got a call from an AT&T Yellow Pages salesperson.

I said that my company (which sells phone systems and a wide variety of telecom products) stopped using printed YPs over a decade ago, because the Internet provides a much more powerful, and much less expensive, way for prospective customers to find us.

Quickly jumping ahead in her script, the saleslady was pleased to point out that AT&T has an online yellow pages, conveniently called YellowPages.com.

I said that I knew all about it, and wasn't interested.

She insisted an continuing her well-rehearsed spiel, explaining that people use the YPs when they're ready to buy, not just read.

I responded that I buy tons of stuff online, and that if I wanted to buy "James Bond movie posters" or "GE refrigerator water filters," I'd just type those words into Google and I'd instantly have many potential vendors to choose from. I told her that I have no trouble using Google to spend my money, and have NEVER used the online YPs for shopping.

I also told her that my customers similarly have no trouble in finding my company's 30-plus websites with Google, which costs me nothing.

She then responded with some forgettable statistic about the sales volume generated by the YPs and repeated her mantra about YPs are for shoppers and Google is for readers.

I could have hung up on the annoying clueless woman right then, but I was willing to play along for a few moments longer, and perhaps teach her something.

While she was on the phone, I went to her YP website and mimicked the action of a prospective customer for a phone system. I entered "Panasonic phone system" (one of our specialties) in the FIND window. But to make the system work, I would be forced to enter a location.

This is one of the fundamental flaws of both print and online YPs -- they're LOCATION-BASED instead of PRODUCT-BASED. The YP system wants to recommend LOCAL businesses, even to people who don't care about the location of a potential supplier. My customers are all over the US, and even in other countries. It doesn't matter where they are or where we are, because we're all connected by FedEx, UPS and USPS.

In the interconnected Internet 21st century world, AT&T's YPs are still structured for the days when people's shopping radius was limited to the distance they could drive in 30 minutes.

When I tried to make the point that my customers don't care where I am, and if some people want a local supplier, a FREE Google search can provide that, too, she again tried to convince me that the YPs are for buyers and Google is for readers.

And to deal with my insistence that our customers are national and not local, while their system insists on shoppers specifying a location, the idiot suggested that we purchase listings for EVERY FUCKING ZIPCODE IN THE COUNTRY.

That's when I hung up.

Wednesday, November 19, 2008

Yellow Pages may have reached the last page

As its customers migrated to the Web search sites like Google, the telephone-directory business followed, hoping the Internet would be its salvation. However, the audience for online yellow pages remains relatively small, and traffic growth is slowing.

So many directory services are vying for local business advertising that no single site dominates. Meanwhile, ad dollars are drying up as small businesses -- the industry's foundation -- find it harder to pay bills or have cut their spending sharply.

Print and online ad spending on yellow pages will plummet 6.3% next year, more than double the rate of decline expected for broadcast TV, according to forecasts. Within the next four years, ad spending will fall 39% in print directories alone -- the steepest projected decline across all local-media categories, according to research.

Facing the real prospect of extinction, the publishers, many with considerable debt, have been slashing jobs, scrapping dividends and exiting unprofitable markets. Shares of two of the biggest publishers, R.H. Donnelley and Idearc, have plummeted 99% in the past year.

Yellow-pages publishers have spent the past several years attempting to reinvent themselves, launching many digital offerings for advertisers, and retraining their sales forces to sell digital ads alongside print ads. But Internet revenues remain anemic. At less than 10%, online-ad dollars make up only a modest portion of total revenues and aren't growing fast enough to offset steep declines on the print side.

Analysts say yellow-pages sales teams face an inherent conflict. While they are pressured to sell both print and online ads, Internet ads are often a third of the price of the print product. The top priority for the sales teams often is to sell the print book first, then sell the digital products.

Even if online revenues were growing at a faster clip, analysts are cautious about the prospects of online-only directories. Yellow-pages ads are the only form of advertising many small businesses buy, and the online ads are typically sold in conjunction with print listings. That means that if businesses aren't buying the print ad, then the online ad disappears too.

In a last-ditch attempt to succeed online, some publishers have struck ad-sale partnerships with Internet companies like Google. White Directory Publishers, which publishes directories in 90 small to medium-size markets, says it is often more effective for small businesses to have a presence on Google than on a directory Web site. But many small- to medium-size businesses don't have the expertise or time to create effective Websites or buy and track search ads, so White Directory is offering to do it for them. (info from The Wall Street Journal)

Tuesday, November 18, 2008

AT&T is still a bunch of clueless idiots

Around 1985, I was selling phone systems to help people save money by owning rather than renting equipment from AT&T. Then AT&T announced that they would start selling instead of just renting, and I was terrified. I thought their immense marketing power would soon put me out of business.

Harry Newton, a telecom maven who had observed AT&T for a long time, tried to make me feel better. He said, "Don't worry, it will take AT&T ten years to find the men's room."

I can now report to you that after more than two decades trying to compete in an unprotected marketing-based environment, AT&T is still wandering through the hallway searching for a place to pee.

The latest evidence:

My parents are in their mid-80s. They live in Florida in a condominium community with other old farts. A few years ago they switched their long distance service from AT&T (through BellSouth) to MCI to save money with the "friends & family" plan.

MCI eventually started offering local service. They didn't have their own wires running around the streets -- they just resold BellSouth services. My parents became full-time MCI customers.

Over the years, the MCI price kept rising, and my folks were paying nearly $100 per month for unlimited local and long distance service and taxes. My father was also paying AOL $20 per month for pokey dial-up internet service. Their condominium has a master antenna system, so there was no option of using a cable TV company for TV, phone and Internet access in a "bundle" like I have at home.

Last month my mother received a promotional mailing from AT&T (which includes the former BellSouth) that made her aware of substantial savings. My folks could dump MCI and AOL, and have fast DSL service and unlimited phone service. The cost from AT&T would be about $50 less than they had been paying to MCI and AOL. AT&T was offering a $100 cash-back deal that would offset the cost of the installation of the DSL equipment.

On 10/30 she called AT&T and scheduled the change from MCI and installation of a DSL modem.

AT&T missed scheduled appointments on 11/4, 11/5 and 11/7. Each time they failed to show up, my parents wasted time waiting around for the technician, and wasted more time on hold trying to re-schedule the appointment. AT&T never called. Apparently no one at AT&T has a telephone.

Ooops. I made a mistake. On 11/9 someone from AT&T called my mother to cancel a non-existent 11/11 appointment.

My mother was getting desperate, and asked me to try to help. I called AT&T on 11/11.

At 12:04PM I heard "Welcome to AT&T." I also heard a U-Verse commercial. The automated system asked for the phone number I was calling about. I inputted Mom's number, and tapped a digit to indicate the reason for my call was a "service appointment."

The robot said it couldn't find any pending service order and asked me to re-enter the phone number and the reason for my call. Again I was told that there was no record of pending service.

I entered the info again and after a few minutes spent in the irritating loop, I started tapping zero and yelling "HELP!"

The robot said, "Just a moment while I connect you to someone" and "Your call may be recorded" and I heard some music.

At 12:08PM I was told that "All representatives are busy assisting other customers," and I was encouraged to pay my bill online. Other announcement themes included help wanted, bundles, a cash-back offer, "Join the new AT&T" and award-winning customer service. Yeah, right.

At 12:19 I reached Mr. Ryan. He saw the pending order, unlike the automated system.

At 12:21 he said he needed to connect me to a DSL specialist.

I heard a few minutes of hold music and at 12:23 he told me that a rep should be with me in a few more minutes.

I was eventually answered by Jennifer. She said that the DSL service was supposed to be active on 11/13, but the brilliant AT&T computer system canceled three service calls because it knew that DSL had not been turned on yet.

She said she'd try to try to expedite the installation. She also said that someone moved the due-date, but there were no notes in the system to indicate who or why. She thought the date was changed online by my parents. (Impossible!)

At 12:32 she said she should have date today, and would call me. She did call back, and made an appointment for 11/14. She told me that my parents would get the installation for free to compensate them for the torture.

The AT&T techie did show up on the morning of Friday 11/14 and the DSL installation seemed to be successful.

Unfortunately, at about 7PM Friday, my parents' alarm started its piercing signal, and my mother could not find any combination of button-pushing to silence the shriek. She called the alarm company and was told that her contract did not include evening or weekend emergency service, and they would not send someone to turn off the noise until Monday morning. My mother hid in the only quiet room -- the master bathroom -- and called my brother to see if he could get some help.

He was able to get the alarm company to send someone Friday night.

My mother paid $150 to find that the fucking idiot from AT&T had disconnected the alarm dialer when he set up the DSL.

Wednesday, November 12, 2008

Pay for parking with your cellphone

Decatur, Georgia is an Atlanta suburb that has launched one of the nation's first pay-by-phone parking systems, part of a strategy designed to encourage more turnover and ultimately more revenue.

For the last year, Decatur has used a system from StreetSmart Technology that uses sensors to detect whether a car has moved. This blocks drivers from plopping in more coins when the two-hour time limit runs out. It also connects parking attendants to a database that alerts them when meters expire -- or points them toward drivers parked in spaces without paying.

Decatur just got even techier with the pay-by-cell system, which let drivers call a local number shown on each meter. After entering the parking space number, they get a text message with a Website address to create an account using a credit card. Once an account is created, drivers can just call the number each time to draw down their account.

A handful of other cities around the nation employ similar systems. But Decatur is the first that uses technology that flashes the time bought on a meter instead of, say, a printed ticket.

To entice drivers to use the system, the city is offering the first two hours of pay-by-cell parking for free. After that, it will charge cellphone users an additional 25-cent transaction fee.

About 50 of Decatur's 385 meters are outfitted with the pay-by-cell equipment, which costs an estimated $200 per meter. Each is outfitted with radios that can transmit data and sensors for detecting cars. It also lets drivers pay the old-fashioned way using change.

Parking monitors seem especially focused on the way the system helps them rest their legs. "We walk around the city all day," said Janice Monroe, a Decatur parking liaison. "This lets us know where meters expire so we can walk directly to them - and cut down on our walking." (info from The Associated Press)

Microsoft may beat Google as Verizon searcher

Microsoft is moving closer to an agreement with Verizon Wireless to become the default search provider on the Verizon's cellphones, a deal rival Google has been striving for.

Under the terms now being considered, Microsoft would share revenue with Verizon from ads shown in response to cellphone Web searches, with guaranteed payments to the carrier of approximately $550 million to $650 million over five years, or roughly twice what Google offered.

Verizon is still in discussions with Google and the situation is fluid with both companies. Verizon CEO Ivan Seidenberg said in a CNBC interview Friday that the company plans to make a decision soon.

Microsoft and Google have been competing over a variety of distribution deals and partnerships recently, with Microsoft showing that it is willing to outbid Google. Microsoft beat out Google for an investment in Facebook last year, and more recently the two have jockeyed over different deals with Yahoo.

Now the companies are both aiming for the rights to be the default search provider on cellphones. While a user can visit any search engine through their web browser, carriers and Internet companies believe usage will increase when they put search services in prominent places on phones.

Web searching on cellphones is still new to most consumers. Only about 7.7% of cellphone users accessed Web search engines through their mobile phone browsers in September, according to one study. Google is an early leader, with about 60% of users opting for its engine, while only 36% use Yahoo and 10% use Microsoft.

Google already has a search and advertising partnership with Sprint Nextel, while T-Mobile USA is selling the G1, a smartphone that runs on Google's Android software and has Google's search bar on its home screen.

AT&T plans to make Yahoo the default search engine for its MEdia Net Web portal, accessible on most high-end phones. Foreign carriers such as Deutsche Telekom AG's T-Mobile unit in Europe and KDDI in Japan already have partnerships in place with Google and Yahoo. Skeptics say these partnerships ultimately won't matter much, as surfing the Web becomes easier on phones and consumers gravitate to whatever search engine they are most comfortable with. (info from The Wall Street Journal)

Tuesday, November 11, 2008

Nortel losing more money and more people

Canadian telecommunications equipment maker Nortel posted a third-quarter loss Monday, reversing a year-ago profit as the economic turmoil and a large goodwill impairment charge hurt results. The struggling company also announced a new round of job cuts, saying it plans to eliminate about 1,300 positions starting this year and ending in 2009.

Nortel's US stock shares fell 16 cents, or about 14 percent, to $1.01 in afternoon trading. The company's shares have lost 93 percent of their value since the beginning of the year, and last month they hit their lowest level since the early 1980s. For the three months that ended Sept. 30, Nortel lost $3.41 billion, or $6.85 per share, down from a profit of $27 million, or 5 cents per share, in the same period a year earlier. Revenue fell 14 percent to $2.32 billion.

"In September, we signaled our view that a slowdown in the market was taking place," said Mike Zafirovski, Nortel's chief executive, in a statement. Since then, he added, "we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers."

In a report titled "I would like to refill my Prozac prescription," RBC Capital Markets analyst Mark Sue said Nortel's "marginalized industry position," combined with the bad economy, means the company's outlook may deteriorate before stabilizing. Sue rates Nortel "Underperform" with a target price of $1.50, down from an earlier $2.

Nortel said its priorities are cutting costs and preserving cash. Along with the job cuts, the company is generally freezing salaries and hiring, re-evaluating its real estate holdings and cutting discretionary spending. The company is also suspending its dividends on certain preferred shares, saying while it is in a position to pay them, "it would be prudent to maintain liquidity and preserve cash."

In addition, several executives, including Nortel's chief marketing officer, its chief technology officer and its global services president, will be leaving the company.

The job cuts disclosed Monday are in addition to 1,200 positions that are being eliminated as part of a previous restructuring plan. Nortel has about 31,200 employees. (info from The Associated Press)

Monday, November 10, 2008

FCC says too much of T-Mobile is owned by foreigners

The pending merger of Verizon Wireless and Alltel prompted the FCC to take a renewed look at foreign-controlled assets in other wireless phone companies, a development that could impact T-Mobile USA. The FCC on Oct. 17 sent a letter to T-Mobile, which is owned by Deutsche Telekom, advising the company that regulators should have evaluated its 2001 acquisition by the German telephone giant under a 20% voting stock threshold. The merger was evaluated under a more lax standard.

The letter said, "T-Mobile USA's level of foreign ownership through the existing ownership structure appears to be in violation" of the 20% limit. "The Commission strictly applies the 20% statutory benchmark of [the law], and has no discretion to waive it," the letter said. "Based on this ownership structure it appears that Deutsche Telekom, a foreign corporation, has a 30%, non-controlling interest in a common carrier license." The letter asked T-Mobile to respond within 30 days about how it can come into compliance.

T-Mobile officials said they are still mulling their response to the FCC's letter, but added they are open to simple restructuring to solve the problem. They also said they believe T-Mobile's current corporate structure passes legal muster. The inquiry could result in little more than paper reshuffling for US wireless companies with foreign partners. In 2001, the FCC explicitly stated that the Deutsche Telekom acquisition fell outside the scope of the 20% stock rule because the German company is a non-controlling owner.

The FCC's earlier analysis of T-Mobile and Verizon Wireless, a joint venture of Verizon and British Vodafone, was done under a separate, waivable 25% ownership threshold. T-Mobile officials said the FCC's new thinking on foreign ownership could be complicated by a 1996 World Trade Organization agreement that allows 100% indirect ownership of US spectrum licensees by foreign entities. Deutsche Telekom has 100% indirect controlling interest in T-Mobile. FCC officials said the commission has no intention of violating the WTO or other trade agreements.

The officials added the T-Mobile inquiry arose when FCC staffers posed foreign ownership questions to Verizon Wireless during a review of its pending merger with Alltel. The Justice Department has already approved the proposed Verizon-Alltel merger on the condition that Verizon divest from 100 markets to ease antitrust concerns.

Verizon has already figured out a solution to the 20% foreign stock ownership problem. Verizon told the FCC that it would place into a trust the voting rights associated with some of Alltel's holdings, precluding Vodafone's interests in those partnerships. That transaction will occur once the Verizon-Alltel merger is completed.

T-Mobile, meanwhile, has submitted multiple filings with the FCC since it was acquired by Deutsche Telekom, and such questions about its foreign ownership structure haven't emerged until now, company officials said. (info from The Wall Street Journal)

Friday, November 07, 2008

AT&T buying Wi-Fi company

AT&T, formerly known as Woodbury Telephone Company and a bunch of other things, agreed Thursday to acquire Wayport Inc. for $275 million, extending its Wi-Fi reach amid growing demand from customers for wireless Internet access.

The deal expands AT&T's hot spots to 20,000 in the US. That includes the networks Wayport operates at Wyndham, Marriott and Four Seasons hotels as well as McDonald's restaurants.

AT&T is seeing big gains in wireless-data revenue and strong sales of Internet-enabled devices such as the iPhone. AT&T broadband and some wireless customers, as well as holders of LaptopConnect wireless-broadband cards, will be able to access the hot spots for free. Others will be charged about $20 a month for the service. (info from The Wall Street Journal)

Thursday, November 06, 2008

FCC probing cableco & Verizon pricing

The FCC has opened an investigation into the pricing policies of major cable operators and Verizon. The agency wants to ensure the companies' customers are getting treated fairly, FCC Chairman Kevin Martin said in an interview with The Associated Press. "I'm certainly concerned with the increasing cable prices that consumers are facing," Martin said. "They are getting less and being charged the same or more."

The FCC wrote on Oct. 30 to cable operators including Comcast, Time Warner, Cox, Charter, Cablevision, Bright House, Suddenlink, Bend Cable, GCI, Harron and RCN.
Verizon, which offers pay-TV services with FiOS, also was included in the probe.

The agency's letter questioned the companies' practice of moving analog channels into digital tiers to free up bandwidth for other uses, such as high-definition channels. Analog customers will have to get a digital set-top box from the operator or buy the digital TV tier to watch those channels.

Cable is competing with satellite TV and phone companies.

Most cable customers are analog customers, and those who do not wish to upgrade to digital cannot watch the channels that are moved to the digital tier.

The agency also will look into whether cable operators and Verizon are confusing customers by linking the shift of the analog channel to the digital tier to the nation's transition to digital broadcasts, Martin said. The two moves are unrelated.

Linking the two in customers' minds could prompt more people to opt for digital video and cable services because the February digital TV transition is mandated by the federal government. The FCC has asked companies being probed to submit information about their pricing practices within two weeks.

Martin said it appears consumers weren't given "appropriate notice" about the channel changes. He said the FCC has received a "significant" number of consumer complaints about the practice of moving analog channels to digital, which has accelerated this year.

The FCC's letter was sent out a day after Consumers Union sent a letter to the Senate Committee on Commerce, Science and Transportation asking for an investigation into the practice of moving analog channels to the digital tier.

"Consumers are left paying the same monthly rate for significantly less service, or must rent more expensive set-top boxes for each television set they own," said Consumers Union, a nonprofit advocacy group. (info from The Associated Press)

Wednesday, November 05, 2008

AT&T will try web traffic limits

AT&T, the country's largest Internet service provider, is testing the idea of limiting the amount of data that subscribers can use each month. The company will initially apply the limits in Reno, Nevada, and consider extending the policy elsewhere.

Other Internet providers are placing such limits on the amount of data users can upload and download each month, as a way to curb a small number of "bandwidth hogs" who use a lot of the network capacity. For instance, 5 percent of AT&T's subscribers take up 50 percent of the capacity.

But the restrictions that Internet providers are setting are tentative. And the companies differ on what limits to set and whether to charge users for going beyond the caps.

Starting in November, AT&T will limit downloads to 20 gigabytes per month for users of their slowest DSL service, at 768 kilobits per second. The limit increases with the speed of the plan, up to 150 gigabytes per month at the 10 megabits-per-second level.

To exceed the limits, subscribers would need to download constantly at maximum speeds for more than 42 hours, depending on the tier. In practice, use of e-mail and the Web wouldn't take a subscriber anywhere near the limit, but streaming video services like the one Netflix offers could. For example, subscribers who get downloads of 3 megabits per second have a monthly cap of 60 gigabytes, which allows for the download of about 30 DVD-quality movies.

Customers will be able to track their usage on an AT&T Website. The company will also contact people who reach 80 percent of their limit. After a grace period to get subscribers acquainted with the system, those who exceed their allotment will pay $1 per gigabyte.

Comcast, the nation's second-largest Internet service provider and AT&T's competitor in Reno, last month officially began a nationwide traffic limit of 250 gigabytes per subscriber. Comcast doesn't charge people extra for going over the limit, but will cancel service after repeated warnings. Previously, it had a secret limit.

Two other ISPs, Time Warner Cable and FairPoint Communications, are planning or testing traffic limits as low as 5 gigabytes per month, which is easily exceeded by watchers of DVD-quality online video. Among the largest ISPs, Verizon is a holdout, and has said it does not plan to limit downloads. (info from The Associated Press)

Tuesday, November 04, 2008

FCC members outvote boss on planned vote

Four FCC commissioners blocked a proposal by Chairman Kevin Martin to revamp the multibillion-dollar system under which phone companies pay each other to transfer calls, causing a Tuesday vote on the item to be canceled. The proposal was pulled from the agenda ahead of Tuesday's meeting after Martin refused to grant a compromise proposal from the four other commissioners on the five-member body.

In a rare move, commissioners Michael Copps, Jonathan Adelstein, Deborah Tate and Robert McDowell issued a joint statement saying they are disappointed that Martin pulled the item and hope he will consider their offer.

"Four Commissioners provided the Chairman bipartisan, constructive and substantive suggestions," the statement said. The commissioners had volunteered to vote in December on a renegotiated overhaul of the payment system and asked that it be put out for public comment this month.

Analysts say the proposal was worth millions to large phone companies such as AT&T, Verizon and Qwest. Small and midsize carriers like Embarq and CenturyTel would have been hurt. The overhaul likely won't see action, even though the four commissioners said they are willing to negotiate with Martin.

The FCC faces a court-mandated deadline Wednesday, when it must justify a small part of the payment system on dial-up Internet traffic. Martin's broad proposal governing both phone rates and subsidies for carriers serving rural areas was intended to be the FCC's response to the court.

While the broader item was yanked from Tuesday's agenda, Martin is hopeful that the FCC can address the court's concerns about dial-up fees at the meeting. Martin's proposed overhaul of the phone-rate system drew protests from smaller phone companies, state regulators and consumer groups. Lawmakers also asked him to delay the vote.

The FCC could vote later this month on a new subsidy proposal Martin circulated to the other commissioners. (info fro mThe Wall Street Journal)

Monday, November 03, 2008

Palin pranked with phone call from fake French president

Moosemama Sarah Palin unwittingly took a prank call Saturday from a Canadian comedian posing as French President Nicolas Sarkozy.

The Republican vice presidential nominee discusses politics, the perils of hunting with Vice President Dick Cheney, and Sarkozy's "beautiful wife," in a recording of the six-minute call.

The call was made by a well-known Montreal comedy duo Marc-Antoine Audette and Sebastien Trudel. Known as the Masked Avengers, the two are notorious for prank calls to celebrities and heads of state.

Audette, posing as Sarkozy, speaks in an exaggerated French accent and drops ample hints that the conversation is a joke. But Palin seemingly does not pick up on them. He tells Palin one of his favorite pastimes is hunting, also a passion of Palin. "I just love killing those animals. Mmm, mmm, take away life, that is so fun," the fake Sarkozy says. He proposes they go hunting together by helicopter, something he says he has never done.

"Well, I think we could have a lot of fun together while we're getting work done," Palin counters. "We can kill two birds with one stone that way."

The comedian jokes that they shouldn't bring Cheney along on the hunt, referring to the 2006 incident in which the vice-president shot and injured a friend while hunting quail. "I'll be a careful shot," responds Palin.

Playing off the governor's much-mocked comment that she had insights into foreign policy because "you can actually see Russia from land here in Alaska," the caller tells her: "You know we have a lot in common also, because ... from my house I can see Belgium." She replies: "Well, see, we're right next door to different countries that we all need to be working with, yes."

When Audette refers to Canadian singer Steph Carse as Canada's prime minister, Palin replies: "Well, he's doing fine and yeah, when you come into a position underestimated it gives you an opportunity to prove the pundits and the critics wrong. You work that much harder." Canada's prime minister is Stephen Harper.

Palin praises Sarkozy throughout the call and also mentions his wife Carla Bruni, a model-turned-songwriter. "You know, I look forward to working with you and getting to meet you personally and your beautiful wife," Palin says.

The Sarkozy impersonator tells Palin his wife is "so hot in bed" and then informs her that Bruni has written a song for her about Joe the Plumber entitled "Du rouge a levres sur une cochonne" - which translates as "Lipstick on a Pig."

The caller asks Palin if Joe the Plumber is her husband and adds: "We have the equivalent of Joe the Plumber in France. It's called Marcel, the guy with bread under his armpit."

He also tells Palin that he loved the "documentary" made about her and referred to a pornographic film with a Palin look-alike made by Hustler founder Larry Flynt. She answers tentatively, "Ohh, good, thank you, yes."

The callers then reveal the prank and identify themselves and their radio station. "Ohhh, have we been pranked?" Palin asks before handing the phone to an aide who ends the call. Obama's campaign spokesman said: "I'm glad we check out our calls before we hand the phone to Barack Obama." (info from The Associated Press)