CLEC M&A increasing ...

Well, after years of going very much sideways, it looks like the asset value for CLECs on the M&A front is finally on the upswing. Back in May, Telepacific announced a transaction with Mpower. On Friday, Time Warner Telecom announced a merger with Xspedius, and today, Cleartel announced a merger with SupraTelecom.

Let's hope we're well beyond the bottom and that the upswing continues.

Missoula (PIMP) Plan Is Put Out for Comment by FCC

Demonstrating their dedication to reforming the intercarrier compensation system immediately(yeah, riiiight) the FCC has wasted no time in putting the PIMP plan out for comment. In a public notice yesterday the FCC announced that comments are due on September 25 and replies are due November 9.

The Plan is sure to be the subject of much discussion this week at NARUC in San Francisco (we will be there) and we look forward to hearing in person the defense of the somewhat twisted reasoning underlying the Plan....

Tunney Act Hearing Today Good News for Opponents of AT&T/BST Merger

We understand from news reports that at today's Tunney Act hearing Judge Sullivan, who is reviewing the November 2005 SBC/AT&T and Verizon/MCI mergers, said that he did not have enough information to rule on whether the mergers are in the public interest and established a schedule to receive additional evidence on August 7. This is good news for CompTel and the other parties who have done a fantastic job of highlighting the many anticompetitive harms arising from the mergers and is potenially bad news for the pending AT&T/BellSouth merger. While no one expects last year's mergers to be undone by Judge Sullivan, the door is open now for additional conditions to be imposed on them while at the same time signaling to the FCC and DOJ not to simply rubber stamp the latest AT&T merger, the AT&T/BellSouth merger.

Update: The Missoula Plan (a/k/a P.I.M.P. Plan) Is Out

It turns out that the rumors were true and today was the day NARUC filed the Missoula Plan (the PIMP Plan as some are calling it) at the FCC. The listed supporters, included among others: AT&T Inc., BellSouth Corp., Cingular Wireless, Commonwealth Tel. Co., Global Crossing, Level 3, Madison River and the numerous members of the the Rural Alliance. Stay tuned.

P.I.M.P. Plan May Be Filed At FCC This Week

We hear that the P. I. M. P. (Promote Incumbent Monopoly Payments) intercarrier compensation reform plan (see May 9 post) may be filed at the FCC this week. The filing of the plan at the FCC comes just ahead of NARUC's meeting in San Francisco next week. As we have said before, we see little hope that the PIMP plan will be put out for public comment any time before late September. The plan, backed by AT&T, BellSouth and RLECs is an RLEC giveaway and regardless of when it's considered, we see little chance of its adoption in its current form. The biggest problem is that it's attempting to tackle intrastate access charges with little legal or political cover. In any event, we look forward to seeing the PIMP plan, whenever it emerges.

Adelphia Merger Conditions -- The Power Of A Tangible Example

As expected, the FCC approved the acquisition of Adelphia's assets by Comcast and Time Warner with a couple of conditions designed largely to ensure that content providers can get their programming to consumers.

Sounds pretty vague, right? Here in DC, however, a real world example exists to highlight the carriage issue. Namely, Comcast and Mid-Atlantic Sports Network have been in a dispute about the terms (ok, price is the big item) that Mid-Atlantic must pay Comcast to carrier Nationals games and other content over Comcast's cable system.

Had this issue come in Kansas City, Pittsburgh, or some other market, it very likely would not have gained the pominence it has in DC -- the home-away-from home of national politicians, many of whom have been personally frustrated by not being able to watch the Nat's at home because of the carriage dispute. As we've said before, where you stand depends on where you sit.

Our Take On The Adelphia/Comcast/Time Warner Deal

This morning, the FCC is expected to approve the acquisition of Adelphia's assets by Comcast and Time Warner. Our sources tell us that the deal will be approved with at least two conditions:

- Comcast and Time Warner will be barred from entering exclusive arrangements for regional sports programming, except in Philadelphia (Comcast owns that network)

- Competing video providers also will be able to file for binding arbitration if they can't otherwise get programming deals with Comcast or Time Warner.

All and all, it looks like the primary winner of the merger conditions effort will be DirecTV and other DBS providers.

In the order, we'll be paying particular attention to the FCC's analysis of "merger harm" and how the Commission expects the adopted conditions will alleviate that harm. In its past precedent, the FCC has stated that it will only adopt conditions designed to alleviate specific harms that may result from a combination.

Today's Tunney Act Hearing ... Be Hopeful, But Keep Your Expectations In Check

Good luck to the competitors moving forward with today's Tunney Act hearing on the SBC/AT&T and Verizon/MCI mergers. Like many, we have been watching this one pretty closely, and we sincerely commend the creative efforts and hard work of the proponents.

Regretfully and unfortunately, even though we agree wholeheartedly with the merits of the competitive cause, our expectations on the ultimate result are very, very low.

We all like to use the rallying cry of the "rule of law" as a basis for why we believe we should be treated fairly. But as to fairness, the rule of law only guarantees judicial process, not justice. The district court has provided a lot of process. We don't, however, expect any justice.

Numbers-Based USF Movement Gets Its Own Association

The effort to change the system for collecting universal service funding from an assessment based upon interstate telecom revenues to a system based on per-telephone number assessments got a boost today with the announcement of the formation of a new coalition, the "USF by the Numbers Coalition (or Numbers Coalition for short)." While the name of the group isn't too catchy, the coalition boasts a powerful membership (Bell companies, CTIA, NCTA) and is headed by seasoned industry veterans. According to the press release issued this morning, the group will be headed by former ALTS President John Windhausen and advised by former FCC commissioner Harold Furchtgott-Roth and "will urge policy-makers to act quickly to adopt a numbers-based system for collecting universal service funding. " Although the legal and policy case for numbers-based reform is less than clear at the moment, the formation of this group certainly moves the advocacy needle in that direction and the momentum in favor of adoption of numbers-based USF is picking up.

VoIP IP litigation update...

Vonage announced this morning that it had acquired "three significant patents" related to packet compression from Digital Packet Licensing Inc.

According to Vonage, acquisition of these patents "places Vonage in control of pending litigation against Sprint Communications LP and Verizon Communications" in federal court.

We're glad to see Vonage fighting back, but we expect protracted IP litigation to continue on the VoIP front for quite a while. Congrats. to Digital Packet Licensing Inc. ... must have been a nice pay day.

Next Week's FCC Meeting Should Be Interesting...

The FCC has released the agenda for its July 13 meeting and it looks like it could be a relatively busy meeting (at least for the FCC in the middle of the summer). Among the items on the agenda are approval of the long-pending Adelphia/Time Warner Cable transaction and from what we understand there are only a couple very minor conditions. Also, as part of its further efforts to crack down on data brokers who illegally obtain and sell other people's phone records, the the FCC is adopting an NAL against LocateCell.com, the databroker, for repeated failure to respond to FCC subpoenas in connection with the Commission's CPNI investigation. We expect to see continued enforcement action in this arena. In fact, the FCC's CPNI and slamming rules are the rules that the Commission seems most interested in enforcing. The interconnection rules? Not so much. Missing from the agenda is the multi-cast/must-carry item that some folks had expected to see.

Rocketoom.com Gone Bust

The blogosphere has been buzzing the past couple of days about the departure of anchor Amanda Congdon from Rocketboom.com and today the Washington Post published a Business section cover story about her departure from the popular video blog over an apparent falling-out with her business partner. According to the Post, some commentators are saying that Amanda pulled a Star Jones and ambushed her partner with the announcement. However, hopefully he is smart enough to understand that she was the primary reason folks were tuning in so reliably and in such numbers. While Rocketboom.com as we knew it may be dead, rest assured the video blog revolution is just getting started.

FCC Order Applying CALEA to VoIP Providers Effective Aug. 4

The FCC's new CALEA rules, applying CALEA to interconnected VoIP providers and providers of broadband Internet access, were published in today's Federal Register and will be effective on August 4, 2006. As you will recall, the D.C. Circuit last month upheld the FCC's decision to extend CALEA obligations to VoIP and Internet access providers (see June 13 post here).

Even though the rules technically go into effect on August 4, 2006, VoIP providers and facilities-based broadband Internet access providers have until May 14, 2007 to come into compliance with CALEA. In the meantime carriers will have to file interim reports with the FCC explaining how they plan to meet the May 2007 deadline, however the format and form of those reports has not yet been finalized. A further notice setting out the requirements will be released later.

Today's New York Times: The Telecom Edition?

Today's New York Times carries two big telecom stories. First, on page one, the Times has an article entitled "Internet Calling Pressures Bells to Lower Prices." It's not clear to us what makes this front-page news, but the article discusses how VoIP calling plans offered by Vonage, SunRocket, Skype and others are pressuring the Bells to lower prices on traditional calling plans that are increasingly offered in bundled packages of voice, data and now video in some areas. The article also notes what we have discussed here before: specifically, that while the Bells now offer their own VoIP calling plans, they are not really very serious offerings. As the Times notes, "these services are rarely advertised. It is cheaper to cut prices [on landlines] than to try to win customers later from a rival." The article also notes (correctly) that "the Bells still control the bulk of the country's 180 million landlines and are far from giving up on what has been a giant cash cow." So much for "intermodal competition."

The other Times story is a Business section above-the-fold cover on AT&T's video rollout ("AT&T IS Calling About TV Service. Will Anyone Answer?") The article discusses the hurdles AT&T and Verizon both face in capturing enough video subscribers to pay for the cost of deploying their respective video networks and also highlights just how slowly and discretely the roll-outs are taking place, noting that just 5,000 subscribers in San Antonio will be able to receive AT&T's service. Contrast that reality with the hype filling the regulatory ether here in DC, where you can't avoid the Bell's non-stop TV, radio and print advertisements begging for regulatory "relief" as though the Bells were ready to offer video to millions if only Congress and the FCC would let them. The reality is very different.