December 2005
 volume ix, number 12
 

Headlines

 

 BACK ISSUES

-November
-October
-September
 -August
-July
-June
-May
-April
-March
-January
 

-Telecom Megamergers  – One Down; One To Go
 

-Michigan Governor Signs New Telecommunications Act

-Texas Telecom Reform Increases Competition and Innovation

-Mobile Companies Challenge Kentucky State Tax

-Alltel Purchases Midwest Wireless

-Sony Introduces Internet-Based Phone Service

-Network Providers Object to VoIP Wiretapping Rules

-Sprint Nextel Acquires Affiliate Alamosa Holdings

-Verizon Introduces New Calling Plans

-FCC Releases Telecom Industry Reports

 

-Overlay of California NPA 310 Planned

 

-Localizer - Optional Calling Plans Now Available

 

 

 


The Telecom Megamergers  – One Down; One To Go


The SBC and AT&T merger became official on Friday, November 21, 2005. The new AT&T emerged, sporting a new logo, a new ticker symbol, and positioning to be the premier global communications service provider for a new era. Quite a feat for a 125-year-old company and the Baby Bell it spawned. This $16 billion merger creates the largest telecommunications company in the United States and one of the largest in the world.

The road to completion included a regulatory review by 36 states, the District of Columbia, the Justice Department, the FCC, and 14 countries. Throughout the process, conditions were plentiful and varied.  At the end of a long line of public utility commissions, Ohio imposed rate increase restraint for its business and wholesale customers; while Arizona sought an arbitration process for its residential customers. 

California, the final state to approve the merger, ensured its customers would not be forced to maintain traditional local phone service as a condition of accessing DSL.  Another part of the agreement increases SBC's charitable contributions by $47 million; plus an initial endowment of $45 million, both over five years, to go to the California Emerging Technology Fund (CETF). CETF will be established to ensure access to broadband and advanced services in underserved communities. 

With the regulatory approval process behind it, AT&T, Inc. is now poised to lead the industry in the deployment of integrated services based on Internet Protocol and begin pioneering another century of communications advancements.

Meanwhile, Verizon and MCI executives anticipate completing their round of regulatory review and approvals by early January 2006.  California granted approval with nearly the same conditions as AT&T, Inc., except Verizon-MCI will increase its corporate philanthropy by $20 million for low-income and underserved Californians and contribute $15 million to CETF.

The proposed Verizon-MCI merger cleared New York's Public Service Commission on November 22nd by a unanimous vote.  New York's conditions included:

  • rate increase limitations on UNEs and existing DS1 and DS3 wholesale metro private line services

  • expansion of the wire center list where Verizon is required to offer discounted wholesale pricing to competitors

  • customer choice for DSL and voice telephone service

The Commission found that the merger will not result in anti-competitive effects for mass market customers, and that conditions imposed by New York combined with conditions previously set by the FCC and Justice Department will protect against adverse impacts on consumers and New York's competitive telecommunications market. 

Now that the new AT&T has materialized, and finalization of the MCI-Verizon merger is all but officially confirmed, the industry can move on and begin contemplating the next round of mergers!

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Michigan Governor Signs New Telecommunications Act
 In late November, Michigan Governor Jennifer M. Granholm signed a new Telecommunications Act that will benefit all of Michigan's consumers.  The new legislation:

  • Gives the MPSC the authority to declare service quality rules to protect retail customers as well as incumbent and competitive service providers;

  • Requires telecommunications service providers that use a new or emerging technology to register with the MPSC to protect customers;

  • Ensures that customers have access to enhanced 9-1-1 services or emergency response services; and

  • Gives the MPSC the authority to review the intrastate end-user common line charge (EUCL) before it is included in customer bills.

"Michigan is among the states with the most competitive telecommunications market," said MPSC Chairman J. Peter Lark.  "Customers will benefit even more with the new Michigan Telecommunications Act that maintains consumer protections while deregulating many rates."

 

Texas Telecom Reform Increases Competition and Innovation
 Within 45 days of Texas enacting its new telecommunications law,  64 new companies had received state video franchises to operate in municipalities and some incumbent cable companies dramatically cut their rates to stay competitive. The new bill was designed to reform outdated telecommunications laws by increasing telecom competition in hopes of providing more choices and better pricing for Texas consumers.  Another goal of the reform is to deploy new technologies such as video programming over phone lines and bring innovative and dynamic new players to the marketplace.

The bill takes a three pronged approach to reform. Telephone access charges are expected to fall by freeing providers from pricing restrictions in markets with 100,000 or more customers. Markets with 30,000 to 100,000 customers must meet a market test to show that they can be fully deregulated; while smaller markets will need approval from the state before they can be deregulated. The second part of the legislation focuses more on advanced data deployment, such as broadband over powerlines, and the third part of the Texas bill addresses video franchising.

It is projected that the reform will create 13,000 permanent jobs in Texas and generate an additional $2 billion in annual investments. 

To read this article in its entirety please visit http://www.heartland.org/Article.cfm?artId=18060

 

Mobile Companies Challenge Kentucky State Tax
 Cingular, Verizon, T-Mobile, Sprint and NPCR have filed a lawsuit in federal court challenging a Kentucky telecommunications tax that was passed earlier this year as part of an overhaul of the state's tax code. The provision would impose a 1.3 percent tax on gross revenues starting January 1 and prohibit the carriers from passing the levy on to their customers.

The wireless carriers are opposed to how the tax can be collected.  They assert that they will be forced to raise rates because the law bars them from itemizing the tax on a customer's cell phone bill. They contend that by itemizing the taxes "customers in one jurisdiction do not bear the burden of taxes imposed by another jurisdiction" according to the lawsuit. If the companies are not allowed to itemize Kentucky taxes, they claim the tax would have to be passed on to cell phone users in other states.

This is the second lawsuit to challenge Kentucky's new telecommunications tax. Two television satellite companies sued the state in May, challenging a 5.4 percent tax that they say unfairly benefits cable operators and hurts satellite operators.

Information from: Lexington Herald-Leader, http://www.kentucky.com

 

Alltel Purchases Midwest Wireless
Alltel signed a deal valued at $1.08 billion to acquire Midwest Wireless whose operations in Minnesota, Iowa and Wisconsin will bring Alltel an additional 400,000 wireless customers. "The Midwest Wireless business strengthens our position in the wireless industry by adding CDMA properties that are contiguous to our existing markets in the Midwestern U.S.," said Scott Ford, Alltel President and CEO.

This marks Alltel's second big purchase this year. In January, the carrier acquired Western Wireless for $4.5 billion. The Western Wireless purchase, which closed during the third quarter, bought Alltel's wireless customer base to around 10 million.

Alltel is now the nation's fifth-largest carrier behind Cingular Wireless, Verizon Wireless, Sprint Nextel and T-Mobile USA.

 

Sony Introduces Internet-Based Phone Service
 Sony has unveiled its new Instant Video Everywhere (IVE), a free Internet-based phone service similar to Skype's computer-to-computer calling but with an emphasis on video conferencing. IVE relies on Windows based software which is available for download online and will ship with Sony's new line of Vaio BX laptops, which feature built-in video cameras.

IVE will let users dial traditional wireline and cell phones from their computers and receive calls from regular and mobile phones for a $9.95 monthly fee.  The service, created in collaboration with GlowPoint, Inc., is another attempt to deliver a picture phone for the consumer market.  The Sony and GlowPoint alliance expands on an Internet video-conferencing service for business that the companies launched in June.

 

Network Providers Object to VoIP Wiretapping Rules
 The FCC's decision to apply the 1994 CALEA regulations to voice-over-IP is drawing opposition from vendors whose networks connect with the PSTN (Public Switched Telephone Network). Providers are concerned that new federal wiretapping rules will stifle innovation and require the re-engineering of private IP networks. Opposition is coming from a variety of organizations including universities, ISPs, libraries and privacy organizations.

In October, two petitions were filed challenging the FCC's decision. Sun Microsystems, the Center for Democracy and Technology, the Electronic Frontier Foundation, the Electronic Privacy Information Center, Pulver.com, Comptel and the American Library Association were among the organizations filing petitions. The American Council on Education estimates that compliance with the regulation will cost colleges and universities $7 billion to update switches and routes and has filed its own challenge to the ruling.

The controversy centers around whether or not the FCC has adequately shown whether new burdens on the industry will actually make the nation more secure; and that the FBI has not made a convincing case that it has difficulty conducting Internet surveillance under existing laws.  Another point of contention is that the Commission decided last year that Internet communications were to be classified as "Information services," and therefore are not subject to traditional telephone mandates, making them exempt from CALEA regulations.

Some lawmakers have also joined in the opposition because they fear that the mandates could give the government the authority to dictate software designs, drive innovators offshore and threaten security as well as privacy.

VoIP providers have until 2007 to comply with the FCC rule issued in August, 2004.

 

Sprint Nextel Acquires Affiliate Alamosa Holdings
Sprint Nextel will acquire Alamosa Holdings for approximately $4.3 billion extending its direct service territory to an additional 20 million people in 19 states. Under the terms of the agreement, Sprint Nextel will assume approximately $900 million of Alamosa's net debt and all of its outstanding common shares for $18.75 per share in an all-cash merger.

Alamosa is the largest Sprint PCS wireless affiliate and has reported the highest penetration and lowest churn rates among its affiliates. Approximately 1.48 million PCS wireless users will become direct subscribers of Sprint Nextel.

The acquisition is subject to the approval of Alamosa shareholders and regulatory approval. The deal should be completed by the first quarter of 2006.

 

Verizon Introduces New Calling Plans
 In an effort to compete with the ever-growing customer base of cable companies, Verizon is rolling out two new nationwide plans that are 30 to 46 percent cheaper than its existing plans.

Verizon Freedom Essentials offers unlimited local, regional and domestic long-distance calling with Voice Mail, Call Waiting and Caller ID for $34.95 a month. Verizon Freedom Value, offering any-distance domestic calling but no calling features, starts at $29.95 in some markets and is the company's lowest-priced any-distance calling plan.

The new plans are now available in New York, New Jersey, Pennsylvania, Maryland, Massachusetts, Connecticut, Delaware, Virginia and Washington, D.C. The Freedom Value and Freedom Essentials plans were introduced last month in Florida, California and Texas and have proven to be very popular.

 

 FCC Releases Telecom Industry Reports
 The FCC released three reports in November on the status of the telecom industry.  The New Telephone Subscribership Report provides information about overall telephone subscribership penetration in the United States, penetration rates by household annual incomes and state penetration rates. To view the report in its entirety visit http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262084A1.pdf.

Also released was The Report on Quality of  Service of Incumbent Local Exchange Carriers. The report summarizes quality of service data for 2004 submitted by major incumbent local exchange carriers as well as smaller incumbent local exchange carriers. The data are presented separately for each operating entity and include measures of service quality provided to residential and business end-user customers, as well as service quality provided to access customers, namely interexchange carriers. This report may be viewed at:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262330A1.pdf

The Statistics of Communications Common Carriers data has been made available electronically to expedite the release of this important information widely used by academics, consultants, and other researchers in the field of telecommunications. It includes a wealth of data on telecommunications costs, revenues, prices, and usage.  The report features:

  • general information on industry structure

  • financial and operating data relating to telephone carriers

  • data on international communications

  • historical financial and operating statistics

  • industry trends

The Statistics of Communications Common Carriers Report is available for viewing at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262086A1.pdf

 

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Overlay of California NPA 310 Planned
 The relief method chosen for NPA 310, which serves the western portion of Los Angeles County in Southern California, will be an overlay. The new 424 NPA will serve the same geographic area that NPA 310 currently serves, which will make ten-digit dialing of all calls in the area mandatory. Permissive ten-digit dialing is scheduled to begin December 31, 2005, with mandatory ten-digit dialing starting July 26, 2006.

 

LOCALIZER - OPTIONAL CALLING PLANS NOW AVAILABLE
Localizer, one of our most popular products, allows customers to easily identify local calls using a simple record layout of originating and terminating NPA/NXX pairs. In addition to basic local calling plans, Tele-Tech is now offering Localizers with optional calling plans. Choose from a selection of new optional plans recently added to our data inventory; or let us know if you need coverage in a specific area and we'll create that optional calling plan for you. Existing customers can choose to include the extra information in their data feed without changing their current format or record layout. 

 Localizers are also available with an array of optional fields including:

  • Rate Centers of both the originating and terminating NPA/NXXs

  • Wireless Indicator showing whether each terminating point is a wireless or wireline NXX

  • Local Call Definition providing added information on each local call such as zone, mileage, plan name, etc.

  • Basic/Expanded Indicator showing whether each call is part of the basic local calling plan, a mandatory/expanded local calling plan or an optional /expanded local calling plan

Identify a wider range of local calls in more markets with more options. Contact Kimberly Russo at krusso@telecomdb.com or 800-433-6181 ext. 7103 for a free sample and more information.

 

 

 

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