Subject: TR Daily, 27 December, 2001
From: [email-masked]
To: [email-masked], [email-masked]
Date: Tue, 3 Feb 2004 16:43:11 -0800 (PST)

Date: Thu, 27 Dec 2001 17:43:21 -0600 (CST)

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Telecommunications Reports presents....

                                  TR DAILY
                                  Dec. 27, 2001
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For a Web version of today's TR Daily, go to 
http://www.tr.com/online/trd/2001/td122701/index.htm
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Table Of Contents

TELECOM REGULATION
-- Mich. PSC:  Ameritech Still Not Close To InterLATA OK
-- Allegiance Complains AT&T Failing To Pay Access Charges
-- Boeing Gets FCC License For In-Flight Broadband Service
-- FTC Okays Four ISPs For AOL Time Warner 
-- New York City Gets Extension On 10-Digit Dialing 
-- FCC Bureau Extends CALEA Deadline 
-- SBC To Pay $1.9M For Missed Performance Goals 

TELECOM BUSINESS 
-- Fewer Telecom Bond Defaults Seen For 2002
-- SBC To Buy Yahoo Stake Valued At About $295M
-- Cablevision Sets 600 Layoffs, $55M Charge 
-- Ault Inc. 2nd Qtr Sales Down 63% 
-- IXCs Mimic Wireless `Bucket' Plans, TRAC Says 
-- ACT Teleconferencing In Asset Purchase Deal
-- Wireless Telecom Buys Microlab/FXR 

CAPITAL MARKETS 
-- TR Daily Telecom Index Gains 1.3%
-- Intraco Closes $15M Investment Pact 

PEOPLE ON THE MOVE 
-- New CFO At Millennium Digital 

************************************************************
TELECOM REGULATION
************************************************************
PSC SAYS AMERITECH IS SEVERAL STEPS AWAY
FROM WINNING InterLATA APPROVAL IN MICHIGAN

The Michigan Public Service Commission says Ameritech-Michigan
apparently has not complied with four items on the 14-point
"competitive checklist" in section 271 of the federal Telecommu-
nications Act of 1996. The PSC said it issued a preliminary order
regarding Ameritech's compliance to give the company "forewarn-
ing" that "redirection is needed" to gain the commission's
endorsement of the telco's bid to enter the interLATA (local
access and transport area) services market under section 271 of
the Act.

The PSC's order discusses checklist items two (access to network
elements), four (local loop transport), seven (access to "911,"
and directory assistance), and 10 (access to databases and
signaling).

In examining checklist item two, the commission discussed
WorldCom, Inc.'s complaint that Ameritech hadn't been sending
line-loss reports on CLEC (competitive local exchange carrier)-
to-CLEC migrations.  Unless it receives notification that a
customer has chosen to receive service from another provider, it
continues to bill for its services, WorldCom said.  When the new
CLEC initiates billing, customers are double billed, WorldCom
explained.

WorldCom said Ameritech had a "cavalier" attitude about this
problem.  The commission said the problem had a "grave potential
effect on competition for local exchange service and is one of
the most serious of the problems raised in this case."  It
directed Ameritech to file a report on its efforts to resolve the
problem within 20 days.

To comply with checklist item four, the PSC said Ameritech would
have to facilitate the migration of voice service from itself to
a CLEC with "line splitting" over an unbundled network element
platform (UNE-P).  A CLEC doesn't need to gain approval from the
data CLEC before providing voice service to a customer and
migrating the service from "line sharing" to line splitting, the
PSC said.

It rejected Ameritech's assertion that the FCC supports its
position that a data CLEC has a right of first refusal for the
voice portion of the loop when a customer seeks to change his
voice provider from the incumbent.  The PSC also ordered Ameri-
tech to streamline the process for ordering and provisioning UNE-
P service when line splitting is involved.

Regarding checklist item seven, the PSC said Ameritech must
provide directory assistance listings (DAL) at cost-based rates. 
During its examination of checklist item 10, the PSC determined
that the access to calling name (CNAM) database should be consid-
ered a UNE.  Ameritech said it wasn't a UNE because the PSC
didn't do an analysis concerning whether the database met the
"necessary and impair" standards of sections 251 and 252 of the
Act. The PSC says it doesn't need to do a "necessary and impair"
analysis because the FCC already has done so. -- Gayle Kansagor,
[email-masked]

			----------

AT&T FAILS TO PAY ACCESS CHARGES TO CLECs,
ALLEGIANCE COMPLAINS TO TEXAS PUC

Allegiance Telecom, Inc., has asked the Texas Public Utility
Commission to require AT&T Corp. to pay for Allegiance's intra-
state switched access services.  Since 1998, AT&T has "intermit-
tently paid" for some of Allegiance's terminating access services
but has refused to pay for any of the company's originating
access services, Allegiance said.

AT&T is paying incumbents' intrastate access charges while it
refuses to pay Allegiance's "lawfully tariffed rates," Allegiance
said.  AT&T is also paying its affiliates' intrastate access
charges even when they "equal or exceed" Allegiance's rates, the
company said.  AT&T's "discrimination against unaffiliated
competitive local exchange carriers confers a significant advan-
tage" on AT&T's local service provider affiliates, Allegiance
added.

In November, AT&T paid XO Communications, Inc., more than
$500,000 in intrastate access charges after XO filed a complaint
with the Texas commission.  AT&T asked the PUC to dismiss XO's
complaint "without prejudice to AT&T's right to pursue a claim
for XO's unreasonable switched access service charges."  AT&T
said it reserved its right to challenge XO's tariffed rates with
any "appropriate court." -- Susan McGovern, [email-masked]

			----------

BOEING GETS FCC LICENSE FOR 
IN-FLIGHT BROADBAND SERVICE

Boeing Co. today said it had received a license from the FCC to
offer in-flight high-speed Internet access, clearing the way for
the firm to commercialize its Connexion brand of broadband serv-
ice.

The airline maker has been developing the high-speed Internet
service since last year and earlier this year began operating a
limited service on private and government aircraft based on an
experimental license received from the FCC in April that allowed
receive-only data transmission.

The agency awarded the new license to Boeing late last Friday
after a one-year application and review process.  The license
covers up to 800 transmit and receive mobile Earth stations
aboard aircraft in the 14.0-14.5 GHz uplink band and 11.7-12.2
GHZ downlink band.

Boeing's application had drawn some protest from PanAmSat Corp.
and Lockheed Martin, which questioned whether Boeing could
prevent interference with other devices in those frequency bands. 
The FCC's order is premised on Boeing's ability to prevent such
interference and to accept interference from all authorized Ku-
band users. 

"Receipt of the landmark two-way license, the first of its kind
in the broadband satellite industry, will enable operators of
commercial airliners and executive jets, such as private and
government aircraft, to offer real-time, high-speed Internet and
intranet access, television and e-mail above U.S. territory and
waters," Boeing said today.

"For the first time in history, air travelers will be able to
experience real time, in-flight connectivity comparable to the
speeds and quality of service they expect on the ground," com-
mented Scott Carson, president of Connexion by Boeing. 

Terrance Scott, a company spokesman, declined to comment on
revenue targets and other financial estimates for the new broad-
band offering.  "We had some targets, but they went out the
window after Sept. 11," the spokesman said.  Boeing hopes to
outfit Lufthansa long-haul jets with a prototype of the new
service beginning in late 2002 or early 2003. -- John Curran,
[email-masked]

			---------

FTC OKAYS FOUR ISPs FOR AOL TIME WARNER -- 
The Federal Trade Commission today approved applications by AOL
Time Warner for four independent Internet service providers to
offer competitive ISP services on AOL Time Warner's cable TV
systems.  AOL Time Warner sought the approvals as part of agree-
ments made with the FTC when the agency allowed the merger of
America Online and Time Warner.  Approved by the FTC were:  In-
ter.net, for competition on all of AOL Time Warner's cable sys-
tems; New York Connect, for competition in the New York cable
division;  Internet Junction, for competition in the Tampa Bay
and Central Florida cable divisions; and STIC.NET, for competi-
tion in the San Antonio, Houston, and Austin, Texas, cable
divisions.  Separately, the FTC is seeking comments through Jan.
22 on an AOL Time Warner application seeking approval of Web One,
Inc., as an alternative cable broadband ISP provider for compe-
tition in the company's Kansas City division. 

NEW YORK CITY GETS EXTENSION ON 10-DIGIT DIALING -- 
New York has been given more time to implement 10-digit dialing
in the "212" and "646" area codes.  The FCC's Common Carrier
Bureau agreed that the Sept. 11 terrorist attacks on lower
Manhattan had caused enough disruption that the state Public
Service Commission should be given until March 28, 2003, to
arrange for 10-digit dialing.  The previous deadline was July 28,
2002.  The PSC, the state Consumer Protection Board, and the City
of New York had asked for a delay until September 2003.  In an
order released yesterday in Common Carrier docket 96-98, the
bureau said the limited deadline extension would give the PSC
"sufficient breathing room."  FCC rules require 10-digit dialing
wherever there is an area code "overlay."  Without 10-digit
dialing, overlays hurt competitive carriers, the FCC says.  The
"646" area code was overlaid on New York City's "212" area code
in 1998.

FCC BUREAU EXTENDS CALEA DEADLINE -- 
The FCC's Common Carrier Bureau has set a new deadline for 164
wireline carriers to comply with certain requirements of the
Communications Assistance for Law Enforcement Act (CALEA) of
1994.  The carriers had preliminary extensions that were due to
end Dec. 31.  But the bureau extended the deadline to March 31,
citing the large number of deadline extension requests, the need
to consult with the U.S. Attorney General, and the time and
resources necessary to review each petition.  Carriers say they
need more time to muster the equipment and resources to comply
with the "digital wiretap" capabilities mandated by CALEA.

SBC TO PAY $1.9M FOR MISSED PERFORMANCE GOALS -- 
SBC Communications, Inc., will have to pay another $1.9 million
for failing to meet performance targets it agreed to when it
merged with Ameritech Corp.  During December it fell short of its
targets for providing wholesale service to competitive local
exchange carriers, the company said.  But a spokesman noted the
December fine was the smallest SBC has had to pay since it
completed the merger with Ameritech in late 1999.  In November,
for example, the company was assessed a $3.5 million penalty. 
SBC agreed to the performance goals to win FCC approval for the
merger.

************************************************************
TELECOM BUSINESS 
************************************************************
TELECOM TRENDS FOR '02:  FEWER BOND DEFAULTS,
STABLE DEBT RATINGS FOR EUROPEAN INCUMBENTS

The telecom sector led the way in bond defaults this year, but
the default rate will slow in 2002 and the industry's misery will
have more company, debt-rating agencies say.  "While defaults in
the telecommunications sector accounted for nearly one-third of
all defaults in 2001, defaults are expected to be more broad-
based in 2002 with significant areas of weakness in the retail,
restaurant, and consumer products categories," Standard & Poor's
said.

Fitch estimates that the telecom industry will end this year with
$30 billion in defaults, for a sector default rate of 25%.  The
expected default rate for the remainder of the high-yield bond
market is 5%, Fitch said.  XO Communications, Inc., became the
largest defaulter in November after it suspended payments on $4.9
billion in debt, according to Moody's Investors Service.

The default rate for telecom companies will slow in 2002 -- if
only because the weaker players have already defaulted, debt-
rating agencies say.  Moody's predicts the default rate for all
industries will peak in the first quarter of 2002, while S&P
foresees a peak in the third quarter.  S&P expects junk-bond
issuers to benefit from low interest rates and renewed enthusiasm
among investors for high-yield securities.  The influx of cash
may spur companies to attempt acquisitions, S&P said.

In Europe, incumbent telecom service providers should see their
debt ratings firm up, Moody's said.  Some European carriers spent
so heavily on third-generation (3G) wireless licenses and infra-
structure that they were in danger of losing their investment-
grade ratings.  But the trend now appears to be in their favor,
Moody's said.

"European investment-grade telecom service providers should be
able to maintain their investment-grade ratings, even though many
of them face not only higher-than-expected financial risk but for
longer than anticipated," Moody's said.

"Despite the increased risk, Moody's is assuming that incumbent
operators will not only continue to enjoy their strong franchise
and leading overall market position, growth in demand for servic-
es, and high operating margins, but also remain in a strong
competitive position to exploit their unique connectivity posi-
tion in the local loop," Moody's said.

Moody's remains skeptical, however, about financial returns from
3G wireless investments.  "Moody's does not believe that the
breakeven point for [3G] services could be reached before the
fourth or fifth year of operation," the agency said.

The ratings agency also remains doubtful about another European
trend:  carriers selling their real estate to raise money for
debt reduction.  Such sales require carriers to lease facilities,
Moody's noted.  These sale-and-leaseback transactions "will not
benefit and could even harm [carriers'] debt ratings because they
engender little real debt reduction," Moody's said, noting that
"the ongoing lease obligations are themselves a form of debt." --
Tom Leithauser, [email-masked]

			----------

SBC TO BUY YAHOO STAKE
VALUED AT ABOUT $295M

SBC Communications, Inc., today said it would buy a stake in
Yahoo, Inc., representing about 3% of the web portal provider's
outstanding common stock and worth approximately $295 million
based on current market trading levels. 

SBC will buy the Yahoo shares from SOFTBANK America, Inc., a
venture capital behemoth that will continue to own a 16% equity
stake in Yahoo.  The agreement appears to further cement rela-
tions between SBC and Yahoo, which announced a deal in November
to offer co-branded DSL (digital subscriber line) and dial-up
Internet access services.  Those product offerings are slated for
roll-out in mid-2002.

"This purchase will strengthen the new SBC and Yahoo relation-
ship, further solidifying the premier alliance between the
nation's largest DSL Internet provider and the number one global
Internet destination," commented Edward E. Whitacre Jr., SBC's
chairman and chief executive officer.

Yahoo CEO Terry Semel said in a similar vein:  "This transaction
demonstrates SBC's strong confidence in Yahoo's future direction
and marks another step forward in our relationship with a key new
partner."  The stock purchase is expected to close in the first
quarter of 2002, subject to regulatory approval. -- John Curran,
[email-masked]

			---------

CABLEVISION SETS 600 LAYOFFS, $55M CHARGE -- 
Cablevision Systems Corp. said it plans to cut headcount by about
600 positions, or four percent of the firm's workforce, and take
an associated $55 million charge in the fourth quarter.  Layoffs
will come from corporate, administrative and infrastructure
functions, the firm said, adding that customer relations and
field service positions are not expected to be impacted.  "Today-
's announcement is an outgrowth of a thorough strategic review of
2002 and beyond," commented James Dolan, chief executive officer.

AULT INC. 2nd QTR SALES DOWN 63% -- 
Ault, Inc., a Minneapolis-based maker of power conversion units
used in broadband modems and other telecom applications, said
revenue for the fiscal second quarter that ended Dec. 2 fell to
$9.9 million from $26.7 million in the comparable period last
year.  The bottom line for the most recent quarter swung to a net
loss of $2.0 million versus a profit of $813,000 in the year-ago
quarter.  "The decrease in sales is largely due to the overall
economic slowdown.  The company's primary markets, the telecommu-
nications and data communications industry, have been especially
hard hit, resulting in high inventory levels and slow order
activity," the company said. 

IXCs MIMIC WIRELESS `BUCKET' PLANS, TRAC SAYS -- 
The Telecommunications Research and Action Center (TRAC) has
released its residential TeleTips Long Distance Comparison Chart,
which details new plans and services long distance carriers have
launched to attract customers and compete with wireless carriers. 
TRAC has found that an increasing number of carriers are offering
"block-of-time" plans similar to new wireless offerings.  "This
is in response to the overwhelming popularity of these plans used
by wireless providers," TRAC researcher Karen Walls said. 
"Consumers like establishing a preset amount for a certain number
of minutes."  Sprint Corp., WorldCom, Inc., Qwest Communications
International, Inc., and Verizon Communications, Inc., all offer
block-of-time pricing plans, TRAC said.

ACT TELECONFERENCING IN ASSET PURCHASE -- 
ACT Teleconferencing will pay $4.8 million in stock and cash for
Proximity, Inc., a Burlington, Vt.-based videoconferencing
services provider.  ACT said the acquisition should increase its
2002 revenue growth rate by about 15%.  ACT's post-Sept. 11 reve-
nue run rate now stands at about $8 million per year.

WIRELESS TELECOM BUYS MICROLAB/FXR -- 
Wireless Telecom Group, Inc., a maker of telecom-related noise
generation equipment, announced the acquisition of Microlab/FXR,
which makes precision components for the wireless infrastructure
industry.  Terms of the deal will be announced next week, Wire-
less Telecom said. 

************************************************************
CAPITAL MARKETS 
************************************************************
ON SLOW DAY FOR NEWS OR INVESTING
TRDaily TELECOM INDEX GAINS 1.33%

On a day with little news flow to influence the few investors
bothering to trade, big telecom company stocks posted modest
gains.  The TRDaily Telecom Index of 90 telecom service provider
and equipment supplier stocks today gained 14.19 points, or
1.33%, to close at 1,079.32.  The index was inaugurated on Nov. 2
at a baseline value of 1,000 points.

Elsewhere, the Dow Jones Industrial Average rose 43.17 points, or
0.43%, to close at 10,131.31.  The S&P 500 average gained 7.76
points, or 0.68%, to close at 1,157.13, and the Nasdaq composite
average added 15.72 points, or 0.8%, for a close of 1976.42.  The
moderate gains in the major indexes was attributed to positive
Wall Street comments about semiconductor stocks and investor
expectations for an economic rebound in the coming year.

Time Warner Telecom was a big winner in the telecom sector,
gaining $1.36 per share, or 7.78%, to close at $18.85 on no
apparent news.  Bear Stearns last week identified Time Warner
Telecom, along with Allegiance Telecom, as the two likely survi-
vors in the competitive local exchange sector.

Meanwhile, Time Warner Telecom's parent, AOL Time Warner, posted
a gain of $0.98 per share, or 3.12%, to close at $32.43.  The
company today took a step toward clearing one of the conditions
imposed on the merger of AOL and Time Warner.  The Federal Trade
Commission cleared the company's plan to provide four unaffiliat-
ed Internet service providers access to its cable modem platform.

Yahoo, Inc., common stock was up $0.26, or 1.48%, on news that it
SBC Communications would buy a stake in the company.  SBC shares
rose $0.57 each, or 1.46%, to close at $36.69.  The day's top
price losers included Marconi plc, the British telecom equipment
maker that has suffered along with others in that sector.  Its
stock lost $0.09 per share, or 7.03%, to close at $1.19. -- Tom
Leithauser, [email-masked]

For a Web version of today's TR Daily Telecom Index report with
graphics and index components, go to:
 
http://www.tr.com/online/trd/2001/td122701/index.htm

			----------

INTRACO CLOSES $15M INVESTMENT PACT -- 
Intraco Systems, Inc., a provider of speech recognition technolo-
gies, closed on an agreement to issue convertible preferred stock
to International Finance Corp., a unit of Anglo American plc, in
return for an investment of $15 million worth of Anglo American
stock.  The firms indicated they would cooperate on product
offerings, and Intraco Systems expects to begin generating
additional resulting revenues in 2002. 

************************************************************
PEOPLE ON THE MOVE 
************************************************************

NEW CFO AT MILLENNIUM DIGITAL -- 
Steven Cochran has been named chief financial officer of Millen-
nium Digital Media, a St. Louis-based provider of cable TV and
telecom services.  He was the company's senior vice president-
finance and accounting.

********************************************************
TR DAILY Copyright 2001 Telecommunications Reports International,
Inc., (ISSN 1082-9350) is transmitted weekdays, except for
holidays.  Visit us on the World Wide Web at http://www.tr.com. 
Published by the Business & Finance Group of CCH INCORPORATED.

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