Inter-Tel Technologies pleaded guilty and agreed to pay a $1.7 million criminal fine and $7 million in settlement and restitution in an E-rate program bid rigging and wire fraud case. The Dept. of Justice and the U.S. Attorney’s Office in San Francisco said Inter-Tel was charged with seeking to defraud the E-Rate program at Mich. and Cal. school districts. In San Francisco, the company was charged with “inflating bids, agreeing to submit false and fraudulent documents to hide the planned installation of ineligible items and submitting false and fraudulent documents to defeat inquiry into the legitimacy of the funding request.” The San Francisco case was highlighted in a House Commerce Committee hearing (CD July 23 p7) in which the school district’s superintendent was lauded for blowing the whistle on the scheme. Inter-Tel, NEC Business Network Solutions, which pleaded guilty in May, and several other companies were involved.
At our deadline, Congress had taken no action on pending telecom legislation and appeared unlikely to do so. Conflicting stories and behind-the-scenes finger pointing highlighted the debate this week, but congressional and industry sources attributed the collapse of legislation to one central theme: Political infighting and retaliation.
Verizon made major concessions in Pa. to win enactment of the controversial new Pa. broadband deployment promotion law signed late Tues. night by Gov. Edward Rendell (D). Effective Jan. 1, the law (HB-30) gives Verizon and other incumbent local exchange carriers effective veto power over municipalities’ entry into broadband and other advanced telecom services. In return, the law uses carrots and sticks as incentives for the incumbents to accelerate their broadband deployments by up to 7 years, particularly in rural areas.
President Bush’s nominee for Commerce Secy. apparently has no particular past experience with the communications industries. Communications Daily found no record tying Carlos Guiterrez, CEO of breakfast cereal maker Kellogg, to the telecom or media industries. Industry observers we canvassed also told us they were unaware of any connection Guiterrez has to the industry. Michael Gallagher, NTIA dir. and the most prominent communications official in the Commerce Dept., was recently confirmed by the Senate, leading many sources to believe he planned to stay at the Dept. at least for the immediate future. President Bush nominated Gallagher via a recess appointment, which was ratified by the Senate 2 weeks ago when it formally approved Gallagher’s nomination.
Another obstacle has emerged for the beleaguered spectrum trust fund legislation. Senate and industry sources told us that Senate Appropriations Committee ranking Democrat Byrd (D-W.Va.) has placed a hold on the bill, which has now been paired with E-911 and universal service fund (USF) legislation (HR-5419). Sources said Byrd’s hold is due to the same concerns that appropriators always had over the bill: The usurping of Appropriations Committee jurisdiction. The bill, which seeks to reimburse Defense Dept. and other govt. users for portions of the 3G spectrum they now occupy, would essentially appropriate money from spectrum auctions in advance. House appropriators had similar concerns over HR-1320, the original spectrum trust fund bill, that were eventually resolved before the House passed the bill in 2003. That bill is now part of HR-5419, a catch-all bill passed by the House 2 weeks ago, and includes state funding for E- 911 deployment and an exemption from Anti-Deficiency Act requirements on USF. The Senate Commerce Committee has passed spectrum trust fund legislation, but it never moved to the Senate floor. During deliberations on the bill, Senate Appropriations Chmn. Stevens (R-Alaska) said he had concerns that the bill would usurp appropriators authority. But sources said Byrd’s hold wasn’t the main obstacle for HR-5419. Senate Commerce Committee Chmn. McCain (R-Ariz.) is also holding up the legislation because House leadership won’t take up his measure to establish a national boxing commission. One industry source said differences with Byrd, which were based on substance, are likely to be easier to resolve than the differences between McCain and House leadership, which sources said appear to be political.
ShippersNewsWire reports that, among other things, the second draft of revised C-TPAT security standards for importers moves away from characterizing the measures as 'minimum standards' and instead says importers should apply various prescriptions based on an 'assessment of their risk.' The articles adds that U.S. Customs and Border Protection (CBP) has circulated the draft among customs compliance managers at 16 major corporations, and is asking for comments by December 3, 2004. (ShippersNewsWire@americanshipper.com, dated 11/23/04)
Hopes in the Senate for decency legislation appeared dim Wed. as Sen. Brownback’s (R-Kan.) spokesman released a statement that said the senator likely would wait until next year to reintroduce decency legislation in the 109th congressional session. “It is highly likely that Senator Brownback will reintroduce the bill as soon as the Senate comes back in session in January,” Brownback’s spokesman said. Supporters of decency legislation remained hopeful that some form of legislation that would increase FCC decency fines could move this week as Congress works in a “lame-duck” session. But Brownback’s spokesman said “poison pill amendments” hurt a bill that would have passed had they been left off. A Senate source said up to 6 Democratic senators had placed holds on the bill due to concerns about a provision that would place fines on artists. The House earlier this year passed legislation that would raise FCC indecency fines to up to $500,000 per incident. The Senate Commerce Committee also approved legislation that would raise fines, but leaders were unable to bring the bill to the floor. Brownback led efforts to attach the legislation to the Defense Dept. Authorization Bill, which passed without decency legislation. Brownback tried to salvage the compromise reached between House members, who wanted a more aggressive bill, and some senators, who had concerns about fines being applied directly to artists and about provisions that would automatically trigger license revocation hearings. Brownback tried to amend the House bill with a compromise reached during DoD Authorization Bill discussions, but no vote on the bill has been scheduled.
Denying CLECs UNE access to high capacity DS-1 and DS-3 loops and transport serving business customers would cost U.S. businesses about $130 billion the next 10 years and deprive the economy of more than 426,000 new jobs, CompTel/Ascent said in a study Wed. It urged the FCC and the Bush Administration to “quickly reinstate their support for policies promoting the availability of high capacity UNE loops and transport for facilities-based CLECs.” “If the Commission is serious about encouraging facilities-based competition, it should not retreat on its promises to ensure competitors have access to loops and other vital network elements,” said CompTel CEO Russell Frisby. The Bells blasted the study.
Public broadcasters are preparing for “a strong grassroots response” to stave off funding cuts for discretionary programs like CPB because of the tight budgetary situation in Congress. The Assn. of Public TV Stations (APTS) believes that with a strong grassroots response from stations, public broadcasters can “make our case for continued funding,” Pres. John Lawson told us. He said despite the Senate’s new composition, “we expect to maintain strong bipartisan support.”
Vonage’s DigitalVoice VoIP service is interstate so it can’t be regulated by state PUCs, the FCC ruled Tues. The ruling, which asserts federal jurisdiction over Vonage-like services, came in response to a preemption petition filed last year by Vonage. Although referring to Vonage service, the decision applies to other types of IP- enabled services, the Commission said.