Multi-agency Committee on Foreign Investment in U.S. (CFIUS) finalized its review of VoiceStream, Deutsche Telekom and Powertel merger, allowing companies to clear last remaining regulatory hurdle before deal closes. VoiceStream said CFIUS ended its review with decision to take no further action. Panel includes departments of Defense, State, Commerce and Treasury. VoiceStream reiterated that it expected merger to close May 31. FCC unanimously gave green light to transaction last week with no major merger conditions. Successful CFIUS review had been expected after companies reached agreement with FBI and Dept. of Justice earlier this year on national security issues. That auxiliary deal was incorporated into FCC approval of transaction. CFIUS itself was created under Exon-Florio amendment to 1950 Defense Production Act and its investigation typically can last up to 45 days.
Spectrum allocation, regulations on space imaging and expediting process for satellite export controls are 3 main issues on tap for Aerospace Industries Assn. (AIA), Bruce Mahome, AIA dir.-space policy, said Mon. after news briefing in Washington on declining R&D federal budget for aerospace research. AIA has been working “to reassure [FCC International Bureau] that it should continue to back the industry,” said David Logsdon, AIA mgr.-space operations, and “put money into [R&D] efforts.” “Some people in the FCC are nervous the satellite industry can deliver workable systems after problems with Iridium and Globalstar” and satellite phones, he said.
FCC spelled out for first time at Commission level, in order on VoiceStream-Deutsche Telekom (DT) merger released Fri., relationship between Communications Act provision that bars foreign govt. ownership and section that allow indirect govt. investment. In granting license transfers in Powertel- VoiceStream-DT merger, order stipulated that indirect ownership by foreign govt. should be addressed only under Sec. 310(b)(4) of Act, not Sec. 310(a), which bars direct govt. ownership. Sec. 310(b) allows for foreign govt. to hold greater than 25% stake in corporate license “unless the Commission finds that the public interest will be served by refusal or revocation of the license,” order said. While text of final order contained no surprises, language has been closely watched for road map that it will provide for similar deals in future.
FCC unanimously approved Deutsche Telekom’s (DT) merger with VoiceStream and Powertel, imposing no special conditions on $34 billion deal and provoking renewed commitment from Sen. Hollings (D-S.C.) to seek restrictions on foreign govt. ownership in U.S. telecom companies. FCC adopted order 4-0, with Comr. Furchtgott- Roth dissenting in part on separate deal on national security issues between federal agencies and companies. Order, approved Tues., is expected to be released as early as today (Thurs.) Commission said in news release it found DT would “have neither the incentive nor the ability to engage in unfair competition, specifically predatory pricing, in the U.S. domestic mobile telephony market.”
Export controls for satellite companies still are in flux while Commerce and State Depts. attempt to settle on uniform policy for licensing and controlling sensitive technology of satellite components, inspectors gen. (IG) said in March reports. Typical of problems is “political jostling” at State and Commerce over exports, satellite official said. They have agreed on 13 of 16 issues involving satellite components, but have been unable to reach consensus on others, Satellite Industry Assn. (SIA) Pres. Clay Mowry told us. Major regulation of satellite components is in “political limbo” as new officials take control of key govt. positions that provide oversight to industry.
Rep. Davis (R-Va.), chmn. of House Govt. Reform Subcommittee on Technology and Procurement Policy, sent letter to Social Security Administration (SSA) April 18 seeking more information on agency’s plans in response to recent General Accounting Office (GAO) decision. In decision made in Dec. but not released until earlier this month, GAO upheld protest by Rockwell Electronic Commerce on telecom contract awarded to WorldCom. GAO concluded that SSA hadn’t evaluated all related FTS 2001 costs linked to WorldCom bid. Rockwell argued WorldCom had edge in bidding because it didn’t include costs of FTS 2001 in its bid package. (WorldCom and Sprint share FTS 2001 contract awarded by General Services Administration [GSA]). In letter to SSA Comr. Larry Massanari, Davis said request for proposals cited by GAO decision “was one of the first significant competitive bids since the award of FTS 2001 and I would like to know how SSA handled the evaluation of FTS 2001 so it did not thwart the competitive process.” Davis said he was interested in learning how FTS 2001 was evaluated and “whether there was adequate competitive opportunity for private industry.” Davis said he was particularly interested in SSA’s plans to address “the concerns expressed by the GAO in their decision.” Letter came as Subcommittee planned to hold hearing on FTS 2001 Thurs. Expected to testify are officials of GAO, GSA, Dept. of Defense, Qwest, Sprint, WorldCom, AT&T.
Interagency task force led by Justice Dept. April 15 will publish final revised standards on federal appraisal of public lands, action that telecom and energy interests said could increase cost of using rights-of-way (ROW). They said such action also would violate restrictions last year set in 2001 Interior and Related Agencies Appropriations bill. Edison Electric Institute (EEI) spokesman said task force, known as Interagency Land Acquisition Conference, was attempting to slip under Congressional radar by publishing revised govt. land appraisal desk guide, rather than formal regulations, enabling federal appraisers to assess inflated costs on companies seeking to deploy fiber and other utility infrastructure on public land.
FCC would be required to conduct new e-rate rulemaking, altering program in ways that one supporter suspected could destroy it, under proposals tucked into President Bush’s budget proposal (CD April 10 p1). General provision in proposed Commerce Dept. budget would have Congress direct Commission to finish rulemaking by Sept. 30, 2002. However, e-rate foe thought program got boost when $2.25 billion in e-rate funds and similar amount for high-cost universal service money for first time were included as $4.5-billion line item (rising to $5.6 billion in FYs 2001 and 2002) in FCC budget.
Bush Administration’s fiscal year 2002 budget proposal would increase funds for FCC, but White House’s long term strategy is to level off agency’s spending over the next 4 years. According to govt. budget details released Mon., Bush would increase FCC’s FY 2002 budget to $248.5 million from current $230 million. Total proposed outlays, or “amount the [FCC] actually spends in a given fiscal year,” would increase to $320 million from $301 million. Spending in FY 2003 and 2004 would drop to $302 million, then increase by $1 million in FY 2005 and FY 2006, respectively, under plan.
White House announced Fri. it intended to nominate 3 Washington insiders as FCC Commissioners: (1) Kevin Martin, FCC transition leader for President Bush and former aide to FCC Comr. Furchtgott-Roth. (2) Kathleen Abernathy, vp of startup network provider Broadband Office Communications, who is former U S West regulatory vp and one-time adviser to ex-FCC Comr. James Quello. (3) Mike Copps, who worked for Sen. Hollings (D-S.C.) for 15 years before leaving Hill in 1980s to work in private industry and finally Commerce Dept. in international trade area. Formal nomination won’t happen for several weeks while paperwork is prepared and security clearances completed. After that comes Senate confirmation process.