--------------------------------------------------

Telecommunications Reports presents....

                                  TR DAILY
                                  Oct. 23, 2001
--------------------------------------------------

PLEASE NOTE:  This electronic publication is copyrighted by
Telecommunications Reports International. Redistribution or
retransmission of any part of this electronic publication -- either
internally or externally -- is strictly prohibited. Violation will
be cause for immediate termination of your subscription and
liability for damages.  You may print out one hard copy for your
personal use. If you are interested in having this publication sent
to colleagues at your company, additional authorized recipients may
be added to your subscription for a fee.  Call Subscriber Services,
at (800) 822-6338, or send an e-mail to customerservice@tr.com for
more details.  If you prefer not to receive TR Daily, please reply
to customerservice@tr.com.

--------------------------------------------------


Table Of Contents
Click here for the full issue:
http://www.tr.com/online/trd/2001/td102301/index.htm

POWELL: NextWave Settlement
STILL AN `OPEN QUESTION'
http://www.tr.com/online/trd/2001/td102301/Td102301.htm

POWELL OUTLINES 5-POINT 
AGENDA FOR COMMISSION
http://www.tr.com/online/trd/2001/td102301/Td102301-01.htm

AT&T EXITS FIXED WIRELESS BUSINESS;
QUARTERLY RESULTS SURPASS EXPECTATIONS
http://www.tr.com/online/trd/2001/td102301/Td102301-02.htm

LUCENT STILL LOOKS TO 2002
FOR RETURN TO PROFITABILITY
http://www.tr.com/online/trd/2001/td102301/Td102301-03.htm

RURAL TELCOS EYE `ECONOMIC STIMULUS'
PACKAGE FOR UNIVERSAL SERVICE CAP BILL
http://www.tr.com/online/trd/2001/td102301/Td102301-04.htm

VERIZON LAUNCHES InterLATA 
SERVICE IN PENNSYLVANIA
http://www.tr.com/online/trd/2001/td102301/Td102301-05.htm

NEWS IN BRIEF 
http://www.tr.com/online/trd/2001/td102301/Td102301-06.htm


****************************************************************
POWELL: NextWave Settlement
STILL AN `OPEN QUESTION'

FCC Chairman Michael K. Powell said on Tuesday it was "a very open
question" whether the agency and other parties can reach a
settlement to end the 5-year-old dispute over NextWave Telecom,
Inc.'s "C" and "F" block PCS (personal communications service)
licenses.

"There are a lot varied interests at the table and whether they can
all be aligned in a way that everyone finds satisfactory is still
a very open question," Mr. Powell told reporters during a briefing
in Washington.  "I'm an attorney and I've been in many discussions
and negotiations.  This thing has 450,000 moving parts and moving
constituencies."

Several wireless carriers that bid on NextWave's spectrum at an
auction earlier this year are negotiating an agreement with
NextWave and the FCC that could free up the valuable spectrum,
sources have said.

Asked to predict the chances of a successful outcome, Mr. Powell
replied, "I learned a long time ago I don't express any odds on
anything associated with NextWave."

Mr. Powell stressed that the Commission wouldn't compromise its
rules or policies just to reach a settlement.  "It is important to
recognize that from the Commission's standpoint, it has certain
principles, certain commitments to auction integrity that it has
defended throughout the extent of the NextWave litigation, and it
has no intention of flushing them down the drain just in the name
of getting a quick return," he said.

On another spectrum-related issue, Mr. Powell said the FCC still
plans on establishing procedures by the end of this year to allow
Northpoint Technology Ltd. and other terrestrial wireless systems
to share the Ku-band with direct broadcast satellite (DBS)
operators.  He defended the agency against criticism that it was
taking too long to complete the proceeding, saying it had the "re-
sponsibility to wade through a thicket of extremely complex legal
and technical questions."

Mr. Powell said "it's very important to recognize that this is one
of the. . .most challenging set of issues that the Commission has
faced in the context of a new service and it needs to tread
carefully."

In addition to technical issues about how terrestrial wireless
operators can share the Ku-band without causing interference to DBS
systems, Mr. Powell said, there are "very difficult legal questions
about possible licensing and allocation as a consequence of a
statutory regime that has different rules and obligations for
terrestrial-delivered services than it does for satellite
services."

-- Paul Kirby, pkirby@tr.com


****************************************************************
POWELL OUTLINES 5-POINT 
AGENDA FOR COMMISSION

FCC Chairman Michael K. Powell today said he would apply his
deregulatory, market-based philosophy to address a host of issues,
the most important of which will be spurring deployment of
broadband services.  "The widespread deployment of broadband
infrastructure has probably become the central communications
policy objective today," he said at a press briefing in Washington.

He stressed the importance of the FCC taking actions to spur the
"digital broadband migration."  That could be an "arduous" process,
he said, but is "essential to survival."  He outlined five areas
that he said would drive the FCC's agenda for the next several
years:  (1) broadband deployment, (2) competition policy, (3) spec-
trum allocation policy, (4) a reexamination of the foundation of
media regulations, and (5) homeland security measures.

Shortly after he took over as chairman, Mr. Powell said he didn't
have a list of specific regulatory objectives that he planned to
pursue.  But today he sounded a different note.  "It really
stresses me that we don't have a more coherent, cognizant vision of
what we're doing here," he said.  "We're just running around
reacting to the latest" issues.  The initial work to act on his
agenda will be started within six months and will be "substantially
underway" within a year, he said.

Various proceedings will be used to address his agenda, he said. 
"What we're going to try to do is create clearly identifiable
vehicles where key policy issues will be debated."  Otherwise, he
said, "the agency gets machine-gunned" with petitions and other
filings from companies, trade groups, and other interested parties
trying to get action on particular issues.

Regarding broadband services, Mr. Powell stressed the importance of
limiting regulations that inhibit deployment.  "It is clear that
substantial investment is required to build out the new networks,
and we should limit regulatory costs and regulatory uncertainty,"
he said.  "Our focus should be on demonstrable and competitive
risks and discriminatory provisioning."

As it mulls broadband regulations, the FCC plans to continue
studying the market and working with states, he said.  The agency
will "clarify regulatory classification and access obligations
expeditiously," he said.  He cited three proceedings that would
focus on broadband services:  (1) the ongoing new networks pro-
ceeding, (2) the cable open-access proceeding, and (3) the third-
generation (3G) wireless spectrum allocation proceeding.

Regarding competition, Mr. Powell said the Commission needed "to
make prudent course corrections in our policies" to spur
competition.  "Facilities-based competition is the ultimate
objective," he said.  He stressed the need for "simplified
enforceable connection rules."

More specifically, the chairman said the Commission would conclude
outstanding "phase I" pricing flexibility proceedings and initiate
a set of new proceedings over the next six months "that will pro-
vide vehicles for rethinking our current framework."

He said a "triennial review" would provide the principle docket for
evaluating unbundled network elements policy.  The Commission will
initiate a proceeding focusing on performance measurement and
enforcement in an "attempt to streamline the essential performance
measures used for making judgments about compliance with the local
competition provision," he added.

He also said the agency would initiate a "dominance and non-
dominance" proceeding to "ask how do we develop a framework that
might be used to deregulate on a carrier-specific or service-
specific basis, depending on the level of competition and market
power."

On spectrum allocation, Mr. Powell found plenty of fault with the
way the government doles out valuable frequencies.  "The nation's
approach to spectrum allocation is seriously fractured," he said,
adding it was "a politicized, reactive process."  He called for a
more comprehensive, market-driven policy that would allow spectrum
users to decide the best uses of bands.

The chairman said the Commission should encourage the development
of secondary spectrum markets, improve interference protection
standards, back the development of unlicensed frequencies, map out
the uses and users of all spectrum, promote spectral efficiency,
and protect frequencies used for public safety.

-- Paul Kirby, pkirby@tr.com


****************************************************************
AT&T EXITS FIXED WIRELESS BUSINESS;
QUARTERLY RESULTS SURPASS EXPECTATIONS

After tinkering for five years with fixed-wireless technology as a
way to bypass incumbent local exchange carriers (ILECs) and reach
consumers directly, AT&T Wireless Services, Inc., is killing the
venture formerly known as "Project Angel."  It took too much time,
money, and effort to deploy the service, and the financial return
was less than AT&T Wireless earns from other operations, executives
said today.

Fixed wireless antenna towers, for example, were expensive and
time-consuming to build, and new subscribers often had to wait too
long for ILECs to transfer their service to the fixed wireless
system, said John Zeglis, AT&T Wireless's chairman and co-chief
executive officer.  "These challenges probably could have been
met," he said during a conference call with financial analysts. 
"But we don't have that much patience for a nonstrategic business."

AT&T Wireless inherited the fixed wireless business from AT&T Corp.
when the two companies began separating last year.  AT&T
essentially invented fixed wireless technology and began market
tests in 1997.  Despite setbacks, AT&T continued to invest in the
venture, then known as Project Angel.  Some skeptics surmised that
the existence of the fixed wireless program gave AT&T ammunition in
its negotiations with other network operators for access to
consumers.

AT&T Wireless's goal was to have 100,000 customers for the fixed
wireless service, which competes against ILECs in the provision of
voice telephony and high-speed Internet access to residential
customers.  But the fixed-wireless venture fell short of
expectations, Mr. Zeglis said.  "In the third quarter, the business
went off track," he said.  "This decision is as clear cut as it is
bittersweet."

AT&T Wireless is the second major service provider to pull back
recently from the fixed wireless business.  Last week, Sprint Corp.
said it would stop taking new customers for its fixed-wireless
service but would continue serving its existing base of 52,000
subscribers (TRDaily, Oct. 18).  It wasn't clear whether WorldCom,
Inc., would follow suit.  Unlike AT&T Wireless, WorldCom's fixed
wireless unit targets businesses rather than consumers.  WorldCom
is on target to launch service in 13 markets by year-end, a
spokeswoman said.

AT&T had more than 47,000 fixed wireless customers.  Over the next
several months, they will be transferred back to the ILECs that
previously served them.  AT&T Wireless will explore using its
fixed-wireless spectrum to provide other wireless services.  Having
been unsuccessful in selling the business, AT&T Wireless will take
a $1.3 billion charge against earnings in the fourth quarter to
account for its shutdown.

The announcement about the fixed wireless unit coincided with the
release of AT&T Wireless's financial performance for the quarter
that ended Sept. 30.  Financial analysts seemed pleased by both. 
"It was a solid quarter, which we believe is a positive in this
environment," said Merrill Lynch & Co.'s Linda Mutschler.

AT&T Wireless's third quarter revenue was $3.5 billion, a 25.1%
increase over the same period a year ago.  EBITDA (earnings before
interest, taxes, depreciation, and amortization) was $718 million,
a 52.3% increase over last year.  The carrier added 748,000
subscribers, about the same as during the year-ago quarter.  Its
main weakness was churn, which was 3.1% versus 2.9% in the previous
quarter and the year-ago quarter.

Some of the churn was "involuntary" and resulted from extending
service to too many customers with bad credit, said Mohan Gyani,
president and co-CEO.  AT&T Wireless has eliminated some of its
less desirable distribution channels, he said.  "We're out of the
business of attracting customers with a propensity for bad debt."

In the fourth quarter, AT&T Wireless expects to add another 900,000
to one million new subscribers.  Full-year revenue growth is
expected to be 30%-35%, and capital expenditures (capex) will be
around $5 billion.  About 20% of the capex will go toward the
deployment of a GSM (Global System for Mobile communication)
overlay and GPRS (general packet radio service) network over 40% of
its footprint by year-end.  The remaining 60% will be built next
year.  The upgrades will enable AT&T Wireless to offer so-called
2.5G data services.

-- Tom Leithauser, tleithauser@tr.com


****************************************************************
LUCENT STILL LOOKS TO 2002
FOR RETURN TO PROFITABILITY

Lucent Technologies, Inc., today insisted it was still on track to
begin generating profits again in the 2002 fiscal year, which for
Lucent began Sept. 30.  "Restructuring actions will drive our
return to profitability and positive cash flow in fiscal year
2002," said Henry Schacht, Lucent's chairman and chief executive
officer.

Revenues in the current quarter, which ends Dec. 31, will be less
than those generated in the previous quarter, Mr. Schacht said. 
But sales will pick up in the March quarter, he predicted.  "We are
seeing early signs of increased customer spending in some segments
of our business for that quarter," he said.

For the quarter that just ended, Lucent today reported revenues of
$5.2 billion, compared with $5.9 billion in the previous quarter. 
Excluding $8 billion in one-time charges, Lucent's loss per share
from continuing operations was $0.27, versus $0.35 in the previous
quarter.

Lucent is in the midst of a massive restructuring that will cut its
workforce in half and eliminate many low-margin operations.  In the
most recent quarter, 18,500 jobs were eliminated, Lucent said, and
annual expenses were cut by $400 million.

-- Tom Leithauser, tleithauser@tr.com


****************************************************************
RURAL TELCOS EYE `ECONOMIC STIMULUS'
PACKAGE FOR UNIVERSAL SERVICE CAP BILL

Several trade groups that represent rural telco interests have been
pounding the pavement on Capitol Hill in a bid to get the Universal
Service Support Act (S 500, HR 1171) attached to any "economic
stimulus" package that moves through Congress over the next few
weeks.  The legislation would remove the caps on the overall size
of the Universal Service Fund and on the amount that carriers are
allowed to receive in universal service support.

The FCC recently adopted an indexed cap that adjusts for inflation
(TR, May 14), but rural telco interests still want policymakers to
move forward with a full repeal of the cap.  In a recent letter to
members of the Senate Finance Committee, which has primary
jurisdiction over the economic stimulus issue, the rural telco
groups touted lifting of the caps as a way to stimulate investment
in new telecom infrastructure and drive economic growth in rural
areas.  

The telecom industry "plays a critical role in ensuring the
nation's economic and national security. . .[but] rural telephone
companies are hamstrung by arbitrary federal rules," said the
letter, which was signed by the Organization for the Promotion and
Advancement of Small Telecommunications Companies, the National
Telephone Cooperative Association, the National Rural Telecom
Association, and the U.S. Telecom Association.

Proponents of lifting the caps say they cause service providers in
high-cost areas to miss out on about $100 million in annual
universal service assistance and discourage upgrades and investment
in newly acquired local exchange properties.  "Congress can free
these companies to make investments by including the Universal
Service Support Act in the economic stimulus package," the telco
groups wrote.

"Additionally, because universal service support is privately
funded through carrier-to-carrier transactions, repeal of the caps
would not add to the cost of the stimulus package," the groups said
in the Oct. 18 letter.  "Finally, repealing the caps would
facilitate another major policy objective of Congress and the
president--investment in the platform need for full broadband
deployment."

Several telecom interests have been eyeing Congress's work on the
fiscal stimulus package as a possible means for gaining some quick
legislative relief (TR, Oct. 8).  The House's main economic
stimulus plan (HR 3090) has cleared the Ways and Means Committee
and awaits consideration on the floor.  In the Senate, where work
on the economic stimulus bill is still in the early stages, a "Dear
Colleague Letter" has been circulating urging Finance Committee
leaders to consider approving S 500.

-- Ryan Oremland, roremland@tr.com


****************************************************************
VERIZON LAUNCHES InterLATA 
SERVICE IN PENNSYLVANIA

Verizon Pennsylvania, Inc., today said it began offering interLATA
(local access and transport area) service to residential customers
in the state.  The FCC granted Verizon the authority to provide
interLATA service in Pennsylvania on Sept. 19.  Under section 271
of the federal Telecommunications Act of 1996, the FCC must
determine whether a Bell company has sufficiently opened its
markets to competition before authorizing it to provide in-region
interLATA service.

The flagship plan offered in the state is a flat-rate 10 cents-a-
minute charge for all long distance calls.  Maura Breen, Verizon's
senior vice president-retail markets and chief marketing officer,
said during a conference call today that customers who had premium
local packages would qualify for a discount plan that offers long
distance calls for 8 cents per minute.

The telco is also offering an "e-values" calling plan that provides
customers with discounts for signing up for service online.  Under
that plan, customers pay 5 cents per minute for weekend calls and
9 cents per minute for weekday calls.  Ms. Breen said the long
distance plans provided simple, one-bill, flat-rate service
"tailored to fit our customers' lifestyles and calling
preferences."  Verizon business long distance service will begin
Oct. 30.

-- Victoria Curtis, vcurtis@tr.com


****************************************************************
NEWS IN BRIEF

Daniel E. Somers is retiring as AT&T Broadband's president and
chief executive officer.  He will be succeeded by William T.
Schleyer, a principal in venture capital firm Pilot House Ventures
LLC and former president and chief operating officer of MediaOne
Group, Inc., a cable TV operator that was acquired by AT&T.  Ron
Cooper, president and COO of Web-hosting company Relera, Inc., will
join AT&T Broadband as COO.  David M. Fellows, a principal at Pilot
House Ventures, will become AT&T Broadband's chief technology
officer....

Christopher Rowe has joined satellite service provider Iridium
Satellite LLC as chief financial officer.  He was CFO at SpotCast,
Inc., a provider of content-delivery technology to mobile
networks....

MDS America, Inc., has asked Senate Appropriations Committee
Chairman Robert C. Byrd (D., W.Va.) to keep the various spending
bills clean of any language that would enable Northpoint Technology
Ltd. to obtain spectrum in the Ku-band without buying it at auction
(TR, Oct. 22).  "As you know, Congress has recognized that the
auction process is the best way to ensure that scarce spectrum
resources are used most productively," MDS America said in a letter
yesterday to Sen. Byrd.  "Please oppose this last-minute attempt by
Northpoint to use the appropriations process at the great expense
of the American taxpayer"....

BellSouth Corp. released a flurry of letters from the Louisiana and
Georgia federal congressional delegations endorsing its bid to
enter the in-region interLATA (local access and transport area)
service market in those states.  Also voicing support for the
Georgia application was Gov. Roy E. Barnes (D.).  The Louisiana and
Georgia state commissions have already lent their support to
BellSouth's application.  The Department of Justice has until Nov.
6 to weigh in on the application, and a final FCC decision is
expected before Dec. 31....

Billing issues top the complaint list for both wireline and
wireless subscribers, according to a new report from the FCC's
Consumer Information Bureau.  In the first installment of what will
be a quarterly report, the bureau compiled the most common
complaints and inquiries received by the CIB's Consumer Centers
during the third quarter on broadcast, cable TV, wireless, and
wireline telecom issues.  The report doesn't include complaints
received by other FCC offices or those made to state agencies or to
service providers.  "The statistics in this report will allow CIB
to play a pro-active role in alerting the Commission to potential
problems that may require further consumer education efforts or
policy changes," CIB Chief K. Dane Snowden said.


********************************************************
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.

Editor: John Curran
Associate Editor: Tom Leithauser
Associate Editor: Ryan Oremland
Associate Editor: Ed Rovetto
Publisher: Stephen P. Munro
1333 H Street, NW, 1st Floor-East Tower, Washington, DC 20005
Editorial Information: Telephone:  (202) 312-6060
                       Fax:  (202) 312-6111
                       Email: jcurran@tr.com
                              tleithauser@tr.com

Customer Service:      Telephone:  (202) 312-6050
                                   (877) 874-8737
                       Fax:  (202) 312-6116
                       Email: customerservice@tr.com

Federal copyright law prohibits duplication or reproduction in
any form, including electronic, without permission of the
publisher.