Convergence of technologies is spurring “surprisingly” strong push by govt. agencies into telecom market, but phenomenon won’t help achieve desired goal of lower costs and more rapid deployment of services, Progress & Freedom Foundation said in study released Jan. 10. More than 200 state and local govts. are providing telecom services, with 100 offering cable service and others everything from Internet to local telephony, said study titled Does Government Belong in the Telecom Business? Argument that govt. involvement can provide benchmark of real costs of providing service, thereby helping regulators set prices at appropriate levels, is myth, study said, because municipal utilities, like other govt. entities, benefit from “plethora of tax and regulatory advantages not available to the private sector": (1) Municipalities are able to issue tax-free debt. (2) They have access to public rights-of-way on terms not available to private companies. (3) They “avoid” franchise fees and other “taxes” that private companies must pay. (4) They aren’t subject to generally accepted accounting practices. (5) They often receive interest- free loans or outright public subsidies. As result of subsidies and advantages, public utilities never provide accurate gauge of true costs of providing service but distort marketplace, study said. Because subsidies allow public utilities to “undercut” prices charged by private companies, they deter entry by real competitors and thus prevent marketplace from setting cost-based prices, it said. Study said govt. agencies that had entered telecom business had been saddled with financial losses and obsolete, legacy technologies. It said such entry distorted marketplace incentives and slowed development of private sector competition. Study said govt. role in telecom marketplace must be confined to removal of regulatory barriers to private deployment of services and reduction of telecom taxes that “account for over 18% of the typical telephone bill.” Recent study by foundation found that high telecom taxes cause one million fewer households to have 2nd telephone line.

NASA’s NEAR Shoemaker spacecraft will begin low-altitude passes over 433 Eros asteroid Jan. 24, getting as close as one to 2 miles Jan. 28 before Feb. 12 crash landing on asteroid’s surface. Spacecraft’s descent will allow its digital camera to take close-ups of asteroid’s landscape until it reaches 1,650 ft. above surface. NEAR Shoemaker isn’t expected to survive maneuver since it wasn’t designed to land.

Motorola reported 41% drop in earnings to $335 million for quarter ended Dec. 31 but said Thurs. that sales rose 11% to $10.1 billion. Company warned last month that quarterly sales and earnings would be lower than expected, in part because of disappointing efforts to curb costs of wireless phone production. COO Robert Growney said company planned to take “further steps” to return to earnings growth this year. In conference call, company said handset sales were expected to lag into first half of 2001. Overall sales for 2000 were $37.56 billion, up from $32 billion in 1999, while earnings hit $1.9 billion, up from $1.4 billion. Personal communications sales edged up 1% to $3.5 billion for quarter, with orders of $2.9 billion down 20%. As result of “increased manufacturing costs,” profits for segment dropped to $76 million from $242 million year ago. While wireless phone sales were up significantly in Asia, “orders were down very significantly” in Europe, Motorola said. Telecom sales rose 19% to $2.1 billion in quarter. Broadband communications segment, which includes cable modems, saw sales climb 52% to $1.1 billion.

Since 9th U.S. Appeals Court, San Francisco, ruling classifying cable modem service as telecom service are “nonbinding dicta,” FCC is free to embrace Cox’s position that it’s pure information service devoid of telecom service component, Cox told Commission in reply comments in open access inquiry. Explaining recent decision to stop paying franchise fees on cable modem service to local govts. in 9th Circuit jurisdiction, Cox said court decision meant it had no choice but to suspend payment and collection of fees pending further clarification of issue by FCC. Recognizing its decision would have adverse financial impact on some local franchise authorities, company said it was in discussion with local govts. “in hopes of reaching a mutually satisfactory resolution.” Referring to criticism by National Assn. of Telecom Officers & Advisers (NATOA) that Cox was refusing to pay franchise fees mandated under Title 6 after declining to contribute to universal service fund and failing to secure necessary state or local certificates required under Sec. 253, company said it continued to pay cable franchise fees on all services that had been deemed Title 6 cable services. It would have continued to pay franchise fees on cable modem services in 9th Circuit jurisdiction states but for Portland decision, Cox said, pointing out it was paying such fees in other states. As for USTA’s charge that Cox hadn’t shown any intent to make payments to universal service fund despite concluding data service was telecom service, company said its telephone subsidiaries in 9th Circuit states paid “significant portion” of revenues into state and federal universal funds. “Far from ‘reasoning’ that its cable services are telecommunications services, as USTA claims,” Cox has “vigorously” and “repeatedly” disputed such suggestion, company said, and not until FCC determines that cable Internet service should be subject to Title 2 common carrier requirements can Cox comply with them.

NTIA announced that $42.5 million was available this year for grants to govts., educational institutions and nonprofit groups for programs to expand advanced services to underserved areas. Funding for Technology Opportunities Program is up from $12.5 million available in 2000. NTIA will hold regional workshops to explain how to apply for funding: Feb. 2 in Washington, Feb. 6 in Denver, Feb. 8 in St. Louis -- www.ntia.doc.gov or 202-482-2048.

Financials: Nortel will cut work force by 4,000, although its overall staff level will remain same through new hires in high-growth areas, company announced Thurs. Cuts represent 4% of Nortel’s 94,500 employees… Time Warner Telecom completed acquisition of GST Telecom assets for $690 million. GST filed for Chapter 11 bankruptcy protection in May.

Internet streaming video surged 215% to more than 900 million streams accessed in 2000, study by DFC Intelligence reported. It said broadband Internet access carried nearly 29% of video streams, and 15% of streams carried ads -- www.dbpwebcasttrack.com.

Arianespace Chmn. Jean-Marie Luton said company lost more than $190 million in 2000, citing operation of Ariane 4 and Ariane 5, training employees to operate both rockets, raising newer rocket’s payload. Production costs for 2nd series of Ariane 5 rocket will be 35% less than first series, InfoWest spokesman said. Company’s losses were “not a surprise,” he said, adding that it expected to break even in 2001. Arianespace also committed money to building S5 preparation building to allow company to perform all maintenance at launch facility in Kourou and expected building to come into service in April, which spokesman said would save company more money this year.

VisionStar’s proposed transfer of Ka-band satellite license to holding company jointly owned with EchoStar is part of long- range goal to provide high-speed Internet service to rural and remote areas of U.S., CEO Shant Houvnanian told us. “We want to bring 2-way high-speed Internet service to the dark side of the digital divide.” Role of EchoStar also will increase if FCC approves, Houvnanian said. “They will get a larger ownership stake, but I will still be the significant shareholder.” VisionStar/EchoStar partnership filed application with FCC Dec. 15 to transfer control of orbital slot at 113 degrees W over Continental U.S. from VisionStar control (CD Jan 9 p8). Houvnanian said he owns 51%, EchoStar 49% of VisionStar/EchoStar. “I've personally invested a lot of money in this project to keep it going,” he said. “This is a complete start-up” company. VisionStar is one of several companies allocated Ka-band slots in May 1997 by Commission (CD May 23 p5) that have yet to launch satellite or service. Houvnanian said since contracting with Orbital to build satellites, VisionStar had exercised option in contract that allowed it to contract with Lockheed Martin to expand scope of service by building larger satellites.

“Robust discussion” of results of latest DTV testing followed presentation of results to more than 150 broadcasters in Washington Thurs., we're told. Closed-door meeting reportedly was told that VSB standard out-performed COFDM on 30-ft. outdoor antennas, COFDM did better on 6-ft. outdoor antennas and neither did very well on indoor antennas, as expected (CD Jan 11 p2, Jan 10 p2). Broadcasters also were told that COFDM would make DTV available to about 6% fewer households and same power level would give stations 14% smaller viewing area. Officials of COFDM supporter Sinclair Bcst. reportedly repeatedly made their claim that testing was flawed because it used COFDM receiver without needed filter. Broadcasters also were said to have repeatedly criticized cable and set-makers for not accelerating DTV rollout. Boards of NAB and MSTV are to meet Jan. 14-16 to decide what to recommend to FCC based on test results.