Subject: [NEXTEL-1] Northpoint Getting Help In Quest for Spectrum

From: [email-masked]
Date: Wed, 08 Oct 2003 10:08:09 -0400

washingtonpost.com
Cable Rival Is Small but Has Friends
Northpoint Getting Help In Quest for Spectrum

By Juliet Eilperin
Washington Post Staff Writer
Wednesday, October 8, 2003; Page E01

From its proponents' point of view, Northpoint Technology Ltd.
(http://www.northpointtechnology.com/) is a small, innovative company waging
an uphill battle to provide television and Internet access to millions of
Americans who are being either overcharged or underserved. From its critics'
perspective, Northpoint is a politically connected firm using its influence
to freeload off of American taxpayers by getting a free license to operate.

Northpoint became the target of such debate after it appealed to Congress
for help in securing access to the same slice of airwaves that has been set
aside for satellite television services such as Hughes Electronics Corp.'s
DirecTV and EchoStar Communications Corp.'s Dish Network.

Northpoint owns no satellites. Instead it wants to build a land-based
network of antennas that would use the same spectrum, between 12.2 and 12.7
gigahertz, to beam TV and Internet services to consumers' homes. With the
aid of key senators, prominent lobbyists and even a famous comedian, the
company has managed to get language inserted in two bills that would grant
licenses to those airwaves for free rather than force Northpoint to submit
to a public auction that the Federal Communications Commission wants to
hold.

The company's technology appeals to many lawmakers, who hear complaints from
constituents who are either deprived of cable or satellite service or feel
they're paying too much. As Sen. Mary Landrieu (D-La.) noted on the Senate
floor this spring, if Northpoint "can go head to head with incumbent cable
systems in all parts of the country, I believe that this good old-fashioned
competition will result in lower prices and better service for consumers."

Northpoint has been doing battle with the satellite companies for years,
ever since it approached the FCC in 1998 about sharing the direct-broadcast
satellite spectrum. The satellite companies, concerned that Northpoint's
service would interfere with their transmissions, got Congress to pass
language requiring independent testing on the matter.

The independent firm concluded that Northpoint could operate without causing
"harmful interference" to the competing companies if it modified its service
in certain ways, but the FCC rejected the start-up's petition for a license.
Instead, the commission scheduled a public auction for part of the spectrum,
now set for 2004.

That decision, which came down a year and a half ago, prompted Northpoint to
turn to Congress. The solution it seeks: language that would prohibit the
FCC from holding a public auction.

The government has estimated that it could raise $60 million to $100 million
by selling the airwaves to the highest bidder. Sen. John McCain (R-Ariz.)
opposes Northpoint's request, saying that giving away spectrum without an
auction represents "a clear violation of administration and congressional
policy."

"We wouldn't give away national forest parklands," McCain said. "It's
outrageous and an example of the power of money and special interests. The
taxpayers of America will lose many, many millions of dollars."

While it portrays itself as David in its battle with the satellite industry,
Northpoint is hardly without influential friends. Its lead partners are
three successful women -- Sophia Collier, treasurer of the New Hampshire
Democratic Party, who made a fortune by selling her business, Soho Natural
Soda, to Seagram; Katherine "Chula" Reynolds, who hails from a Texas ranch
family; and Toni Cook Bush, a former senior counsel with the Senate Commerce
Committee and a stepdaughter of superlobbyist Vernon Jordan.

The company's founders also include J. Bonnie Newman, who served under
President George H.W. Bush as an assistant for management and administration
and worked for Sen. Judd Gregg (R-N.H.) when he was in the House.

The company's franchisees have plenty of Washington ties, too. They include
the son and sister-in-law of Democratic Sen. Joseph R. Biden Jr. of Delaware
(the senator has recused himself from the issue), former Clinton White House
aide Betsey Wright, and comedian Lily Tomlin, who has lobbied members of
Congress and staffers on Northpoint's behalf. Another franchisee is the wife
of a former top aide of Sen. Conrad Burns, Leo Giacometto, who lobbies for
Northpoint. Burns (R-Mont.) is one of the company's most vocal backers.

The company spent $500,000 on lobbying last year, according to company
officials, using a high-powered stable including Bob Livingston, the former
House speaker-designate; seven-term congressman Lloyd Meeds, now at the law
firm Preston Gates Ellis & Rouvelas Meeds LLP; and Diane Albaugh, whose
husband, Joe, was one of President Bush's top advisers. The company's
efforts also hold out a special promise for lobbyists such as Livingston: a
stake in the company if it succeeds in getting an FCC license, a bonus that
could be worth millions of dollars.

Toni Bush is quick to note that the firm's rivals have an army of lobbyists
as well. DirecTV paid Quinn Gillespie & Associates LLP $240,000 last year in
addition to having one in-house lobbyist, and EchoStar spent $1.5 million on
lobbying, according to federal records. Northpoint is also facing off
against MDS America Inc., a company that has built a terrestrial wireless
service in the Middle East and wants to do the same thing in the United
States.

At the moment, Northpoint has the momentum. In September, Landrieu and Sen.
Kay Bailey Hutchison (R-Tex.) inserted language into the spending bill for
the Commerce, Justice and State departments that would block the FCC from
publicly auctioning off the portion of the spectrum Northpoint is seeking.
Sen. John E. Sununu (R-N.H.) had inserted similar language into a satellite
bill this summer, enraging House Energy and Commerce Committee Chairman W.J.
"Billy" Tauzin (R-La.).

The Bush administration, among others, has questioned why Congress would car
ve out an exemption for Northpoint. Tom Schatz, president of Citizens
Against Government Waste, called it "a huge waste of money."

But Sununu and others say satellite companies -- which under legislation
passed in 2000 are eligible for parts of the spectrum without going through
a public auction -- are simply afraid of competition. He said he is not sure
how the battle between the two forces will play out.

"If I could predict that, it would be resolved already," Sununu said.

The Senate plans to take up the Commerce, Justice and State spending bill in
the coming weeks, though it is unclear whether the Northpoint language will
survive on the floor -- or in negotiations with the House. The
administration could also weigh in on the issue, but it is unclear whether
Bush officials feel strongly enough to tinker with the legislation.

Northpoint executives are undaunted. "People think because we're a small
company and the big companies beat up on you, we'd roll over and play dead,"
Toni Bush said. "That is not our approach."

http://www.washingtonpost.com/ac2/wp-dyn/A58840-2003Oct7?language=printer

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