Subject: [NEXTEL-1] SEC inquiry highlights importance of wireless subscriber numbers

From: NEXTEL-1
Date: Fri, 02 Jul 2004 15:24:38 -0400

SEC inquiry highlights importance of wireless subscriber numbers
By Heather Forsgren Weaver
July 02 13:20:00, 2004

WASHINGTON—Subscriber numbers are an important metric for the wireless
industry because the industry is still growing, so an inquiry by a
federal agency into how those numbers is calculated is important, said
Rich Nespola, chief executive officer of the Management Network Group
(TMNG).

“In wireless today, it is still a land-grab opportunity, so subscriber
growth is something that all analysts look at,” said Nespola.
Even though all analysts look at subscriber numbers, they are at the
mercy of wireless carriers to know how many subscribers they serve
because there is no independent way to figure this out, said Nespola.

Nespola said he found the Securities and Exchange Commission’s recent
inquiry into telecommunications subscriber numbers—first reported
Thursday by the Wall Street Journal—interesting.

“Why isn’t the Federal Communications Commission asking these
questions?” asked Nespola. “The FCC has a right to audit, or it could go
to the Cellular Telecommunications & Internet Association and ask for
all of this information.”

CTIA keeps a running tab of industry subscriber numbers on its Web site.
As of Friday morning it read, “165,780,688 Current U.S. Wireless
Subscribers.” This is a compilation from its members who give the
information to an independent accounting firm under non-disclosure
agreements. CTIA receives only the totals, said John Walls, CTIA vice
president of communications. “The only numbers we ever see are the
totals. We don’t ever get any specific carrier information.”

The FCC gives carriers some guidance on how to determine subscriber
numbers in the directions on its Form 477, which it uses to examine the
extent of broadband deployment. There are no separate rules for wireless
carriers.

Nespola said he believes wireless carriers generally report their
subscriber numbers accurately, but the SEC inquiry gives them a chance
to go back and verify their processes and numbers.

“A lot of this can be done innocently without malice or forethought and
in an industry with high dynamic and growth, churn and then you add
wireless local number portability, it adds a reporting challenge,” said
Nespola. “It is a worthwhile question. It provides the carriers the
opportunity to go back and verify their numbers since with LNP there
could be some room for error.”

Verification appears to be a key component. Verizon Communications Inc.
filed information with the SEC late Thursday indicating it had
overstated its subscriber numbers by 8.5 percent but a Verizon official
said the change had no relation to the inquiry.

http://rcrnews.com/cgi-bin/news.pl?newsId=733

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