FCC Opened Forbearance Floodgate

IT WAS NEARLY ONE YEAR ago when a two-two tie at the Federal Communications Commission on whether to grant or deny a forbearance petition by Verizon Communications Inc. resulted in the Bell company receiving sweeping relief from federal and state regulation of its high-capacity broadband voice and data services. The commissions action was irresponsible, and it will lead to higher prices, fewer choices and less innovation for consumers. COMPTEL currently is challenging the decision before the U.S. Court of Appeals for the District of Columbia. Unfortunately, it likely will be 2008 before the court issues a decision.

As a result of the FCCs reckless action, AT&T Inc., BellSouth Corp. (now owned by AT&T), Qwest Communications International Inc. and large independent phone companies filed me-too forbearance petitions in an effort to receive the same regulatory relief. These petitions were filed last summer and the commission has up to 15 months from the filing dates to act on the requests. With a full complement of five commissioners finally in place, COMPTEL is hopeful there will be no further default grants of forbearance.

Not satisfied with the relief it already has gotten, Verizon has taken full advantage of FCC Chairman Kevin Martins anticompetitive approach to overseeing the communications industry by filing six additional forbearance petitions this fall. The petitions seek relief from the few remaining regulatory requirements that still applied to nonbroadband services including loop and trasport unbundling requirements in six major metropolitan statistical areas (MSAs). Verizon alleges this additional relief is justified because of the extensive competition it claims to face in Boston, New York, Providence, Philadelphia, Pittsburgh and Virginia Beach.

If these petitions are granted, Verizon would have no legal obligation under federal law to provide unbundled loops or transport for residential or business service from Massachusetts to Virginia. This means, for example, Verizon would no longer be required to provide unbundled loops or transport throughout almost the entire State of Pennsylvania, and all of the major metropolitan areas in the Northeast and most of the Mid-Atlantic.

COMPTEL has urged the commission to reject these Verizon petitions. The petitions are a blatant and arrogant attempt to remonopolize the industry. They should be rejected immediately by the FCC without even considering the merits (of which there are none) because Verizon based its argument for relief on confidential and proprietary third-party carrier information, such as E911 listings, that Verizon has access to simply because it is the E911 provider in the six MSAs in question.

A group of CLECs, who are the source of the information upon which Verizon based its argument for relief, filed a motion to dismiss the forbearance petitions, saying Verizon wrongly appropriated their confidential E911 information in violation of their respective interconnection agreements. In addition, the CLECs accuse Verizon of misusing confidential information it obtained as a result of the Bell companys merger with MCI last year. Another group of CLECs filed a motion to compel Verizon to produce the confidential information, which its petitions rely upon to demonstrate the existence of competition.

Although the FCC has launched a proceeding to examine the merits of the petitions, Verizon has refused to share the confidential data with interested parties, including COMPTEL, involved in the proceeding despite the parties having agreed to be bound by a protective order. Without access to the confidential information Verizon is using, COMPTEL and other parties dont know what we are supposed to comment on. We certainly cant counter Verizons arguments when we are armed with nothing more than the rhetoric in the Verizon petitions.

A grant of the Verizon petitions will have a significant adverse impact on consumers and end users living and conducting business in some of the largest MSAs in this country. It would reduce competition from telecom service providers. It is absurd for the commission to move forward on these petitions without ensuring that the proceeding is open to all interested parties. The FCC should dismiss the petitions outright. Failing that, at a minimum, the commission should compel Verizon to provide all parties that sign the protective order with the information upon which the petitions rely.

As of this publications deadline in early January, the commission had not yet ruled on the motions to dismiss the petitions nor had it compelled Verizon to release the information it relies on to justify relief.

Earl Comstock is president and CEO of COMPTEL, a Washington, D.C.-based trade association representing competitive facilities-based telecommunications service providers, emerging VoIP providers, integrated communications companies and their supplier partners.