Regulatory News - Texas PUC Chairman Pat Wood Stands on Threshold of Change

Posted: 02/2001

Texas PUC Chairman Pat Wood Stands on
Threshold of Change
By Kim Sunderland

Texas Public Utility Commission (PUC, www.puc.state.tx.us)
Chairman Pat Wood III has famous dimples, according to his executive assistant,
and he might be bringing them to Washington later this year.

Wood is poised to take a position with the FCC (www.fcc.gov)
at the request of President George W. Bush.

The former Texas governor named Wood to the Texas PUC position in 1995. Word
in Washington is that Bush wants Wood to join Commissioners Michael Powell and
Harold Furchtgott-Roth to form a new Republican majority.

A Harvard Law School graduate, Wood’s PUC term ends in August, and his
credentials are impressively solid.

Wood graduated magna cum laude in 1985 from Texas A&M University with a
civil engineering degree. Prior to joining the PUC, he served as legal counsel
to the chairman of the Texas Railroad Commission, as legal advisor to one of
five Federal Energy Regulatory Commission members and as an associate project
engineer with ARCO Indonesia.

The man knows telecom, energy and transportation. He also has a keen idea of
where the three will meet someday.

In addition, Wood is distinguished for his ability to cross party lines,
bring advocates together on common ground and get the job done.

Wood spoke with PHONE+ Washington bureau chief Kim Sunderland last fall on
the Texas telecom agenda, his chances of coming to Washington, and what his
future holds.

Q: What’s on the Texas PUC agenda for 2001?

Wood: Well, I’ve got four items and two of them have been checked off
here [for 2000]: [Section] 271 is checked off and bill simplification, which was
a legislative enactment that required simplified retail customer bills.

The two [items] that aren’t done are a Digital Divide report that we’ve got
due to our legislature. They asked us to do a study of a number of issues
relating to the availability of more advanced service to the rural and
low-income areas. That’s taking up a lot of resources, but we’re learning a lot
that we didn’t know.

And then the last thing on my list that I’ve got to get checked off is to get
Verizon [Communications, www.verizon.com]
probably 20 percent of the lines here and get them opened up like [Section] 271
did for [SBC Communications Inc., www.sbc.com]
so that we can get competition going in all major areas of the state.

Bell competition is actually doing pretty well. We’ve probably got a million
and a half lines that used to be Bell served that are now CLEC served.

Q: So CLECs down there are doing well?

Wood: A lot better. Probably in residential there are half a million
to 600,000 customers being served by CLECs in SBC territory. There are still
issues that we work through as we hear about them, and we’re known here for our
Rocket Docket approach [which is swift PUC resolution of complaints]. We do have
concerns about getting issues resolved in a matter of hours not weeks.

Q: What about ILEC backsliding?

Wood: [Section] 271 implementation is an ongoing process. Just SBC
getting the certificate was great, but there’s a lot of responsibility that
we’ve got [at the PUC] to keep the market open. It becomes easier as the months
go by and becomes more i rreversible. But we just want to keep it that way.

Q: There are competitor concerns about SBC’s Project Pronto, which is the
incumbent’s data affiliate. The project to roll out broadband across its region
is being challenged by a lawsuit in which Internet users claim that SBC promised
them too much too soon and now can’t deliver.

Wood: Could be. I think there’s a high demand for the product. Their
advertising of the product was great, but I think they’ve pulled back on it
until they get caught up. But the initial advertising was very enticing to the
retail customer. Covad [Communications Co., www.covad.com],
Rhythms [NetConnections Inc., www.rhythms.net]
and NorthPoint Communi- cations Group Inc. [www.northpoint.net]
are in here as wholesale customers getting a lot of the same service done. But
the transfer from the ILEC to ASI [Advanced Solutions Inc.), which is [SBC’s]
data affiliate, had problems keeping up [with demand]. I mean none that were
catastrophic, but there’s been a little of a slowdown while that transition took
place.

There’s also a tight labor market. One of the nice benefits of competition is
that these technically proficient, qualified employees … don’t have to stay
with SBC. They can shop around. As the king of turnover in state agencies, God
knows I know about that! We had 27 percent turnover last year.

Q: In a recent policy forum on this issue, several CLEC attorneys said
they were scared of this project, and that they plan to lobby against approval
of any similar project in the future. What do you think about that?

Wood: Well, it’s like everything: You’re scared of what you don’t
know. I think … if the wholesale price is right for the CLEC to purchase that
bundled service, then that will hamper down a lot of their concerns. We’ve got
to really see if that holds up. In fact, from the FCC’s order, the state’s got
some ability to review that price and make sure that it’s cost-based.

The FCC has done a pretty good job of balancing the need to endorse projects
that get the bandwidth going. I think regulators have to make sure it gets
delivered. And Wall Street folks generally want to make sure there are enough
retailers for the service … to fight cable modem.

Q: Can you elaborate on that?

Wood: The presence of the cable modem certainly in more and more of
our cities here is providing a tremendous discount on DSL. There’s a clear
realization from SBC that the more retail agents that they have for their
infrastructure investment, then the better off they’ll be. There’s no way that
one conduit reaches everybody.

Q: In a related question, where does Texas stand on the cable open access
issue?

Wood: We’ve got no legislation on it. Our legislators are looking at
it and we [were] engaged in hearings about it throughout [2000]. There’s a
report … but I don’t know that it endorses one side. It just explains the
issue. I think if any legislator wants to move forward, there will be more
hearings.

Q: When your term is up this summer, what are your future plans?

Wood: To be a father and husband, which I have been ignoring. I love
living here in Texas. This is where I grew up and I hadn’t quite thought beyond
getting this electric market opened up by June.

Q: Will you definitely leave the commission this year, or could you be
reappointed?

Wood: I could be, but I’m not going to seek that. I mean, I’m 38 years
old and I need to get on with my life. I will be searching long and hard for
something that is actually as challenging as this job.

Q: Since becoming chairman of the PUC, what commission decision has had
the greatest impact, and what do you feel is still left undone that needs to be
finished before you go?

Wood: I don’t think it was a single decision. It was probably a whole
host of things from our initial arbitration after the ’96 [federal] act was
passed, through the final approval of the [SBC] 271. During that whole
market-opening series of cases … there were a lot of things that had to be
done to accomplish that and they all had to work together. That’s been the bulk
of our time commitment, just implementing those series of laws.

Q: What’s the area you most want to work on before you leave the PUC?

Wood: We want to deliver the promise of the [state’s competition] bill
not just to urban Texas, but to the whole state. And so we want to make sure
that we get rural areas opened and get Verizon some local exchange lines here
too.