WINSTAR, RBOCs SQUABBLE OVER POST-CHAPTER 11 INTERCONNECTION

In emergency petition, IDT Winstar said it sought ruling so similarly situated ILECs also couldn’t deny or delay providing facilities and services. “These facilities and services must be provided to IDT Winstar pursuant to the requirements of the Communications Act and the Commission’s rules,” Winstar said. “However, unless the Commission intervenes and orders the RBOCs to meet their obligations under federal law, thousands of customers will be without local exchange and long distance telephone service, data transmission and Internet access service.” Winstar said it planned to file in U.S. Dist. Court to enforce Secs. 410 and 406 of Communications Act to prevent “threatened disconnection” of services in violation of Act. Winstar officials weren’t available Wed. to say whether that court filing had been made. IDT Winstar -- or New Winstar -- said RBOCs threatened “blackout” in providing service during which it would have no service and end users could see interruptions. At center of problem is RBOCs’ contention that unless IDT Winstar assumes debt of Old Winstar, they will disconnect circuits and other facilities of customers who want to use IDT Winstar as their carrier, petition said. IDT Winstar said that argument was result of 2 “improper” motives by Bell companies: (1) Effort to “extort” from regulatory process payment of Old Winstar’s debts by new company. (2) Attempt to “injure or destroy a potential commercial rival.”

Qwest urged Commission to deny IDT Winstar petition. “IDT apparently believes that by purposefully failing to notify customers of a possible disruption in service, the Commission will reward it by preventing Qwest and the other carriers from following their procedures and attempting to exercise their rights under the law,” Qwest said. “Even if the relief sought by IDT were permitted by the Communications Act and bankruptcy statutes, IDT should not be permitted to exploit a situation for which it alone is responsible.” It said that under statutory requirements, utilities didn’t have to provide service to bankrupt firm unless they received payment under “adequate assurances” agreement. Citing Chapter 11, Qwest said utilities had to provide services to debtor for first 20 days of bankruptcy case and period following that as long as bankrupt company provided adequate assurance of future payment. That could include cash deposit. However, Qwest said that in this “unusual case,” IXCs, CLECs and RBOCs that were creditors “were enjoined from altering, refusing or discontinuing utility services to Old Winstar despite not receiving ‘adequate assurance’ payments” under agreements. Qwest said it was owed $3.8 million in payments not received under original post-bankruptcy adequate assurance agreement, plus $1.6 million for services provided to Old Winstar before its Chapter 11 filing.

“Wholesale carriers like Qwest were left holding the bag for Old Winstar’s failure to follow normal bankruptcy processes and for not notifying its customers that service might be disrupted or terminated due to its declining financial position and failure to pay its wholesale vendors,” Qwest told FCC. In Jan., Bankruptcy Court converted Winstar proceeding from Chapter 11 to liquidation under Chapter 7, Qwest noted. During that period, IDT didn’t assume or reject any Qwest contract with Old Winstar, instead directing that Chapter 7 trustee seek additional time to consider such measures. Unhappy with requirements imposed by Bankruptcy Court, Qwest said IDT obtained temporary injunction from U.S. Dist. Court, Wilmington, that barred service providers from terminating contracts until Bankruptcy Court could hear IDT request for stay on appeal.

Verizon said in ex parte filing that “the Commission’s processes should not be used to allow carriers in bankruptcy proceedings to avoid the requirements of the bankruptcy court.” It cited 120-day period provided to Winstar to assume or reject existing services or facilities and mandate to make “appropriate cure” for services or facilities assumed from pre-Chapter 11 company. BellSouth had ex parte meeting Fri. with FCC staff, including Wireline Bureau Chief Dorothy Atwood, on allegations raised by Winstar. Filing said meeting covered “steps the Commission could take to avoid similar situations in the future.”

GSA told FCC that Winstar services provided under telecom contracts were “critical” to federal agencies. “GSA urges the Commission to ensure the continuity of services so that there may be a seamless transfer of customers from Old Winstar to IDT Winstar,” agency said. GSA awarded Winstar 14 metropolitan area acquisition contracts to provide local voice and data services to federal agencies under agreements that cover 30,000 govt. users. Services include basic dial tone and Emergency 911. Agreements require Winstar to maintain reliability standard of 99.5%, GSA said. Federal customers covered under contracts include those with national security roles, such as Coast Guard Search & Rescue and U.S. Dist. Courts. “Continuity of service is particularly important to the public for operations such as these,” GSA said: “In fact, in light of September 11, the availability of competitive local exchange carriers such as IDT Winstar is going to be vital in providing redundant systems for backup plans to ensure continuing operations.” It echoed comments of Winstar, which argued that disputed facilities for provisioning already were in place at RBOCs.

SBC urged FCC to reject Winstar’s emergency petition, saying it centered on “self-created and preplanned ‘emergency.'” In comments to FCC Mon., SBC cited recent hearings before U.S. Bankruptcy Court in Wilmington, Del., at which IDT lawyer informed court that when company reached agreement to buy Winstar’s assets it had no intention of assuming agreements under which ILECs were providing services and circuits used by customers. SBC said it was “equally apparent” that IDT Winstar had no plan to send out notices that would meet Winstar’s Sec. 214 obligations to inform customers that “IDT Winstar would terminate service if it chose not to assume such agreements.” SBC told Commission: “In what can only be characterized as a tactical maneuver meant to deprive the ILECs of their rights under the United States Bankruptcy Code, IDT Winstar embarked upon a course of conduct designed to place in jeopardy the uninterrupted provision of telecommunication services to the very customers it now professes to seek to protect.” Rather than trying to enforce Communications Act requirement or FCC rules, SBC said IDT Winstar’s petition sought “preferential treatment” and urged FCC to ignore bankruptcy law, interconnection agreement and tariffs. IDT Winstar can fix situation by paying for services it wants, SBC said.