In 3-2 vote, FCC late Mon. allowed Sec. 272 separate long distanc...

authority in state must provide in-region long distance service through separate affiliate in that state for 3 years after approval. Verizon received long distance approval in N.Y., which was first Sec. 271 application to win approval in nation, on Dec. 22, 1999. After 3-year requirement, it’s up to Commission whether separate affiliate obligations should remain. While agency allowed most of N.Y. obligations to sunset, it also issued order addressing broader question whether it should allow Sec. 272 duties to sunset within 3 years as provided by Telecom Act or should be extended by agency. Legg Mason said in research note Tues. that order indicated FCC would go state-by-state “rather than give Verizon and the other Bells regionwide relief when one of their states hits the 3-year mark.” Bell companies had proposed regionwide deregulation as way to trim redundant operations and costs, “but under the FCC order will have to settle for more gradual relief,” Legg Mason said. Order said FCC planned to open rulemaking “in the coming months” seeking comment on whether there still was need for dominant carrier regulation of Bell company in-region, interLATA services provided outside of Sec. 272 separate affiliate. “We will take further action to address these issues in the future as appropriate,” Commission said. It noted that Telecom Act “clearly contemplates” sunset of separate affiliate and other requirements of Sec. 272 if FCC doesn’t extend them. Commission said it was “firmly committed to ensuring compliance” with nondiscrimination requirements of Sec. 272(e). “In particular, we note that the Commission may order an independent audit or otherwise investigate compliance with these requirements,” it said. In narrower public notice that terminated Verizon’s separate affiliate requirements in N.Y., Copps and Adelstein dissented, saying action was done “without the necessary analysis by the Commission.” They wrote in joint separate statement: “In this era of corporate governance problems and accounting depredations, we find it incredible that the Commission would eliminate a tool to provide safeguards and accounting transparency without even addressing the arguments raised in the record.” They said Congress charged FCC with determining whether structural, accounting and auditing safeguards of separate affiliate remained necessary to “prevent anticompetitive discrimination in the market.” They said agency failed to consider whether there was need for those or other safeguards. Copps and Adelstein particularly stressed extent to which they said FCC had failed to consider views of states, noting that N.Y. regulators had concluded that eliminating those requirements would be premature. “Since the state commissions are engaged in the Section 271 process from the beginning, and are our partners in the effort to carry out the directives of Congress, it is particularly important to weigh their considerations, and particularly that of the affected state, as we move to this next phase,” they said. Comr. Martin issued separate statement but didn’t dissent. He said decision to allow separate affiliate requirements to sunset without analysis or discussion was “odd” because FCC previously had issued notice asking whether it should extend Sec. 272 safeguards. Martin said he would have preferred separate order that set out agency’s analysis and rationale for granting relief to Verizon “rather than remain silent.” Legg Mason said that as first major FCC vote by Adelstein, deference that his joint dissent gave to state issues was significant and could have impact on other proceedings, including Triennial Review proceeding.