TEX. ATTORNEY GEN. URGES CONTINUED SEPARATION REQUIREMENT ON SBC
The Tex. Attorney Gen., along with several competitive phone companies, urged the FCC to continue a requirement that SBC provide long distance service in Tex. through a separate subsidiary. Sec. 272 of the Telecom Act requires Bell companies to operate their long distance services through such affiliates for 3 years after they get FCC approval to enter the long distance market in each state. With SBC’s 3 years ending in July for Tex., the FCC asked for comments on an AT&T petition asking the Commission to extend the requirement for at least 3 more years. Tex. will be the 2nd state where the local Bell company has completed 3 years in the long distance market -- Verizon in N.Y. was the first, in Dec.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The Tex. Attorney Gen.’s Consumer Protection Div. said it supported AT&T’s petition because SBC, known as Southwestern Bell Telephone (SWBT) in Tex., “continues to possess substantial market power in the provision of end-user connections and therefore has an incentive to discriminate, as almost all competitors are still dependent upon SWBT for the provision of facilities.” The Tex. PUC told the FCC it didn’t have time to prepare comments by the Commission’s deadline but planned to weigh in later this month. The Attorney Gen.’s filing said the PUC had supported an extension of the separate affiliate requirement in past filings because of concern about SBC’s dominance in the local phone market. “No regulatory authority could or should have a better understanding of the state of the telecommunications marketplace in Texas than the Texas [PUC],” the Attorney Gen. said.
MCI recommended retaining the Sec. 272 safeguards as long as SBC remained classified as a dominant carrier in providing long distance in Tex. “As long as a [Bell company] remains dominant, i.e., continues to possess market power, the [Sec.] 272 safeguards remain necessary to constrain the [Bell’s] ability to discriminate against its rivals in [the long distance market] and to engage in cost-shifting,” MCI said. Letting the safeguards expire “would be inconsistent with the Commission’s 20-year history of imposing separate affiliate requirements on dominant LEC participants in the interLATA market,” it said.
“These safeguards cannot be allowed to sunset summarily” because they're more critical in Tex. than in N.Y., where the FCC eliminated them after Verizon had been in the long distance business for 3 years, Sprint said. The N.Y. market is “more developed” while SBC “retains overwhelming dominance in the Texas local exchange and exchange access markets,” Sprint said. In addition, the carrier said, safeguards are warranted “given… SBC’s demonstrated abuse of market power.” Birch Telecom gave several examples of what it charged was SBC’s “anticompetitive conduct:” (1) “An ostensible mistake by a SWBT employee processing the conversion of a single customer from Birch to SWBT resulted in the disconnection of 75 other Birch customers.” (2) “Birch, and other CLECs, have complained that SWBT is denying DS-1 UNE loops to CLECs for provisioning service to end user customers on the grounds of ‘no facilities’ being available, while making DS-1 facilities available for the same orders if the CLEC orders the same facilities as special access services at the higher special access price.” (3) “SWBT has doubled the recurring colocation power charges assessed to Birch and other CLECs, including back-billing of the increased charges for services dating back a year or more, by speciously reinterpreting its colocation tariff to require charges for redundant power.”
SBC retorted that AT&T’s petition was “a transparent attempt by AT&T to raise the costs of its rivals by shackling them with burdensome, unnecessary regulations to which AT&T itself is not subject.” The FCC already has let the Sec. 272 requirements expire in N.Y., SBC said, and “AT&T’s weak attempt to distinguish New York from Texas and its disingenuous claims of discrimination and cross-subsidization provide no basis for a change of course.” Verizon supported SBC’s position, saying AT&T’s proposal was “merely an attempt to handicap its [Bell] competitors by burdening them indefinitely with the costs and operational inefficiencies of operating through separate affiliates, to the detriment of competition in the long distance market.”
The FCC acted on a rulemaking in Dec. that determined, among other things, that decisions on extending the Sec. 272 restrictions would be made on a state-by-state basis, rather than for a Bell’s entire region. A notice of proposed rulemaking that’s on the agenda for the open meeting today (Thurs.) looks at related questions, such as what regulatory classification should be placed on the Bell companies’ provision of long distance service. However, it’s not aimed at answering the questions raised by AT&T’s petition, a spokesman said.