AT&T CALLS FOR BINDING ARBITRATION IN NEGOTIATIONS WITH BELLS

“Private one-on-one negotiations and even a mediated process have not resulted in the desired outcome,” said AT&T Chmn. David Dorman. He said he was also “frustrated” by the “absence of any positive response” from the Bells to the offer AT&T made last month. The carrier then offered to pay higher UNE-P prices in return for improved access to UNE loops, which it needed to move to its own facilities (CD April 30 p1). But SBC Assistant Gen. Counsel Paul Mancini said SBC was “baffled” by AT&T’s comment about moving to its own facilities. He stressed AT&T had “always had the opportunity to move to its own facilities… They don’t need our permission or participation to do that.”

AT&T also expressed concern that if the court decision takes effect, “the Bells have made it clear their intent to raise wholesale rates. This will inevitably impact what consumers and small businesses,” which currently save $15 billion per year from lower prices in a competitive local marketplace, pay for telephone services. Dorman said while some Bells had indicated they would delay wholesale rate increases until later this year, competitive carriers “must act quickly and with a commitment to advance competition in this industry.”

NARUC officials said they agreed that binding arbitration should be pursued because time is getting short before the stay of the court’s order expires. Binding arbitration “could get us from posturing to brass tacks,” said NARUC Pres. Stan Wise, a Ga. PSC comr.

CompTel/Ascent CEO Russell Frisby applauded the AT&T proposal to “break the stalemate,” but questioned “whether success will be achieved in the long run, even through an arbitration process. Many of the existing interconnection agreements, which are in question, are a result of binding arbitration decisions that the Bells have chosen to either ignore or challenge in court.” He said there would need to be “some assurance that the Bells would, for once and all, live up to any arbitrated decisions.” He also stressed it was “vital” that small carriers be invited to participate “if any transparent, mediated process is to go forward.” Moreover, he said it was “critical” that the arbitrations “result in answers to the loops and transport questions that have been plaguing our members.”

Sprint said it “shares the frustration of AT&T” on the progress of negotiations. It said the Bells’ market power had “rendered the negotiation process very difficult.” Sprint said it was “very concerned” about the intention of some Bells to stop providing high capacity loops, which it said weren’t addressed in the court decision: “These loops must continue to be available as UNEs.” Sprint also said it believed “the first step in resolving [an] uncertainty” created by “conflicting views coming from the D.C. Circuit and the Supreme Court on the role of unbundling in the 1996 Telecom Act” should be for “the Supreme Court to review the decision and establish a definitive interpretation.”

The Bell shot back, saying AT&T was the one that had refused to come to the negotiation table. “They haven’t showed a strong interest in negotiating,” a Verizon spokesman said. He said there had been “no negotiations with AT&T” since his company “put out a very fair proposal on the table.” Verizon last month announced a framework for reaching commercial agreements with its wholesale customers that would replace UNE regime (CD April 22 p2). The framework, called Wholesale Advantage, would offer a transition to new prices by phasing in increases over 3 years, and it would offer services such as voicemail, inside wire maintenance and DSL.

The arbitration is “even not appropriate” in this case, the Verizon spokesman said. He said arbitration occurs when 2 parties reach a contract that has some disputable points, but “we don’t have an agreement” with AT&T. He urged AT&T to “sit down and negotiate. We negotiate with thousands of other CLECs,” but not with AT&T.

Echoing Verizon’s complaints, Qwest Senior Vp-Public Policy Steve Davis said: “Unfortunately, AT&T is unwilling to sit at the table and negotiate. AT&T’s tactics to date and strong interest in debating this issue through press releases and other public forums -- rather than at the negotiating table -- make us wonder how serious they are about finalizing a commercial agreement.” Davis said the approach that Qwest had taken to use a mutually agreed upon mediator in its talks with CLECs led to “very positive one- on-one negotiations with various CLECs and 2 productive mediated group forums… We will continue to meet with any and all CLECs that are truly interested in working toward an agreement.”

But an AT&T spokeswoman strongly disputed Qwest and Verizon’s statements about her company’s unwillingness to negotiate. “This is an outrageous misrepresentation,” she said: “I recommend that Verizon quit hiding behind the nondisclosure agreements and reveal to the world every proposal and communication between AT&T and Verizon so people can decide for themselves who has been acting in good faith.” She also said AT&T had two 8-hour mediated sessions with Qwest and additional private discussions, with the last session last Thurs.

Meanwhile, SBC’s Mancini said his company was “willing to use a mediator in the AT&T negotiations if they want.” But he said “before we move to the drastic step of binding arbitration, let’s see if a mediator can help us bridge our differences.”

Consumer Federation of America Research Dir. Mark Cooper said the AT&T proposal would benefit consumers, because it could provide “the needed break-through that levels the playing field among competitors and ensures long-term competition.” He said it was “obvious that the current negotiations between the Bells and their competitors aren’t working, and why should they when the Bells hold all of the cards.” He said binding arbitration that was “subject to public scrutiny is an indispensable, logical step to restoring some integrity to the process of bargaining.”

There’s a “deep divide” between the Bells and competitors over wholesale arrangements, said Legg Mason in a report issued Fri.: “The Bells want to keep competitors on their wholesale platform but at substantially higher rates… while a number of IXCs [interexchange carriers] and CLECs want more Bell help in shifting their business to a facilities-based UNE-L approach.” Legg Mason analysts said “both sides have been openly dismissive of each other’s positions.” Though AT&T has proposed binding arbitration and the FCC has urged agreements, “we believe the substantive gulf and continuing procedural disputes do not bode well for the prospects of a broad industry breakthrough,” the report said.

Absent an “industry breakthrough,” court action will be the next key step, the report said. There are several legal scenarios, Legg Mason said: (1) The D.C. Circuit could grant another extension of the stay it imposed on its Triennial Review Order decision. It’s possible the CLECs will file for such an extension as soon as this week, to get the process going before the current stay runs out June 15. Solicitor Gen. Theodore Olsen could seek such a stay to gain more time to consider whether to appeal to the U.S. Supreme Court. (2) The CLECs and possibly the govt. could ask the U.S. Supreme Court to impose its own stay pending review on the merits of an appeal. (3) Olsen could decide not to endorse a stay but still appeal to the high court, which the report said would be unusual. (4) He could oppose both a stay and an appeal. (5) He could endorse both, which if granted would preserve the status quo until the high court acted.