FCC Inaction on Forbearance Petition Hands Verizon Regulatory Win
The FCC lifted through inaction regulatory controls on broadband data services Verizon sells business customers. Chmn. Martin chose not to release a notice of proposed rulemaking or seek any votes on a Dec. 2004 Verizon forbearance petition. The FCC was split 2-2 on whether to grant Verizon the relief it sought, with the Democrats prepared to dissent, source said. Because the FCC didn’t act, Verizon effectively gets the regulatory relief it sought. The FCC had until midnight Sun. to block or modify Verizon’s request.
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Comrs. Copps and Adelstein warned that the effect of granting the petition could be sweeping -- exempting Verizon from Title II regulations on business services, such as Ethernet and virtual private networks, including everything from CALEA and disability access mandates to the obligation to provide interconnections without discrimination.
“Here we permit a forbearance petition go into effect that erases decades of communications policy in a single stroke,” Copps said in a statement released late Mon. “In effect, we provide industry the pen and give it the go-ahead to rewrite the law. Congress instructed this agency to implement the law; it did not tell us to delegate far- reaching policy changes to the companies that fall under our jurisdiction. It is end users, particularly small business consumers, who will suffer the consequences.”
Copps said the way the FCC handled the petition is legally “suspect.” “There is no appealable order,” he said. “There is no document, no stitch of analysis, no trace of discussion, nothing that a court can use to gauge where the Commission is coming from.” Copps said the action could lead to higher prices for special access. “Services like special access are the backbone of business communications in this country,” he said. “But customers could see special access rates skyrocket and competitors who rely on this input squeezed out of the enterprise market. This will raise the cost of doing business in this country for businesses both large and small.”
Comr. Adelstein said the FCC’s forbearance authority is a powerful tool that it should wield with great care. “By allowing this petition to grant by operation of law, and without a shred of analysis, the Commission prejudges important open proceedings and ignores precedent,” he said. “It helps one telecommunications giant at the expense of virtually everyone else, including small and rural telephone companies, and business users of all sizes.”
Adelstein also warned of higher prices. “This course raises the specter of price hikes and fewer choices for businesses, banks, universities, government agencies and other high volume users of communications services, in addition to consumers in rural America,” he said.
Martin indicated during a meeting with reporters Fri. that providing a “level playing field” for all broadband providers and regulatory relief where possible is one of his top priorities. “I think the Commission should act on that,” he said of the Verizon petition. “I'm hopeful that we will be able to provide some regulatory relief for the incumbents’ deployment of fiber to not just consumers but to commercial entities as well.”
An AT&T spokesman said the his company will likely seek similar relief. “We will evaluate the decision once it’s released, but we believe the decision should apply to all market players,” the spokesman said.
CompTel Pres. Earl Comstock blasted the decision. “The chairman’s action yesterday represents the height of irresponsibility by a federal official,” Comstock said: “With this action the Chairman has unilaterally abdicated the Commission’s responsibilities with respect to oversight of Verizon’s common carrier service offerings. As a result, competition and consumers are now at the mercy of Verizon’s financial self-interest. If history is any guide, there will be predictable adverse results.”
Comstock added: “What makes this action particularly egregious is that Verizon has already been granted significant regulatory relief through previous actions championed by the chairman, and two similar petitions by AT&T and BellSouth were withdrawn after those actions.”
Medley Global Advisors said in a research note Mon. the significance of granting the Verizon petition remains unclear. “Verizon has stated that its petition does not apply to TDM/Circuit Switched DS1 and DS3 special access circuits which indicates that CLECs… who purchase TDM/circuit-switched DS1 and DS3 loop/transport facilities from the Bells to serve the small business market would not be effected by this petition,” MGA said.
MGA said that while the FCC handed Verizon an apparent win, a court fight is likely. “There is a high probability of legal risk associated with the FCC’s decision to let the petition go into effect by operation of law,” the firm said. “CLECs are expected to challenge the FCC’s action because there remains significant disagreement among the parties over precisely what services fall within the scope of Verizon’s request,” the firm said: “The FCC’s decision not to opine on the specifics of the petition increases the inevitability of legal action, which could delay the deregulatory benefits Verizon is seeking.” - Howard Buskirk