Verizon Fights Assault on 2006 Broadband Deregulation
The FCC has no legal authority to review the automatic grant of a Verizon forbearance petition that took effect more than a year ago, that company told the agency in comments filed earlier this week. The proceeding is over and “the Commission lacks authority to issue a belated order,” Verizon said. In July three rival phone companies asked the agency to take a new vote and end broadband deregulation that Verizon won in March 2006 when the FCC couldn’t reach agreement by a statutory deadline (CD July 26 p10).
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Covad, NuVox and XO Communications want quick FCC action because Qwest, AT&T, Embarq, Frontier and Citizens all have filed “me-too” petitions seeking the same forbearance from regulation of broadband transmission services. The Verizon forbearance took effect because at the time there were only four commissioners, who were deadlocked, the group said in its July petition. Now that the FCC has a full complement, it should take another look, the competitors urged.
The only way the FCC can review that “deemed granted” petition is to open a new rulemaking; it can impose the rules the competitors seek only by developing a record documenting the type of market failure that justifies regulation, Verizon said. “Because the Commission has not initiated such a proceeding -- and because, in any event, the facts would not show a need for such regulation given that the market for these services is competitive,” the FCC should deny its rivals’ motion, Verizon said. The company told the FCC it has negotiated “private carriage agreements,” replacing tariffed service, with more than 100 customers. The contracts are valued at more than $1.5 billion, Verizon said.
Qwest said the competitors’ petition offers an alternative to denying Verizon’s petition, but that alternative doesn’t work either. It proposes that the FCC issue an order explaining the limits of the “deemed grant.” But legally there can be no order because there was “no agency action,” Qwest said. The commission cannot “turn the deemed grant into a grant by Commission action and explain the grant with an order,” Qwest said.
The petitioners’ quarrel may be with Congress for setting up the process by which a forbearance petition is granted automatically unless the FCC acts by a certain deadline, said AT&T. The “deemed grant” mechanism is a federal mandate, not “any discretionary Commission decisionmaking,” said AT&T. “This Commission is simply not empowered” to rewrite Section 10 of the Telecom Act “to suit the petitioners’ desire for further review, and ultimately reversal, of the relief awarded to Verizon,” the company said. The competitors’ petition demands “a waste of scarce Commission resources,” said AT&T. The Commission instead should be devoting “its full attention” to granting the me- too petitions so other phone companies “can compete on equal footing with Verizon in a private carriage environment to offer custom-tailored solutions.”
Investment firms Columbia Capital and M/C Venture Partners urged the FCC not to “compound” the problem by approving the me-too petitions. Because a “deemed” grant sets no precedent, the FCC cannot approve me-too petitions based on it, said the firms, which invest in competitors to incumbent telecommunications and cable companies. Section 10 of the Telecom Act requires that forbearance decisions promote competition but “just the opposite will happen” if the FCC extends forbearance to the other Bells, said Columbia Capital and M/C Venture Partners. Doing so would mean that the FCC would “solidify” the big companies’ ability to “resist competition and repel further investment in competitive alternatives,” they said.
The FCC had no opportunity to consider the impact of the Verizon petition on small businesses because the petition was approved “by operation of law,” not by a vote, said the Small Business Administration’s Office of Advocacy. As a result, the FCC “breached its requirements” under the Regulatory Flexibility Act, said the advocacy office. “The record failed to contain consideration of how granting this petition may or may not impact small businesses,” it said.