Qwest Poised to File New Forbearance Petition

The new petition will be nearly identical to the first, perhaps with some new data, said Shirley Bloomfield, Qwest senior vice president for federal relations. Qwest officials realized “while working with the FCC throughout the day” on Tuesday that the agency “needed more time to carefully examine this important policy issue,” she said. Qwest was ready to refile Wednesday but had to wait for the FCC to close down the old docket, a company official said. Qwest seeks forbearance from regulation of enterprise-level broadband services used by competitors and big businesses.

The FCC considered including the Qwest petition in an omnibus forbearance order, proposed by FCC Chairman Kevin Martin, that also dealt with petitions by AT&T, Embarq and Citizens Communications’ Frontier subsidiary. All are so- called “me-too” petitions seeking the forbearance Verizon got last year. But Martin is said to have lacked the needed three votes for that plan. Carriers opposed a compromise proposed by dissenting commissioners that would have limited forbearance to interexchange services. “At the 12th hour, from all indications, it didn’t look like we would get any relief” not gained in an FCC order earlier this year freeing Qwest to combine local and long distance operations without added regulation, Bloomfield said.

By refiling, Qwest can continue to be included in the omnibus order, which remains in play. Since the FCC wasn’t able to act on it by the Qwest petition’s Tuesday deadline, the next target date is Oct. 11, the deadline for action on the AT&T petition, sources said. Under the Telecom Act, if the FCC doesn’t act on forbearance petitions in a year they automatically are approved.

There should be “parity among all of the carriers seeking similar forbearance,” Bloomfield said. Equal treatment, perhaps through the omnibus order, matters, given telecom industry competitiveness and Qwest’s status as the smallest Bell, she said. Timing matters, too, she said. Forbearance should begin at the same time for all carriers, she said.

Analysts at Stifel Nicolaus said some FCC commissioners seemed worried about the impact of broadband forbearance on a pending review of special access services. “If the agency concludes that proceeding in coming days or the next few weeks, it’s possible the FCC will be in a better position to consider the telco forbearance petitions,” Stifel Nicolaus said in a report. However, Medley Global Advisors said the modest deregulation offered to Qwest leaves the outcome of other companies’ forbearance petitions “in grave doubt with a small window of opportunity left for a compromise to emerge.”

FCC Commissioner Robert McDowell said it was a shame the agency couldn’t have acted “to deregulate segments of the telecommunications industry where sufficient competition has grown to obviate the need for further government involvement.” McDowell said the commission considered lessening regulation by “applying a national market analysis to certain packet-based business broadband services as laid out in Qwest’s pleadings.”

FCC inaction on the forbearance requests was a good thing, Sprint Nextel said. “From the beginning, it has been clear that these forbearance petitions were back door attempts to escape statutory obligations and regulations that correctly protect competition and that discipline prices in the special access market,” the company said.

A key stumbling block seemed to be “the idea that the competitive status of broadband services should be examined on a local market-by-market basis,” said Randolph May, president of the Free State Foundation, a think tank. It’s no wonder that presented a problem, the former FCC official said. “This notion runs counter to the Commission’s longstanding position that, for all practical purposes, broadband services operate on an interstate basis in a national market.”