Competitors Ask FCC to Revise Forbearance Process

Competitors complained of not being able to review all the evidence submitted in forbearance proceedings, being unable to comment on late-filed documents and waiting for weeks before the FCC issues forbearance orders that can change their wholesale arrangements with the Bells. The petition by Covad, NuVox, XO Communications, Cavalier Telephone and McLeodUSA outlined “10 Rules of Forbearance” designed to remedy their concerns.

Among the proposed rules: (1) Limits on when petitioners can file ex parte documents during the process and guarantees that competitors and others can respond. The CLECs proposed barring petitioners from filing significant ex parte documents within 30 days of the statutory deadline for FCC action, unless requested by the commission. Interested parties would be allowed to respond to those late ex parte filings within 21 days of the deadline. If, at the FCC’s request, a party filed an ex parte with less than seven days to go, interested parties would have seven days to respond. (2) A requirement that petitions are “complete as filed,” which means all evidence supporting the petition must be contained in the initial filing and petitioners can’t add things later unless requested by the FCC. This is a rule the commission used in reviewing Section 271 petitions filed by the Bells when they sought to enter the long distance market after the Telecom Act passed. (3) A requirement that the FCC issue a written order within seven days of acting on a forbearance petition. (4) Immediate dismissal of petitions asking for forbearance from providing unbundled network elements to competitors if they don’t include all relevant “evidence of competition in wire centers.”

The rules also tackle a major sticking point with competitors: The lack of a written order when a petition is “deemed granted.” Verizon’s grant of enterprise broadband forbearance last year occurred without an order because no formal vote occurred. Under the proposed rule, even if a petition were deemed granted, the FCC could keep trying to reach agreement afterward on either approval or denial. The FCC would keep the forbearance docket open and the chairman would poll members every 90 days to see if “circumstances permitted” revisiting the petition. Theoretically that means a petitioner could gain forbearance under the law’s “deemed granted” clause but lose it if the FCC later voted to deny the petition, lawyers for the competitors acknowledged, in answering a question. The Verizon case occurred when the FCC, deadlocked 2 to 2, was unable to reach a decision by the 15-month deadline set by the Telecom Act. The proceeding occurred when the FCC had only four members.

“These companies want the federal government to undo longstanding, bipartisan competition policy that has brought amazing levels of investment and consumer choice,” said a Verizon spokesman. “They want special, government- set prices, even in highly competitive markets.” An industry source said competitors have “stymied” the process by refusing to provide “information on their own networks and customers” that would help the commission determine the extent of competition in markets targeted by forbearance petitions. “The modern world of communications is highly competitive and focused squarely on the future,” said a US Telecom Association spokesman. “It’s time for everyone to acknowledge the competitive changes and [adapt] to the new world.”

CLECs sometimes are unable to review or comment on data submitted at the 11th hour in a forbearance proceeding. A last-minute letter from Cox Communications, requested by the FCC, was pivotal in the agency’s decision to approve a Qwest forbearance petition in 2005, but McLeodUSA, which now questions how the FCC interpreted the letter, was unable to see it before the petition was approved, said McLeodUSA Vice President William Haas. “Decisions should not be made in the middle of the night with a shot clock to our head,” said Francie McComb, Cavalier Telephone vice president, referring to the 15- month deadlines set by Congress.

Competitors also complained that orders outlining the FCC’s forbearance decisions sometimes are issued long after the vote. In the Omaha case, the FCC gave competitors a 5-month transition to negotiate new contracts after Qwest gained forbearance but the order wasn’t released until 2 months later, essentially cutting the transition to three months, said Haas.

The forbearance process is unusual because it doesn’t conform to the Administrative Procedure Act and gives the FCC discretion to waive statutory provisions without Congressional involvement, the competitors’ petition said. What’s needed is for the commission “to bring some order” to the process, the petition said. Forbearance petitions have become an important tool in the Bells’ efforts to gain deregulation and yet “the commission has never adopted rules to handle these critical petitions,” the competitors said in a news release. The ideal solution would be if Congress revised Section 10 of the Telecom Act, but such revisions don’t come easily, said Heather Gold, XO Communications senior vice president.