CLECs Question Forbearance Process

It’s doubtful the FCC’s decision on the AT&T broadband petition will be known until late at night Thursday, and that’s indicative of the problem, said Cavalier Vice President Francie McComb. Key evidence sometimes isn’t entered into the record until the last minute during forbearance proceedings, and opponents have little time to respond, she said. Cavalier was one of several CLECs that recently petitioned the FCC to devise a formal, more open procedure for handling forbearance petitions.

“I don’t think these kind of big ticket policy decisions were ever intended to be decided by forbearance petitions,” said Gregory Kennan, federal counsel for One Communications. “That can’t be what Congress intended” in devising the forbearance procedure, he said. “The FCC is very political, subject to influence” from a variety of sources, Kennan said. Some forbearance petitions seek “exemption from dozens of statutory provisions,” said Sprint Nextel Vice President Anna Gomez. It would be good if the FCC focused on the merits of these deregulation requests, rather than getting caught up in politics, she said. Section 10 “has created a mess,” said Kennan.

The AT&T petition is one of several patterned after enterprise broadband relief Verizon won last year. The FCC reportedly may try to combine the AT&T request with the other pending petitions in a single order, an effort that failed last month when the FCC tried to do that in time for the deadline for Qwest’s broadband forbearance petition. Forbearance petitions have specific deadlines for FCC action, and agency failure to act in time deems a petition automatically granted. Verizon’s broadband petition was “deemed granted” last year. Qwest agreed last month to withdraw its “me-too” petition after the FCC got deadlocked on the contents of the bigger order and was faced with either denying the Qwest request or letting it automatically go into effect.

Waiting in the wings are two requests by Verizon and Qwest for forbearance from a different type of regulation -- unbundling -- both with Dec. 5 deadlines, speakers said. These petitions, in which the two incumbent LECs seek UNE forbearance in a total of ten MSAs, are similar to one that eliminated Qwest’s unbundling requirements in Omaha two years ago. The pending petitions would eliminate the need for incumbents to sell loop and transport elements to competitors at regulated rates. They're particularly threatening to those competitive local exchange companies dependent on unbundled network elements to reach customers, speakers said.

Incumbents often cite cable competition as a justification for UNE forbearance, but many cable companies don’t provide loop and transport UNEs to CLECs, Gomez said. “That is not in their business plan,” said McComb. Special access is mentioned as an alternative to UNEs, but then the incumbents make moves to forbear from special access pricing as well, said Gomez. Another alternative is to get UNEs through commercial agreements with incumbents but CLECs don’t always get reasonable deals, said McComb.

Vendors and customers should join CLECs in speaking out against those upcoming UNE forbearance petitions because fewer CLECs mean less choice for customers and less equipment that vendors can sell, they said. “If a CLEC has to exit the market, there is less to buy” from vendors, Kennan said. “Make your voices heard.”

Qwest Official Defends Forbearance Bids

Incumbent carriers file as much information as they can when petitioning the FCC for forbearance, Qwest Staff Director Dave Teitzel said during a Wednesday panel. Competitors frequently say information is lacking, but the only data not available is what Qwest doesn’t have -- competitive information held by the CLECs themselves, Teitzel said. “I don’t know how companies like Qwest could come up with information it doesn’t have,” he said. Qwest can determine competition from factors such as the amount of customers it has lost or how many access lines are purchased from Qwest, but it can’t know exactly how many customers the competitors have, Teitzel said. “What we don’t have is known only to competitors.”

Christopher McKee, Starvox general counsel, said he agreed with that in one sense: CLECs must share concerns with the FCC about lost business as the result of forbearance decisions. “If you think your business will be devastated, it’s up to you to tell the FCC,” he told the audience.

When moderator Genny Morelli, a Washington attorney, asked panelists whether they think the forbearance statute works, there was some sentiment that tweaks at least might be useful. Teitzel said “the law is the law” and “given adequate evidence,” the FCC acts the way that section 10 requires. But if another Telecom Act surfaced it wouldn’t be surprising if the forbearance section were rewritten because of the debate surrounding it, Teitzel said: “Until then, it is what it is.”

“The problem is, section 10 requires the FCC to do reverse rulemaking,” said NCTA Associate General Counsel Steve Morris. “When you have a provision as broad as section 10 and standards are so vague, it makes it difficult for all.” The 15 months given the FCC to decide on forbearance requests isn’t long enough to make decisions, he said. Not only does the commission have to gather data and “crunch numbers,” it also has to make a major policy decision, Morris said.

The FCC could make a “partial fix” without legislation “by making sure petitions are complete as filed” rather than letting the incumbent make changes during the review process, said Angela Simpson, Covad government affairs director. “It’s virtually impossible to do that,” Teitzel replied.

Asked whether one competitor, usually cable, is enough to justify easing an incumbent’s regulation, Teitzel said that in the four MSAs where Qwest is seeking unbundling forbearance “we would argue there is more than one competitor; it’s a very chaotic market, subject to change.” Asked about whether cable even offers services to businesses, Teitzel said Cox in Omaha, where Qwest got forbearance two years ago, mainly serves business.

Nonetheless, McKee said, “I think the FCC will do the right thing and reject the UNE forbearance petitions filed by Qwest and Verizon.”