Me. Office of Public Advocate (OPA) asked state Supreme Court to void Verizon price cap regulation plan state PUC approved in May. OPA said plan was unlawful because PUC violated provision in alternative regulation statute that prohibited alternative regulation rates for residential and small business customers that were higher than they would have been under traditional rate-of-return regulation. OPA also alleged due-process violations. Five-year price cap plan increased monthly residential basic exchange rate $1.78 per line, raising Verizon’s annual revenue $12.5 million. OPA said PUC had “failed to hold a proper hearing to collect the evidence necessary to make a determination” whether price regulation plan would cost consumers more than traditional regulation. Proper course, it said, would have been for PUC first to design rate caps, then open 2nd docket for full traditional rate case to set starting point for cap system rather than design caps and set starting rates in single docket. OPA said it had asked PUC early in proceeding for separate hearings on Verizon’s revenue requirement but agency rejected request. Advocate also charged PUC had failed to collect sufficient cost information to justify rate increase, failed to follow due process on admission of evidence, acted contrary to law’s intent by allowing Verizon to use increased local revenues to cover costs of nonlocal services. PUC Chmn. Tom Welch said his agency had “followed the law and the proper procedures” in price cap case and said agency wasn’t legally required to have separate cap and rate proceedings. Welch said PUC’s interpretation of law was consistent with legislature’s procompetition intent. He said PUC’s decision would ensure Verizon could be competitive in local and toll markets. OPA didn’t seek injunction or expedited hearings so court probably won’t hold hearings until spring, which would mean decision in summer.

FCC has clarified that it hasn’t taken “definitive” position that Sec. 253 of Communications Act bars municipalities from charging rights-of-way (ROW) fees that exceed costs. Clarification came in response to concerns raised by municipalities that footnote in amicus brief filed by Commission with 2nd U.S. Appeals Court, N.Y., in City of White Plains v. TCG suggested that ROW fee requirements that exceeded cost recovery violated Sec. 253. In letter to Kenneth Fellman, chmn. of Commission’s State & Local Govt. Advisory Committee (LSGAC), FCC Gen. Counsel Jane Mago said agency was involved in case to express its position that “costs imposed on new entrants, but not incumbents, are not ‘competitively neutral and nondiscriminatory’ under Sec. 253(c) of the Communications Act.” Footnote in brief was not intended to “represent a definitive FCC position that Sec. 253 precludes any compensation above cost recovery,” she said. As for LSGAC’s suggestion that Commission either withdraw brief or at least “offending” footnote, Mago said while agency was concerned that “others” were misrepresenting language of brief, “we believe that the best approach to dealing with this problem is to allow the brief to remain filed with the court as written.” She said Commission had taken care to avoid taking firm position on revenue-based fees and when parties reviewed it they would see that that was case. If Commission were to withdraw brief or footnote, “we believe that action could similarly be misconstrued,” she said. Attorney Nick Miller, who represents members on LSGAC, said: “The General Counsel’s letter puts to rest the big lie many of the industry advocates have been telling legislators, regulators and courts around the country.” He said “big lie” was that FCC has taken stand on this ROW compensation issue.

FCC named former Office of Engineering & Technology Chief Dale Hatfield Tues. to head inquiry into technical and operational issues involving deployment of Enhanced 911 (E911). Inquiry was among steps that FCC said it would take to examine rollout of E911 when it granted waiver requests of 5 national wireless carriers and began enforcement investigations against Cingular Wireless and AT&T Wireless (CD Oct 9 p1). FCC said inquiry would look into information from technology vendors, network equipment and handset-makers and public safety officials. It said that while parameters of inquiry would be shaped in coming weeks with help of Hatfield, at outset it would focus on technology standards issues, hardware and software development and supply conditions. Separately, FCC opened comment period for petitions filed by Cingular, Nextel and Verizon Wireless seeking reconsideration of certain parts of orders on their E911 Phase 2 waiver requests. Petitions contend that Commission improperly adopted strict liability standard for future compliance.

FCC decision to let SBC offer long distance service in Ark. and Mo. (CD Nov 19 p1) could be affected by further action agency plans to take on carriers’ DSL resale obligations, Comr. Copps said in statement issued late Fri. Copps, who concurred in voting, said “questions raised in the closing hours of deliberation, arguably going beyond the Sec. 271 process, compel further consideration which the Commission… agrees to undertake in a new and separate proceeding to be initiated at the end of the year and completed as soon as possible next year.” He said that proceeding “could conceivably lead to changes in the implementation of the majority decision to authorize SBC to provide long distance service in [Ark. and Mo.]” Copps said majority of commissioners concluded “that our precedent is not adequately clear” on DSL resale issue.

Concerned over adverse reaction, especially in Congress, to FCC decision allowing PTV stations to solicit ads on their excess nonbroadcast digital capacity, CPB board Fri. directed management not to include revenue raised from PTV stations’ commercial ancillary and supplementary services for calculating grants based on nonfederal financial support. In special telephone meeting, board also directed management to exclude ad supported revenue in calculating CPB grants. Saying it needed to clear “confusion” caused by FCC decision, board said it was aware that present funding sources didn’t meet PTV stations’ needs to for transition to, and effective use of, digital broadcasting, but it would view with concern any increased commercialization of public broadcasting. While board recognized need for public broadcasters to find additional funding to support their “vital mission, the public broadcasting industry must act in ways that reaffirm its commitment to a noncommercial foundation.” Saying FCC decision to allow public broadcasters to accept ads on their excess DTV channel capacity would “accelerate trend toward creeping commercialism,” House Commerce Committee leaders urged Commission to reconsider decision (CD Nov 2 p9). House Commerce Committee Chmn. Tauzin (R-La.), Vice Chmn. Burr (R- N.C.) and Telecom Subcommittee ranking Democrat Markey (Mass.) told FCC Chmn. Powell in recent letter that funding goals for public broadcasting shouldn’t guide Commission action. “Federal decisions regarding the level of funding for the public broadcasting system reside with Congress,” they said.

Incumbent telcos’ hold on “411” directory assistance (DA) access code must be broken to facilitate new competitive entry, competitive DA providers said at NARUC panel on DA issues. Klaus Harisch, CEO of Germany-based competitive DA provider Telegate, said incumbent telcos didn’t own 411 but their hold on code was major obstacle for new entrants in DA marketplace. He said his company’s expansion plans in U.S. market were being hampered because there was no way it could use familiar 411 code for customer access to its services. He said his company had asked FCC to investigate competitive impact of incumbents’ 411 monopoly. But not all DA competitors agreed that 411 opening was key to competition. Dean Polnerow, pres. of Internet-based DA provider Switchboard Inc., said his company and others like it were doing well without 411 by offering value-added services. He said competitive DA market offered large choice of prices and services to customers willing “to change their minds and dialing habits.” Melissa Newman, Qwest regulatory affairs vp, said opening 411 to presubscription or other provider selection method would be costly and disruptive for incumbents while providing doubtful public benefit. She said only 20% of residential customer base used 411 regularly. She said lack of 411 hadn’t been barrier to competition since Qwest overall had lost about 50% share to DA market despite having 411 code. Jeff Carlyle of FCC Common Carrier Bureau said Telegate petition raised interesting issues: “We believe DA competition is a vital component of local exchange competition. The question Telegate raises is whether DA dialing parity is needed for DA competition. Do we need to act in this area and, if so, what do we do and who will pay for it?”

PHILADELPHIA -- FCC’s 3 newest commissioners told state regulators meeting here this week that they valued their experience and expertise and were willing to listen and collaborate with them in addressing problems that affect both interstate and intrastate telecom service.

PHILADELPHIA -- State regulators meeting here Mon. advanced policy resolutions addressing future of unbundled network element platforms (UNE-P), national wholesale performance standards, accounting, subscriber line charges and several other issues at NARUC annual convention.

AT&T Chmn. Michael Armstrong said Tues. that while expected Sec. 271 entry of Bell companies into long distance in virtually every state next year would have state-by-state impact on AT&T’s long distance revenue, he saw signs of hope that states were beginning to pay attention to economically viable resale rates for local exchange service. “If PUCs and the FCC begin to pay attention to the economic viability of the local exchange, this pattern [of no competition] is going to change,” Armstrong told UBS Warburg Global Telecom Conference in N.Y. While executives of Verizon, SBC and AT&T all reiterated their stances on what they said needed to change in regulation of local loop access and state price caps on LECs, questions on regulatory impact on company revenue took on immediacy as IXCs and Bell companies prepared for more widespread RBOC long distance entry next year. Verizon Co-CEO Ivan Seidenberg spoke out against govt. competitive access policies that he said created “irrational” competition by flooding market with competitors who weren’t facilities-based. “The government would be smart to get out of the way, to stop controlling our prices,” Seidenberg said. “Having 2 or 3 rational competitors in a market is good. I like that,” he said. “Now we have 2 or 3 rational players and 7 or 8 irrational players.”

In attempt to correct what FCC Chmn. Powell said had been “a quagmire for years,” Commission Thurs. began rulemaking to “provide clarity and certainty” in its radio multiple ownership rules as well as what defined local market. Agency said it would conduct “comprehensive examination” of its rules and polices on multiple ownership in individual markets. Action is designed to make those rules “more responsive to current marketplace realities” while maintaining its “core public interest concerns” of promoting diversity and competition, Commission said. Noting “substantial changes” had resulted in ownership consolidation as result of 1996 Telecom Act, agency “expressed concern that FCC policies on local ownership do not adequately reflect current industry conditions.” Commission requested comments on: (1) “Specific empirical data” on effect of consolidation on public interest. (2) How sale of existing group should be handled. (3) How to treat claims that station was failing, dark or unbuilt. (4) Whether FCC should rely on numerical limits or other rules in acting on public interest determinations. (5) Whether public interest should be handled in “case-by-case analysis.” (6) How to treat local marketing, time brokerage and joint sales agreements under rules. While rulemaking is under way, Commission said staff will continue to “flag applications that raise competitive concerns” in given market. FCC also set timetable for Mass Media Bureau to resolve pending applications -- giving bureau 90 days to come forward with recommendations on those pending for more than year. Endorsing proceeding, Comr. Copps said “the criteria used to evaluate proposed transfers and mergers cry out for sunshine and clarity… The public interest is served when the private sector has clear and transparent rules of the road… “ Comr. Martin said it was “imperative that we get moving” to clarify the rules,” but said he would have favored “more direct action” immediately to regulate mergers and acquisitions. NAB Exec. Vp Henry Baumann said Commission had “done the right thing” in moving to correct FCC’s “confusing and uncertain standards” on mergers. But, he said, it’s “disappointing” that “flagging” practice will remain. Baumann said it had “resulted in long delays for hundreds of transfer applications that meet all applicable standards.” At news briefing, Mass Media Deputy Bureau Chief Robert Ratcliffe said transfer and merger applications were flagged if approval would result in single owner’s having 50% of radio advertising in given market or 2 group owners combined with 70%.