VERIZON MAKES $5.7 MILLION PAYMENT FOR SEC. 271 VIOLATION

Five incidents cited by FCC were: (1) Cable TV ad campaign targeted to business customers on several Washington, D.C., cable channels in Feb. and March 2002. (2) June 2002 bill inserts in N.J. before Verizon was given permission to offer long distance service there. (3) “Win- back” letters sent in March and June 2002 to 20,000 former business customers in 9 states offering long distance service, among other things, before company was permitted to offer it. Areas were N.J., Va., D.C., Md., W.Va., Del., Me., N.H., Vt. (4) Direct mail solicitations to businesses in Va. in May 2002 offering long distance before permissible in that state. (5) Letters to 400 N.J. business customers in Jan- July 2002 period saying long distance authorization was coming soon.

Verizon said “no customers received or paid for long distance service as a result of these incidents” and once carrier identified those mistakes, it “took immediate steps to correct them and initiated a comprehensive internal review to identify the cause of the errors.” Thus, Verizon gained no benefit from incidents, “which only confused our customers,” Verizon Chief Mktg. Officer Maura Breen said. She said as part of internal investigation, company implemented new practices such as creation of compliance team that reviews long distance marketing, additional training for service representatives, more controls on direct mail to customers. Breen said those procedures would be used until Verizon received permission to provide long distance in 3 remaining jurisdictions. -- Edie Herman .HEADLINE OPASTCO CALLS STATES TOO QUICK TO GIVE AWAY UNIVERSAL SERVICE FUNDS

OPASTCO said Tues. it was upset with way many state PUCs were allowing competitive carriers to receive Universal Service Fund (USF). Group said it would start pushing message to Congress that states were straying from congressional intent of Telecom Act of 1996 and that FCC needed more oversight of PUCs. With OPASTCO members in Washington for annual legislative and regulatory conference, many were planning to meet with members of Congress this week in attempt to put more focus on USF issues, particularly designations of eligible telecom carrier (ETC) by state PUCs.

Many states are granting carriers ETC designation in effort to bring federal funds into states, OPASTCO members said. In doing so, those states aren’t applying analytical review to carriers, they said. “They're reviewing carriers in a casual, perfunctory way,” Robert Orent, Hiawatha (Mich.) Communications gen. mgr. said of Mich. PUC. “There’s not been one iota of effort to determine if ETC status is needed.” He said Congress never intended ETC designation to be “casual decision” and said while Telecom Act did allow for multiple rural ETCs, it didn’t require PUCs to approve that many.

Robert Williams, of Oregon Farmers Mutual Telephone Co. in Mo., said ETCs were being passed out “willy nilly.” ILEC that Williams operates also has wireless carrier and he said he probably would have to file for ETC for his wireless division since competitors also were doing so. OPASTCO members said ETCs shouldn’t be approved in areas that were too small to sustain competition. But rural wireless carriers countered by saying they worried ETC could be used to protect incumbents. “We look forward to working with the FCC and the states on addressing the Eligible Telecommunications Carrier designation process to make sure that all applicants are treated fairly and to prevent the designation process from being turned into an incumbent protection program,” said Mark Rubin, Western Wireless dir.- federal govt. affairs.

Nanette Thompson, chmn., Alaska Regulatory Commission and member of Federal-State Joint Board on USF, said panel had asked for comments on issues involving state approvals of ETC status. She said it was issue Joint Board would be evaluating. She also said courts had upheld all challenges to ETC designations granted by states.

Senate Commerce Technology Subcommittee Chmn. Brownback (R-Kan.) spent nearly 45 min. Mon. with OPASTCO members, who said USF dominated conversation. House Commerce Committee staffer also spoke with OPASTCO members Mon. in session that included discussion of USF. Members met with Congress members Tues., most of them with those from states they served. OPASTCO members were pushing ideas presented in White Paper issued in Jan. Saying FCC had poorly implemented USF provisions of Telecom Act of 1996, they said Commission should have more oversight of state PUCs and should establish guidelines and principles that competitive carriers should meet.

OPASTCO said FCC should adopt following set of standards to evaluate ETC status: (1) Carrier must demonstrate its ability and willingness to provide all of services supported by federal high-cost program throughout service area. (2) ETC must emphasize its universal service obligation to offer service to all consumers in service area. (3) Carrier must have formal arrangements in place to serve customers where facilities had yet to be built out. (4) Carrier must have plan for building out its network once it received ETC designation and must make demonstrable progress toward achieving its build-out plan in order to retain ETC designation. (5) Carrier must demonstrate that it was financially stable.

White Paper also supported following policies on ETC designations in rural service areas: (1) ETC designations in rural telephone company service areas should be made at study area level. (2) State PUCs and FCC should ensure that competitive ETCs would be capable of providing high-quality service to all customers in service area, should rural ILEC find it necessary to relinquish its own ETC designation. (3) Service quality standards, reporting requirements and customer billing requirements established by state commission should be applied equally to all ETCs in state. (4) State PUCs had authority to decertify any ETC that wasn’t meeting any of qualifications or requirements enumerated above.

OPASTCO members said they recognize USF wasn’t front- burner issue at FCC or among many on Hill. But it’s likely to get more attention as federal and state regulators meet as part of joint board on USF. Board hasn’t been listed in Federal Register yet and OPASTCO Pres. John Rose said it could be year before board completed work and gives recommendations to FCC.

Williams said policymakers needed to reach decision on how wireless should be treated in regard to USF and whether separate USF fund was needed to create wireless infrastructure in rural areas. “We need to ask policymakers if ubiquitous wireless service is in the public interest,” Williams said. Such proposal raises many questions, he said, including which carriers would be eligible for USF funding. OPASTCO members said wireless carriers that received USF support should also be subject to same service quality requirements.

CTIA Pres. Tom Wheeler said Telecom Act intended to provide consumers in both rural and urban markets with same telecom choices and services. “The FCC should not make 2nd- class citizens of rural Americans,” he said. “Rural customers receive Universal Service support not only for the first line to their house, but also on additional lines -- why shouldn’t wireless carriers be allowed to provide first or 2nd lines to rural customers?” Wheeler said in rural areas where both wireless and ILECs received USF funds, prices dropped and services were expanded. Western Wireless’s Rubin said ILECs still received great majority of USF and USF didn’t subsidize artificial competition, but rather removed barriers to entry into rural markets.