BUSH ASKS FOR ONE-YEAR UNE-P TRANSITION, RATHER THAN TIL END OF YEAR
The Bush Administration, in a letter signed by NTIA acting Dir. Michael Gallagher, said Wed. the Bell companies should continue to offer current UNE-P wholesale prices for “a full year,” ensuring a smooth transition for consumers. That period would be longer than the transition period on the table as offered by the Bells (CD June 16 p1).
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Gallagher wrote Chmn. Powell saying he should “act promptly using all methods at your disposal to protect consumers and ensure appropriate competitive access to local networks, including the rapid adoption of interim rules that will accomplish those goals.” However, Gallagher does qualify that the transition period should apply “unless superseded by permanent rules, and include the maximum legally sustainable transition period without wholesale rate increases for those network elements subject to the vacatur of the D.C. Circuit Court.”
Gallagher said the protections were needed in light of the Solicitor Gen.’s decision not to appeal the ruling of the U.S. Appeals Court to vacate the FCC’s UNE rules. The letter appeared in part to be an attempt by the administration to assuage CLEC concerns about abrupt cut off of their access to UNEs. The letter also comes amidst criticism that the administration agreed to not appeal the case only after receiving assurances from the Bells and Powell that consumers wouldn’t be dramatically affected, especially not before the Nov. elections.
The Consumer Federation of America is looking closely at a meeting of top officials at the White House that led up to last week’s decision on an appeal. Mark Cooper, research director at CFA, told us he was concerned about “extra-legal” contacts between companies and the White House and the administration and Powell leading up to the announcement.
“The FCC is an independent agency,” Cooper said. “The executive branch isn’t supposed to influence the FCC. But there are accounts of these direct conversations between the President and the chairman of the FCC. You can’t do that with an independent agency. The whole set of commitments, the arm twisting, all of it is really unseemly.”
CLECs in general were heartened by the letter. “We are encouraged that he is asking for what appears to be a one year wholesale rate freeze,” Russell Frisby, CEO of CompTel- ASCENT, told us. “We believe that it’s appropriate. We do, however, question the Bell letters. We think it’s important that the FCC take the actions advocated by Mr. Gallagher.” Frisby said CompTel believes the Bell letters didn’t go far enough: “The Bell letters do not offer anything more than a 6 month rate freeze. It’s unclear what happens to loops and transport. It’s also unclear whether the Bells are at some point going to seek retroactive payments under the true-up provisions of the existing interconnection agreements.”
Verizon said market negotiations should dictate any agreements that are struck between CLECs and the Bells. “Most important, we agree that commercial negotiations is the best way to achieve greater market-based competition in the industry. We just announced our third agreement yesterday and continue in discussions with 50 wholesale customers.”
BellSouth Vp Herschel Abbott strongly opposed a mandatory one-year transition. “Now that the old rules have been officially vacated by the court, both sides have considerable incentive to negotiate commercial agreements,” he said: “We believe that the imposition of a full-year rate freeze, as suggested in today’s letter, would destroy much of that incentive and would be inconsistent with the Court of Appeals decision.”
A spokeswoman for AT&T said commenting on the Gallagher letter is difficult “without more details of how it affects the competitive industry.”
A group of top executives from 9 CLECs sent Powell a letter late Tues. saying they were pleased the Bells had agreed to “maintain the status quo” but disappointed the statements “fall short of committing to maintain the status quo through the end of the year.” Patrick Donovan, an attorney for the group, said Wed. the Gallagher letter “validates” the CLEC concerns.
A former top NTIA official said Wed. Gallagher’s involvement in the negotiations wasn’t unusual: “The NTIA is the administration’s voice on telecom. That is exactly what the NTIA administrator is supposed to do.” The official said the NTIA dir., and not political operatives within the White House, should maintain any contacts with the FCC on an issue like the UNE-P transition.