Forbearance Wins Depend on CLEC Participation, Lawyers Say
NASHVILLE -- It will be “tough” for Verizon to win an appeal of last year’s FCC decision denying it forbearance in six cities but nothing is certain, speakers at a CompTel forbearance roundtable said Tuesday. Verizon will likely “go right down the middle,” arguing that the FCC had enough data on facilities-based competition to justify granting forbearance and so it was “arbitrary and capricious” to deny, said lawyer Thomas Jones. Verizon likely will also reference a previous FCC decision to grant-in-part forbearance in Omaha and Anchorage, he said.
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A Verizon win isn’t impossible, said Jones. Appealing to the FCC is “a bit like going to Vegas,” he said: Decisions can be based on FCC members’ priorities, how the document is worded, and even commissioners’ moods. But the FCC’s Verizon order was “artfully written,” he said. That the vote was 5-0 also helps CLECs who support the FCC denial, said Heather Gold, XO Communications vice president of government relations. Verizon’s original petition was one of “massive overreach,” she added. The Bell shouldn’t have sought forbearance in as large a territory as it did from the start, she said.
If the FCC had granted Verizon’s forbearance petition and killed unbundling requirements in those cities, CLECs would have faced significantly increased costs in the Verizon territory, Gold said. XO households would have had to pay $12-$14 more per month, she said: “On the loop end you are pretty much hosed if you have to give up UNEs [unbundled network elements] and that’s part of your structure.”
A “duplicate” forbearance petition by Qwest is up for FCC decision in April, but the Commission probably will delay action until the end of July, Jones said. CLECs in the Qwest region haven’t estimated how much a decision to forbear would cost, but it should be in the “ballpark” of Verizon projections, he said.
All CLECs should be active in getting the Qwest petition denied, even if they operate out of Qwest’s region, Gold said. Though a negative FCC decision might not hurt them now, it could set a framework for deciding a later forbearance order in their region, she said. Special access carriers also have incentive to take part, because UNE rates keep special access rates low, she said.
CLECs should engage the Qwest region’s four state regulators, Gold said. All are active in competitive issues and will call the FCC if they hear from CLECs, she said. CLEC lawyers are “hugely aided” when CLEC officials participate on the Hill and at the FCC, Jones added.
Congress is becoming more aware of forbearance issues, said Kim Bayliss, Dutko Worldwide managing principal. Initially, only a “handful” of congressmen were interested; recently, companies have started engaging Congress on why forbearance matters, she said. “We're still not completely where we need to be… but we're certainly better off than where we were a year ago.”
Transition to a new President could exacerbate “deemed granted” issues, Bayliss said. Forbearance petitions are considered “deemed granted” when the FCC fails to make an order within 15 months of filing. It might take the FCC and Congress until Q2 2009 to get organized, Bayliss said. “You can have a Commission without a full complement of commissioners… setting the stage if somebody wanted to engage in some shenanigans for a tied situation in a deemed granted petition,” she said. “That’s what makes me the most nervous.”
A bill introduced last fall by House Commerce Committee Chairman John Dingell, D-Mich., would amend Section 10 to take away the deemed granted position. The bill doesn’t limit telcos’ ability to file forbearance petitions, but would help “change the climate,” preventing “forced decision making” that can result in unfavorable decisions, Bayliss said. Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii, has a similar bill, she added, but it’s unclear whether Congress will make the bills a priority: “Unless Congress hears from more of you… then its going to be hard to get it to move.”
Democrats are more supportive of killing the Telecom Act’s deemed granted provision than Republicans, Bayliss said. Republicans say the provision forces the FCC to act since the Commission is known to delay other matters for years, she said.
A McLeodUSA petition to reconsider the FCC’s Omaha forbearance order is unlikely to see movement this year, panelists said. “Very little chance,” Jones said. But with Chairman Kevin Martin likely stepping down at the end of the year, it’s possible something will happen longterm, he said. Paetec, which recently acquired McLeod, will need to be active on the issue, Bayliss added.