Qwest Seeks Unbundling Forbearance in Phoenix
Qwest refiled for forbearance in the Phoenix metropolitan statistical area, again seeking relief from dominant carrier and loop and transport unbundling rules. The company said competition has intensified since last year, when the FCC rejected a Qwest petition seeking the same relief in Phoenix, Denver, Seattle and Minneapolis (CD Aug 19 p3). The petition’s success may depend on a decision by the U.S. Court of Appeals for the District of Columbia Circuit, said Stifel Nicolaus analyst David Kaut.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Last year, the FCC rejected Qwest’s four-market petition by 5-0 vote. A new commission controlled by Democrats will make it even tougher for Qwest to get relief, Kaut said. However, a “looming” D.C. circuit decision on the FCC’s 2007 denial of Verizon’s six-market forbearance petition could work in Qwest’s favor, he said. It “seems likely” that the appeals court will send the Verizon request back to the FCC, forcing the commission to revisit its standards for unbundling forbearance, he said. “If the court includes strong deregulatory guidance in its opinion and a deadline for FCC action, that could actually improve Qwest’s UNE/wholesale forbearance prospects, and not just for Phoenix, but also Seattle, Denver, and Minneapolis-St. Paul.”
The expected court remand could also work against Qwest if the court gives the FCC leeway to formulate new standards, Kaut said. “The FCC’s Democratic leadership could try to make things tough for Qwest and the other Bells,” the analyst said.
An appeal by Qwest of the FCC’s four-market forbearance decision is also pending in the D.C. Circuit, but the court has held the challenge in abeyance while it completes the Verizon case. Qwest is “waiting for the court’s ruling to determine any affect it may have on our petitions,” a company spokesman said. “However, due to the ongoing competitive pressures in Phoenix, we chose not to wait for the conclusion of the Verizon 6 MSA case to file the request for relief.”
Qwest said its new petition addresses FCC concerns about the company’s last forbearance request for Phoenix, including the lack of reliable Phoenix-specific wireless substitution data, and “sufficient evidence” estimating the total number of enterprise switched access lines in service. The petition includes competition analysis “designed to be consistent” with FCC analysis in recent forbearance decisions, including Qwest’s Omaha and four-MSA petitions, and Verizon’s six MSA petition, Qwest said.
The telco’s market share in Phoenix is “substantially less” than the 50 percent standard the FCC has relied on before, the company said. In calculating its share, Qwest accounted for wireless substitution, it said, citing a fall 2008 survey finding that 25 percent of Phoenix households have cut the cord. “Intermodal competition, particularly from wireless and VoIP providers, is more advanced than it was in Omaha, Nebraska, in mid-2005,” it said. Qwest’s access line count has “fallen sharply,” despite growing population and increased average annual telecom spending by households, it said. Competition from Cox Communications has intensified, Qwest added. “Cox currently appears to offer voice services even more widely in Phoenix than the data demonstrated in regard to Qwest’s last Petition, and it does so over its own network.”
Competitive local exchange carriers are expected to oppose the new Qwest petition, as they did the four-market request. CompTel is reviewing the petition, a spokeswoman for the CLEC association said.