Verizon Reverses Course, Withdraws Petition to Raise Special Access Rates
Facing several challenges, Verizon withdrew its petition for an increase in special access rates late Friday. Verizon’s rate increases, which foes say would have increased their rates by up to 8 percent in some areas, were scheduled to take effect Tuesday at midnight unless the FCC filed a suspension order (CD May 11 p7). “Verizon decided to withdraw its tariff filing prior to the filing becoming effective in order to focus our resources and the debate on the broader issues in the special access rulemaking proceeding,” a Verizon spokesman told us. “Those issues include continuing to demonstrate that the high-capacity marketplace is highly competitive and no additional regulations are necessary.”
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!
"Verizon is proposing to withdraw in its entirety the revisions it filed under Transmittal No. 1187, before they would have become effective on May 15, 2012, and is proposing to reinstate the material that is currently in effect,” Frederick Moacdieh, executive director-federal regulatory affairs, said in a letter to the Wireline Bureau (http://xrl.us/bm7ti3). “Verizon filed Transmittal No. 1187 on April 30, 2012, to eliminate the requirement that customers provide three months’ notice when they discontinue certain DS3 Switched and Special Access services and to increase certain Special Access Pricing Flexibility rates.” Bureau staff met with Verizon on Thursday to discuss the tariff, an FCC spokesman said. The commission granted Verizon’s permission to withdraw its tariff Monday morning.
The Verizon spokesman said the FCC did not indicate it would reject the tariff. Industry sources told us that when a company withdraws a petition, it often indicates a belief that the FCC would not grant approval; a company would often rather withdraw than have that precedent established. “I think they were not interested in having the FCC examine the economics of the situation, so at this point the only way they could avoid having the FCC look at the reasonableness of the rates would be to withdraw the petition,” said an attorney representing an entity opposing the increase. Verizon’s proposed rates were higher than the price cap rates, the NECA rates, and the TELRIC rates that the PUCs established reflecting costs, the attorney said. If the commission were to suspend the rate increase and investigate it, it would be statutorily required to rule within five months. “That would certainly be a straw in the wind with respect to the larger docket,” giving ILECs an indication whether it was OK to raise the rates, the attorney said. Carriers request permission to withdraw tariffs about 15-20 times a year in total, an FCC spokesman said.
The Broadband Coalition, a group of major CLECs that opposed the rate increase, is “pleased that Verizon withdrew, but it does not take away the need for the FCC to complete the docket on special access, create certainty in the marketplace for everyone, and to conclude a proceeding that is now almost 10 years pending,” group spokesman Chip Pickering, a former Republican congressman from Mississippi, told us. “If they're not ready to reach a final order, it is possible, we believe, to go forward with an interim order to give a greater level of confidence and certainty that the wholesale market in special access would be preserved.” The coalition would ask the FCC to make a determination that the market is not competitive, and that “the current rates do not reflect market reality or market cost,” Pickering said.
"We're happy that they withdrew it because it would have meant a tremendous cost to our members and to businesses across the country,” said Jerry James, CEO of CompTel. “Our members were very much opposed to a second rate increase by Verizon in such a short time frame, especially when the FCC has taken the position it’s going to study and get a mandatory data collection on the industry to determine whether, as we believe, there is a market failure.” Now it’s “even more urgent” for the FCC to fix special access “in order to avoid similar actions by any other incumbents,” he said.