CLECs fight for forbearance reform

A trio of CLECs warned federal regulators today against freeing incumbent carriers from obligations to lease network elements to competitors. In a briefing, XO Communications, Cavalier Telephone & TV and McLeodUSA warned of the dangers so-called “forbearance” would bring to competition and consumers and challenged the FCC to adopt rules to fix the “out of control process.”

Verizon Communications filed petitions last year asking the FCC to lift regulations that force the company to lease monopoly elements of its local networks to market entrants in those metropolitan areas. If its applications are granted, Verizon would be able to deny competitors access to critical network facilities that are required to serve 34 million individuals in six markets.

The FCC requires applicants to provide detailed market data demonstrating that competitors are successfully competing with it over their own network facilities. Under federal law, the incumbents’ requests are automatically granted if the FCC does not act on forbearance petitions within a maximum of 15 months from their filing, meaning that the FCC has until Dec. 5 to rule on the Verizon applications.

On behalf of the competitive telecommunications companies, Heather Gold, XO’s senior vice president of external affairs, proposed that the FCC adopt a set of 10 rules for forbearance to create a “fair, rational system that allows the petitioners and those commenting on the petition a fair process.” These rules include adopting standard procedural requirements and confirming that the Administrative Procedures Act applies to the petition as well as that the petition satisfies the forbearance checklist. The proposed rules also include provisions to ensure full, fair and timely access to forbearance petitions and documents.

“Our major concern is the impact of these kind of petitions and the consequences of not having these rules and not having a process is a lack of innovation, reduction of consumer choice and limited competitive options,” Gold said. “We’re not getting better on broadband. We’re falling. We’re not having the same level of innovation and competitive choice brought to the market as we saw after the passage of the ‘96 Act.”

Bell companies are using the forbearance petitions to “gut the competition that had been created by the [Telecommunications] Act,” McLeod said. In July of this year, McLeod filed a petition with the FCC to modify an order in Omaha granting forbearance to Qwest. The ruling allowed Qwest to unilaterally impose huge price increases, hiking the monthly wholesale price for high-capacity local loops by 86%, McLeod estimated. William Haas, McLeod’s vice president and deputy general counsel, called the judgment improper due to the filing procedure processes and the resulting reconsideration process.

“The lack of process that enabled this information to be filed literally hours before the decision was being made, with no opportunity to review or comment or produce countervailing data, was a completely unfair process for McLeodUSA,” Haas said. “We had no ability to go before the FCC and explain why the data was not reliable.”

“We really believe forbearance has real consequences for residential and small business customers,” said Francie McComb, vice president of regulatory affairs at Cavalier. “We’ve tried to work with Verizon, but it’s not easy, because despite our repeated requests, they have refused to provide us or any other competitor any information on how they would offer wholesale services if they were to prevail in forbearance…Forbearance poses a very real threat. The FCC should do something about it now. We ask the FCC to defend the competitive choice.”