Concerns grow over Bell lobbying resources in state fight

Panelists at the Competitive Telecommunications Association’s conference in San Antonio, Texas, yesterday said concern is mounting over whether competitive carriers would have the resources to match what they expect to be a furious effort by the Bell companies to convince state commissions to remove switching and transport from the list of unbundled network elements.

“We’ve gone from litigating this issue once with the FCC to having to do it all over again in 50 state proceedings,” said Robert Quinn, vice president of AT&T. “Funding, coordinating and finding the lawyers and consultants to support us on that is going to be an extreme drain on resources, and extremely expensive.”

“We can fight the battle, but the Bells are going to chip away at this, and they have too many resources; we’re outmatched,” said Dave Scott, president and CEO of Birch Telecom. Scott suggested that CLECs consider a companion strategy designed to convince the states to force structural separation on the Bells, which in theory would force the Bells’ wholesale units to offer competitors the same terms and service they offer their own retail units.

According to Rob Curtis, vice president of strategic planning for Z-Tel Communications, duplicating the same victory--the preservation of UNE switching and the UNE platform for mass-market customers, and an expanded role for state commissions in determining impairment--in 50 state proceedings would be a difficult task even if the Bells had fewer resources at their disposal. A particularly onerous factor is the relatively short timeframe the FCC gave the states to make their impairment assessments, all of which must be concluded within nine months of the order becoming official, which is expected in the next two to three weeks.

“What we accomplished at the FCC was the result of the CLEC community coming together as a whole and testament to a lot of hard work that people were doing in Washington,” Curtis said. “Pulling that off in 50 states simultaneously is going to be a task that boggles the mind.”

Nevertheless, competitors believe they have all the evidence they need to demonstrate operational and economic impairment exists. For instance, Curtis said Verizon Communications could only commit to about 1500 hotcuts per month for a switch in New York State that Z-Tel had planned to buy out of bankruptcy.

“It would take us five years to fill a switch. You can’t make the investment work on that kind of life cycle,” Curtis said. “Hot cuts are the single biggest impairment.”

To demonstrate economic impairment, Scott read from an interconnection bill received by a competitive carrier attempting to compete in a Bell territory. The total charges reduced the CLEC’s margin to that of resale. “The Bells build in cross-connect and transport costs so as to destroy the economics of DS-0,” he said. “This is irrefutable--it’s based on the tariffs. This is the story we have to tell.”

Scott added that competitors would be wise to point out to state commissioners the apparent inequity of the Bells choosing to compete in long-distance by leasing the facilities of interexchange carriers.

“Let the Bells try to explain that,” Scott said.

Competitors also are beginning to wonder just what they won from last week’s FCC triennial review order. Concerns mount that the broadband portion of the order will freeze CLECs out of high-speed data services and even prevent them from using the more cost-effective softswitch as a means of transitioning to their own facilities. Also, according to Quinn, CLECs had access to DS-1 lines “practically everyplace” going into the triennial review, but have lost them virtually everywhere as a result of the order, which eliminated competitor access to UNE switching for business customers being served by high-capacity loops.

“I don’t think this is as big a victory as a lot of us might think,” Quinn said. “Clearly it is better than what we could have ended up with, which would have been really bad, but it’s a loss from where we were a month ago.”