COMPTEL ACCUSES VERIZON OF PLAYING HIDE AND SEEK

Blacklining in Section 272 audit raises ire of competitive association

Given the contention that has marked the Section 271 approval process for letting incumbent carriers offer in-region long distance, it is not surprising that the first biennial audit required by Section 272 of the Telecom Act has taken a controversial turn.

How the FCC handles this dispute will set the tone for future Section 272 audits. This worries the Competitive Telecommunications Association (CompTel), which alleges Verizon Communications — the first incumbent to win 271 approval, two years ago in New York — is hiding information from the public in an audit conducted by PricewaterhouseCoopers and submitted to the FCC last June.

In a recent letter to FCC Chairman Michael Powell, CompTel alleged the version of the report available for public scrutiny and comment is so heavily redacted that neither the association nor its members can tell whether Verizon complies with Section 272. This section requires incumbent carriers providing in-region long-distance service to submit to an independent audit every two years to ensure the carrier has maintained a clear separation of its long-distance and wholesale units.

“Telling us that there's weather doesn't really tell us anything,” said Jonathan Lee, CompTel's vice president of regulatory affairs. “They need to tell us whether it's hot or cold.”

Section 272 prohibits redaction, or “blacklining,” according to Lee. CompTel is concerned that redaction will become a favorite tool of Bell companies wanting to hide critical information in future 272 audits if the FCC permits it this time.

Predictably, Verizon maintains the Telecom Act provides for the protection of customer- and competition-sensitive information. In fact, the FCC and the states have a responsibility to create a mechanism for that protection, according to Joe DiBella, Verizon's regulatory counsel.

DiBella said Verizon is complying fully with Section 272 and is confident the FCC will come to the same conclusion after reviewing the unedited version of the report. Protective clauses in Sections 220F and 272D were included in the Telecom Act because Congress understood that audits inherently include confidential information, he said.

“The FCC and the states have what they need to carry out their responsibilities,” DiBella said.

That's not really the point, said John Roberts, professor of telecommunications law at DePaul University.

“Section 272 says the public must have access to this information,” said Roberts, noting that assuring separation of an incumbent's long-distance and wholesale units “is the only way to make sure the Bell companies can't use their control of the local bottleneck to subsidize other companies.”

Mitchell Brecher, a CLEC attorney with Washington law firm Greenberg Traurig, suggested the FCC could mediate Verizon and CompTel to common ground.

For instance, a confidentiality agreement could be drafted that would be part of a protective order issued by the FCC. Also, CompTel could hire its own third-party auditor to review the unredacted version of the report, Brecher said.

“Everything is negotiable,” he said. “And the FCC staff is very good at getting people in a room and not letting them out until they work something out.”