AT&T asks FCC to reject Verizon’s ‘bad debt’ petition

AT&T has asked the FCC to reject a petition for revised tariffs filed by Verizon Communications that would require financially troubled wholesale customers to pay Verizon in advance or place security deposits for those services.

Verizon filed its petition last month in the wake of WorldCom’s Chapter 11 filing. But AT&T accused the carrier of using that as a convenient excuse to gain approval of “radical new tariff provisions” that would substantially disadvantage competitive carriers that have sound credit and pose no bad debt risk.

In its filing submitted yesterday, AT&T called Verizon’s plea for expedited relief in the matter “thinly disguised greed,” and said approval of Verizon’s petition would give the RBOC the opportunity to impose “more onerous” payment terms upon all of their “captive” access customers.

In addition, AT&T called Verizon’s assertion that it and other incumbent carriers are facing a bad debt emergency “fiction.” The interexchange carrier cited the FCC’s ARMIS (automated reporting management information system) data, which it said indicate that Verizon and other incumbents have “very low” levels of bad debt, generally less than 1%.

A Verizon spokesman said the threat posed by WorldCom’s bankruptcy filing is “very real,” and added that AT&T’s position is inconsistent with its own assurance-of-payment strategies.

“We are asking for no more – and in some cases less – than what AT&T and the other IXCs have in their contracts with their customers,” he said.

Verizon’s petition comes at the same a time as SBC is calling for revised tariffs that would protect it from financially troubled carriers.

In a reply filing, SBC told the FCC wholesale customers that have filed for bankruptcy protection in the past two years owe hundreds of millions of dollars to incumbents. MCI WorldCom alone owed SBC more than $300 million when it filed for protection under Chapter 11 on July 21, said the carrier.

SBC’s revised tariff request differs from Verizon’s in that SBC would require only credit-impaired customers that owe at least $1 million to make a one-month deposit or pre-pay for one month’s service. Credit impairment would be determined by benchmarks used by nationally recognized credit-rating organizations.

In a prepared statement, SBC said AT&T requires financially troubled customers to make a deposit of up to three times the average monthly charges incurred by the customer, while Sprint requires a deposit of up to six months.

“We urge the commission to see through the utter hypocrisy of our critics’ opposition to our reasonable request,” said SBC President Bill Daley, in a statement.

Reporter’s Notebook

FCC Chairman

Michael Powell this week launched FCC University, a training and development initiative that will allow commission staff to continue their professional development. The “university” will offer courses on emerging technologies, economics and market analysis. Some will be specifically geared to meet the needs of engineers, economists and lawyers. The courses will be available at the commission offices through FCC staff and guest lectures, as well as off-site through universities, professional associations and industry vendors.