FCC denies Verizon Section 272 audit confidentiality

Verizon Communications was dealt a blow Friday, when the Federal Communications Commission (FCC) denied the carrier’s request to confidentially treat some information contained in its Section 272 biennial audit for New York State.

Section 272 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 unit and its wholesale unit. Verizon had come under attack from the Competitive Telecommunications Association (COMPTEL) for submitting to the FCC two versions of the audit report, a full version for the review of the commission and its staff, and a redacted version for public scrutiny and comment.

Verizon maintained the redacted version was necessary to protect customer- and competition-sensitive information and that the Telecom Act contained provisions for doing so. But the FCC disagreed.

“On its face, the plain language of Section 272 (d)(2) mandates public disclosure of the results of the audit, which are contained in the final audit report,” the commission’s order states. “Allowing BOCs [Bell operating companies] to withhold information from the final … audit report would prevent parties from exercising their statutory right to comment on the audit results. … Without reviewing the information in the audit report, parties cannot reasonably be expected to evaluate and comment on Verizon’s compliance with these requirements.”

According to the opinion and order, Verizon “requested confidential treatment”--the ability to blackline portions of the audit it deemed sensitive--for information on 28 of 87 pages of the audit report, and on 12 of 45 pages in a supplement.

H.Russell Frisby, COMPTEL president said the ruling sets a strong and necessary precedent for future 272 audits.

“We’re already in a situation where SBC [Communications] has filed a report and attempted to redact harmful information,” he said. “That type of action clearly contravenes the letter and spirit of Section 272.”

As more RBOCs win Section 271 approval for in-region long distance and establish affiliates to handle that part of the business, Section 272 becomes more important, Frisby said.

“The FCC and the state regulators are stretched to the limit, he said. “For the process to work, the public … must be able to participate in the process and to do that, you need access to the information.”

A Verizon spokesman said the company was disappointed in the ruling and is considering its options.

“We obviously don’t agree with the decision, because we feel the information that’s in there traditionally has not been part of the public record,” he said.

Verizon’s options, which could include asking an appeals court to stay the order, are most likely limited, according to John Roberts, professor of telecommunications law at Chicago’s DePaul University.

“You can appeal anything the FCC does, but looking at that statutory provision, no court would interfere at this point,” he said. “This was an easy case for the FCC.”