SBC: CLECs reneged on commitment to drop opposition to Pac Bell 271 application

SBC Pacific Bell this week filed comments with the California Public Utility Commission (PUC) that criticized competitive carriers AT&T, MCI/WorldCom and Z-Tel for continuing their opposition to Pacific Bell’s application to provide long-distance service in the state under Section 271 of the Telecom Act.

SBC alleged the three carriers had entered into an agreement with the commission in late spring that would have called for the PUC to reduce the rates Pacific Bell could charge for a local loop from $11.70 to $9.95, and rates for switching and ports by about 69%. In return, the CLECs would drop their opposition to Pacific Bell’s 271 application.

“This is a massive rate reduction,” said Lora Watts, president of SBC Pacific Bell, who stressed that SBC had no involvement in the alleged agreement.

According to Watts, the rate reduction approved by the PUC on May 16--known as the “Lynch alternate” for its sponsor, PUC President Loretta Lynch--was the largest of several plans that were considered.

Watts added that Pacific Bell passed 12 of the items on its 14-point checklist to determine whether it has adequately opened its local market to competitors. Concerning the two items that didn’t pass muster, Watts said, “One involved a mechanized process for local number portability that no other state--or the Telecom Act--requires. The other issue dealt with DSL resale. Our DSL service is a wholesale service, and they have questions concerning the fact we don’t have a retail offering that we can provide at wholesale prices.”

Despite getting the rate relief they had been seeking--and apparently in violation of the quid pro quo agreement that had been allegedly struck--AT&T and the other CLECs continued to express concerns regarding Pacific Bell’s 271 application in their reply comments filed last week.

In its own reply comments filed with the commission this week, SBC said the issues raised by the CLECs were “immaterial, irrelevant and inaccurate.”

“AT&T is rehashing old ground and continuing its pattern of road blocking,” Watts said. “We’ve refuted what they’ve said, and we’ve asked the commission to grant us permission to go forward.”

Given that Pacific Bell first filed its application with the PUC about five years ago, Watts said she was simply hoping the commission would avoid adding any roadblocks or delays and vote on the application at the next commission conference. “At this point, it’s difficult to speak in terms of ‘expediting’ approval,” she said.

Ken McNeely, president of AT&T California, called SBC’s allegations a “shameless attempt” to draw attention away from “very clear and legal deficiencies” in its application. He added that no agreement with the commission that would have traded a specified rate reduction for removal of their opposition to the application ever existed.

“There was an attempt to settle our differences, but that never materialized because Pac Bell didn’t meet its part of the bargain,” McNeely said.

However, in a transcript furnished by the Star Reporting Service and provided to Telephony by SBC, Commissioner Geoffrey Brown said “a significant concession” was made by each of the aforementioned CLECs.

“I was given an assurance by the CEO of AT&T, the CEO of WorldCom and an executive at Z-Tel to the effect that they would drop their opposition to 271 if the Lynch alternate passes,” Brown said, according to the transcript.

The transcript did not make clear when Commissioner Brown allegedly made this comment.

When read the transcript, McNeely said in response, “I can’t speak to Commissioner Brown’s motivation. The words are there. What I’m saying is that AT&T came to no such agreement with SBC with respect to their filing. And we had no such agreement with the PUC.”

Reporter’s Notebook

Tom Tauke, senior vice president of federal policy and law for Verizon Communications, told attendees of the Progress and Freedom Foundation that FCC policies developed in the late 1980s intended to stimulate growth of the Internet instead “distorted” pricing and economics and encouraged “bad business plans and poor investment decisions.” He said companies that invest in network facilities “need the ability to make money” from those investments. “You can’t give that business away and expect the new networks to evolve,” Tauke said. He added that new technology “should not be burdened from day one” with regulations meant for traditional telephony. An AT&T spokeswoman, responding to Tauke’s remarks, called them “flawed,” because voice and data networks cannot be viewed as separate entities. “The Bells are upgrading their networks to provide both voice and advanced services,” she said in a prepared statement. “Exempting what Verizon describes as ‘new’ broadband network facilities from the market-opening requirements of the Telecom Act would essentially put the entire ratepayer-funded network off-limits to competitors.”

Qwest Chairman and CEO Dick Notebaert has been named chairman of the FCC’s Network Reliability and Interoperability Council. FCC Chairman Michael Powell said in a statement that Notebaert’s “extensive background in the Bell system would provide important insight and expertise as we address the critical challenges in network reliability and interoperability, particularly in the areas related to homeland security.”