SBC seeks to protect itself from financially challenged customers

In light of the WorldCom scandal, SBC Communications tomorrow will file a petition with the FCC seeking greater protections in its dealings with financially challenged customers.

Specifically, the carrier wants assurances that it will get paid for future services to wholesale customers on shaky financial ground. Last week, Verizon Communications took similar action when it filed a petition with the FCC to force WorldCom to prepay for services it receives from other carriers.

Verizon asked the FCC to authorize security deposits or advance payments. Though the final details of SBC’s petition still are being hammered out, Priscilla Hill-Ardoin, senior vice president-FCC, said its plan would be less rigid than Verizon’s.

“We won’t be making unreasonable cash demands, and we don’t want to stretch these companies further,” she said. “But we’re not a bank and we need remuneration.”

SBC is concerned that its ability to provide service, and the quality of that service, could be compromised if it is not able to recover its fees, Hill-Ardoin said. At the same time, the company is trying to be sensitive to the difficult challenges facing financially challenged customers.

Accordingly, customers will be provided with several options and given some latitude in choosing the options that best meet their needs. The options will be based on credit benchmarks used by national credit rating organizations.

“Cash is king, but customers would be able to opt for bank guarantees, irrevocable letters of credit or bank credit lines, or some combination of these,” Hill-Ardoin said.

SBC’s plan also contains a provision that would restore a customer to standard billing procedures once its financial problems have been resolved.

– Glenn Bischoff

Reporter’s Notebook

Verizon today filed an application with the FCC to provide interLATA service in Virginia under Section 271 of the Telecom Act. Verizon currently is authorized to provide long-distance service in eight states – New York, Massachusetts, Connecticut, Pennsylvania, New Jersey, Rhode Island, Vermont and Maine. It has applications pending in New Hampshire and Delaware. The FCC has 90 days to consider an application once it is filed. The commission must rule on the New Hampshire and Delaware applications by September 25 and the Virginia application by October 30. Verizon is the fourth largest long-distance provider nationwide, with 9 million customers in 44 states.