Verizon accepts Pennsylvania order

The Pennsylvania division of Verizon Communications on Friday accepted a state order that the company must adhere to a strict code of conduct to bolster local telephone competition.

The Pennsylvania Public Utility Commission (PUC) voted unanimously 5-0 last month for Verizon’s “functional” structural separation, which fell short of upholding a 1999 PUC global order that would have required full separation into wholesale and retail units.

Verizon’s agreement comes as no surprise, as the commission warned it would pursue full separation plans should the RBOC fail to comply. The onus now is on the PUC to specify the exact terms of the deal, said Jeff Moore, senior analyst of network services at Current Analysis.

“The PUC needs to spell out the details of what they expect because the press release they issued in March was very nebulous in many respects,” Moore said. “They gave Verizon a serious and lengthy tongue lashing, but the concrete measures they took were very minor.”

In its order, the commission said Verizon could continue operating as one unit, but attached conditions that included harsher penalties for anti-competitive behavior and lowered fees for providers servicing rural areas.

“Verizon is a very rich company and they can absorb the occasional penalty with great ease,” Moore said.

In a two-page letter to the commission, Verizon said it would agree to its interpretation of the order’s conditions rather than AT&T’s, which Verizon said differed drastically from its own reading.

AT&T – which led the legal charge to have Verizon fully split – filed a petition with the PUC on April 18 calling for “integrated operations support system (OSS) treatment of Verizon’s competitors and Verizon’s retail business alike.”

In its letter to the commission, Verizon said AT&T’s interpretation attempted to muddle the spirit of the order.

“The cost of this ‘integrated OSS’ is, in fact, the bulk of cost of the full structural separation proposal rejected by the commission,” Verizon wrote in its letter. “We categorically disagree with AT&T’s interpretation of the [order] and do not agree in any way to the modifications to the order advanced by AT&T.”

Verizon maintained throughout its legal battle that full separation would cost the company and Pennsylvania consumers $1 billion. AT&T hired an economist who suggested a $41 million price tag, but industry experts said the number was likely somewhere between.

Additionally, Verizon said it would withdraw its pending appeals to the 1999 full separation order.