Verizon asks FCC to stay Section 272 order

Verizon Communications has asked the FCC to reconsider and stay its order issued last week that denied the carrier’s request to confidentially treat some information contained in its Section 272 biennial audit for New York State.

In the petition filed yesterday, Verizon called the FCC’s order a “bad precedent that will impair future audits and make the audits themselves potential sources of harm to the companies that participate in them.” The carrier further said the order was inconsistent with the commission’s “long-standing” policy of protecting confidential data it examines in an audit.

According to Verizon, the commission’s Common Carrier Bureau audit staff, working with the Bell operating companies (BOCs) and independent auditing firms, developed a set of rules in 1998 that called for audit reports to be submitted in draft form to the BOC. An “oversight team” would then negotiate with the BOC and delete from the final report information deemed to be proprietary.

Verizon alleges that the FCC altered the rules in the last month of the New York audit, eliminating the ability for the carrier to eliminate data from the audit it believed confidential, but allowing Verizon to redact—or black line—such information. The carrier said it “had no choice but to follow” the procedural changes.

Now the FCC has eliminated redaction, which the carrier believes will reduce the willingness of some to participate voluntarily in the audit process, which in turn would force the commission to make such participation compulsory. Verizon fears such tactics would engender significant risk that “the amount and quality of information made available to commission auditors will be reduced.”

“This cannot help but have a chilling effect on future audits,” said Verizon in the petition.

Section 272 of the Telecom Act 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. The Competitive Telecommunications Association (COMPTEL) had argued that Section 272 further requires incumbent carriers to provide a full version of the audit report for public scrutiny and comment, and did not allow for redaction of any type.

The FCC agreed. In its memorandum opinion and order, the commission said, “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.”

COMPTEL President H. Russell Frisby questioned Verizon’s motives in asking for the stay and wondered whether the carrier believes it should be exempt from adhering to the law simply because information contained in the audit report “may not put them in the best light.”

“If that’s their position, I think it’s outrageous,” Frisby said. “The law is the law, and if you’re responding to an audit required by law, you should disclose all information.”