CLECs seek Congressional investigation of USTA plan

Competitive carriers led by the Association for Local Telecommunications Services and CompTel/Ascent Alliance sent a letter to members of the House judiciary committee this morning asking them to investigate a lobbying plan developed by the U.S. Telecom Association. The plan, hatched at the behest of major incumbent carriers, could violate federal antitrust laws if it were to come to fruition, said ALTS President John Windhausen.

The USTA is seeking a three-year commitment from the telecom industry’s largest and most influential suppliers to support a lobbying effort to enact comprehensive federal legislation that would end government management of competition and reform universal service. Each supplier was asked for funding equal to 3/1000ths of a cent for each dollar of revenue over the three-year period. The USTA estimated that large companies would contribute about $500,000 annually under the formula. Invited to participate in the plan were Lucent Technologies, Nortel Networks, Adtran, AFC, Alcatel USA, Corning, Fujitsu, Intel, Motorola, Siemens, Cisco, Avaya and Calix.

Windhausen accused the Bells of using their market power to strong-arm the vendors. "It’s pretty clear the Bell companies are trying to threaten the manufacturers by saying, if you don’t support our regulatory agenda, we’re not going to buy your equipment," Windhausen said.

Russell Frisby, president of the Competitive Telecommunications Association, went further, accusing the Bells of coercing suppliers into a boycott of competitive carriers. "It appears the Bells are committing more money to this than they did to Tauzin-Dingell," Frisby said. "They seem to be making an all-out effort to kill us."

USTA President and CEO Walter McCormick called the allegations outlined in the letter "baseless and slanderous." He said in a statement the allegations stem from a story that appeared in the Los Angeles Times on October 28. The paper reported that the goal of the lobbying plan is to "help persuade federal officials to slash regulations and let the phone companies raise prices." McCormick said the story contains "no facts from which such an inference could responsibly be drawn."

Jason Oxman, vice president and assistant general counsel for Covad Communications, a letter co-signer, admitted that the competitive carriers decided to approach Congress rather than the U.S. Department of Justice, which is responsible for prosecuting antitrust violations, because "we don’t have enough information to go to the Department of Justice with any kind of complaint," said the Washington Post in today’s edition. A Covad spokesman confirmed this morning that the paper quoted Oxman accurately.

However, Oxman stressed in an interview with Telephony today that even if no discussion of price reductions occurred at a USTA-organized meeting of plan architects held in Washington, D.C., two weeks ago, the fact that USTA and the Bells asked suppliers to participate in a lobbying effort to legislatively create a new regulatory regime that would put competitors out of business could constitute an anti-trust violation. “That would have an indirect impact on price as well, because it would raise prices as the monopolists would be able to reclaim the market for themselves,” Oxman said.

In an interview with Telephony yesterday, McCormick defended the plan, saying it is imperative that the telecom industry rid itself of an archaic regulatory model that has lost its relevance. "While telecommunications is the most technology sensitive and technology driven sector of our economy, it currently is being regulated pursuant to a 19th century model that was established to protect captive shippers of grain from monopoly railroads," McCormick said.