FCCs Inaction Leads to Legal Action

have until mid-May to file lawsuits against the FCC for its inaction on Verizon Communications Inc.s petition requesting its broadband services for large businesses be reclassified as information services.

Competitive carrier association COMPTEL in late March submitted its complaint, asking the D.C. Circuits Court of Appeals to set aside the granted petition on grounds that it is arbitrary, capricious, an abuse of discretion, contrary to statutory authority, unsupported by record evidence, and otherwise not in accordance with law, the document reads.

When the chairman of a federal agency is able to abdicate his responsibility to protect the public interest, and instead chooses to advance the private financial interests of a single giant corporation, it is time for the courts to step in and protect the public, said Earl Comstock, COMPTELs president and CEO, in a statement.

FCC Chairman Kevin J. Martin explains to attendees at the COMPTEL PLUSeventwhy the FCC did not actively grant or deny Verizons forbearance petition.

COMPTELs Jason Oxman, senior vice president of legal and international affairs, said he expected some CLECs likely would take the same action as the association. Meanwhile, the National Telecommunications Cooperative Association did not return calls requesting comment on whether it intended to follow COMPTELs lead.

Because it took no action in 15 months, the FCC on March 19 approved, by default, Verizons request for regulatory relief on its packet-switched broadband services, including Frame Relay and ATM, as well as non-TDM-based optical networking, optical hubbing and optical transmission services. That regulatory relief going from governance under Title II, or telecommunications services rules, to Title I, or information services rules means Verizon potentially will no longer have to contribute to the Universal Service Fund (USF). The RBOC did say in its petition it is not trying to shirk its USF obligations, and the FCCs Martin is circulating an order that would require USF contributions to be put on the list of obligations Verizon must abide by in the enterprise market.

AT&T Inc. has confirmed it will pursue relief similar to that granted to Verizon; BellSouth Corp. remained on the fence about whether it would file such a request, given that it was in merger talks with AT&T; and Qwest Communications International Inc., which has been extraordinarily quiet on the regulatory front, did not return calls for comment.

The fallout from this reckless inaction, says Oxman, is difficult to determine because there is no written order. There never will be an actual order, since the petition was granted by default, explains FCC spokesman Mark Wigfield; essentially, Verizons documentation serves as the legal document.

Predicting the effect on competitive carriers also is tough without an order, but the industry presumption is, when dealing with Verizon, CLECs would have a harder time getting fair interconnection agreements and special access prices for their enterprise customers.

The FCC really has left the industry completely at the mercy of Verizon, Oxman says. The agency, he adds, handed over its regulatory authority to Verizon and said, Do what you want.

Democratic Commissioner Michael J. Copps agreed with that perspective in his public statement responding to the forbearance. He called the approach suspect because there is no appealable order. There is no document, no stitch of analysis, no trace of discussion, nothing that a court can use to gauge where the commission is coming from, he wrote. He said he fears the commissions inaction will adversely impact issues including homeland security operations, USF contributions and could pave the way for unregulated rate increases. His Democratic colleague, Jonathan S. Adelstein, expressed similar concerns, and said he was worried about risking law enforcement access protections under FCC rules and the Communications Assistance for Law Enforcement Act.

The day after the FCC failed to act on Verizons petition, FCC Chairman Kevin J. Martin faced an irate crowd at the COMPTEL PLUS Convention + Expo in San Diego. He told the audience he and Commissioner Deborah T. Tate saw Verizons request for relief as very narrow, while the two Democratic commissioners viewed the relief as broad and over-reaching. Even though a number of companies were lobbying the FCC to take action on the Verizon petition before March 19, Martin said he was unable to get consensus on the matter and so let the deadline pass. He also said he wanted to approve the Verizon petition all along because he fears incumbents will continue to slow infrastructure investment if they are forced to share their networks with competitive carriers.