"The Check is in the Mail"

Posted: 05/1998

"The Check is in the Mail"
Local Competition in New York

By Andrew O. Isar

Promises and reality are often miles apart. Despite the best of intentions (or lack
thereof), promises have a nasty habit of not being met. When a promise is made by someone
with a dubious record of keeping promises, it takes a leap of faith to believe that the
promise will be kept. The New York Public Service Commission (NYPSC) may be about to take
just such a leap of faith.

In mid-March, parties who participated in the commission’s nearly two-year
investigation into Bell Atlantic Corp.’s (formerly New York Telephone/NYNEX) in-region,
interLATA market entry, were informed of the commission’s intent to give the company’s
interLATA market entry a conditional "thumbs up." Despite overwhelming evidence
to the contrary–enough evidence to fill a small bank vault–the commission determined
that Bell Atlantic should be found to have met the Telecommunications Act of 1996’s
competitive checklist. The commission’s support would be predicated on Bell Atlantic
promises to meet certain conditions. Although the commission sought limited response from
the industry, the message was clear: The commission was ready to support Bell Atlantic’s
entry into New York’s interLATA market.

What did Bell Atlantic promise? Among other things, Bell Atlantic promised to design an
application-to-application pre-ordering interface. It promised to work with competitive
local exchange carriers (CLECs) to develop and disseminate design criteria. It committed
to develop an electronic bonding interface for operations support systems (OSS)
maintenance and repair functions. And it promised to provide full cooperation for
third-party OSS testing. Bell Atlantic also agreed to recombine unbundled network
elements–but for an additional, unspecified fee–and agreed to make significant price
adjustments for non-compliance, although it remains unclear what "significant price
adjustments" really means.

The FCC’s yardstick for compliance requires actual evidence demonstrating present
compliance with the statutory conditions for entry. Yet seemingly little weight was given
to competitors’ documented delays and setbacks. Numerous problems associated with
negotiating agreements, provisioning new subscribers, accessing fully functional and
non-discriminatory OSS, maintaining customers’ service and reconciling inaccurate bills
were trivialized. And little consideration was given to the fact that few Bell Atlantic
subscribers have no local service alternatives.

In a proceeding replete with examples of how Bell Atlantic has continually failed to
meet its obligations to competitors, it was Bell Atlantic’s promise to make everything
right that ultimately prevailed. If the commission’s recommendations are adopted,
consumers, regulators and the competitive industry will be left with a litany of Bell
Atlantic promises to do better. These promises come from a monopolist with a poor track
record of keeping promises and who has no intent of giving up its 99.9 percent local
exchange market share, nor any incentive for meeting its promises once its interLATA
market entry prize is won.

Last August, the New York Times said of the NYSPC’s local exchange competition
policies: "The commission appears frightened by any step it might take that would
undermine NYNEX’s well-being, thereby triggering a cutback in what is already the
country’s worst customer service record…If the commission follows form, it will punish
NYNEX’s rivals, giving dissatisfied customers no exit." Commission reliance on Bell
Atlantic promises would effectively gut the competitive checklist, reduce competitive
choice for consumers and demonstrates that promises (words) and a little political clout
sometimes speak louder than actions.

Andrew Isar is President of Harbor Consulting Group Inc., a Washington-state based
regulatory consulting and  policy firm. He may be contacted at (253) 265-3910.