A press release sent to LLFCC on the Verizon forbearance offensive:

WASHINGTON--(BUSINESS WIRE)--A group of competitive telecommunications companies today challenged the Federal Communications Commission (FCC) to fix a statutory loophole that imperils telecom competition and threatens to leave consumers in the iron grip of Verizon, Qwest, AT&T, and other incumbent telephone companies.

In a filing today with the FCC, competitive telecom companies are urging the immediate adoption of procedural rules for "forbearance" petitions. Under the little-known "forbearance" provision of the 1996 Telecommunications Act, the Bells and other incumbents can ask the FCC to forbear from applying existing regulations. Continuing a multi-pronged war on competition that began almost as soon as the ink was dry on the Act, the Bells today are making forbearance petitions their tool of choice to eliminate regulations that foster competitive entry and a competitive marketplace ensuring choice for consumers. Yet, the Commission has never adopted rules to handle these critical petitions.

If granted, such petitions would sweep away the essential pro-competitive regulatory requirements of the 1996 Telecommunications Act. Worse still, the incumbents' requests are automatically granted if the FCC does not act on forbearance petitions within a maximum of 15 months from their filing.

Forbearance will have nationwide impact on competition. Verizon is using forbearance petitions to eliminate pro-competitive regulations in six markets serving 34 million customers: Boston, New York, Philadelphia, Pittsburgh, Providence and Virginia Beach. The FCC's decision on Verizon's petitions will be the template for subsequent Commission actions, including Qwest's pending petitions for forbearance in Minneapolis/St. Paul, Phoenix, Denver and Seattle. Qwest has already successfully used the forbearance gambit in Omaha, and following partial FCC approval of its petition is on its way to driving competition out of that market.

Competitive carriers stress that Congress should amend or repeal the forbearance statute to prevent further abuse by the incumbents. Until Congress acts, the Commission must immediately move to protect competition and consumers, adopting interim procedures to fix the broken forbearance process.

Heather B. Gold, Senior Vice President of External Affairs at XO Communications, said, "The public needs to understand the big picture of the incumbents' unrelenting assault on competition. The Bells' fault-ridden forbearance petitions are just the latest tactic in an anticompetitive war that began escalating in 2001 with the mantra of 'new wires, new rules.' In every instance, the Bells have promised to invest in innovation and support the development of competition in return for exemption from regulation - and they've broken every promise."

Gold continued, "The Commission and the courts cannot retreat from their responsibility to enforce pro-competitive policy and allow the Bells to dismantle the Telecom Act piece by piece. The Commission needs to step up to its job of ensuring choice for consumers before it is too late. One essential element of that job is the adoption of procedural rules that govern forbearance."

William Haas, Vice President and Deputy General Counsel, McLeodUSA said, "Forbearance encourages sneak attacks on competition. Such petitions can fly under the radar and score direct hits on pro-competitive rules without warning, and in defiance of sound, rational regulatory decision-making. Qwest used forbearance to undermine competition in Omaha, and now Verizon and Qwest are using the same tactic in major markets throughout the nation."

The forbearance statute contains numerous shortcomings. For example, it undermines established rulemaking by creating a new legal procedure for deciding whether to enforce laws, and does not always conform to the procedural requirements of the Administrative Procedure Act (APA). Forbearance constitutes deregulation by default - petitions are deemed granted if the Commission does not reach a decision by the statutory deadline. Lastly, the statutory deadline prevents rebuttal, there are no processes to reconsider granted petitions, and no requirement for written orders on deemed granted petitions to ensure consistency with the public interest.

To rectify these failings, competitive telecommunications companies are pressing the Commission to immediately adopt "10 Rules of Forbearance":

• Procedural Requirements. The Commission should adopt procedural requirements to facilitate the review of and participation in forbearance proceedings. Such rules should ensure adequate comment and review.
• APA Notice and Comment Requirements Must Apply. The Commission should confirm that APA rules concerning notice and comment rulemaking proceedings apply to petitions for forbearance. These APA rules ensure due process by requiring agencies to provide all interested parties with adequate notice of a proposed rule and time to comment.
• Petitioners Must Prove that Forbearance Meets Each Requirement of the Checklist. Petitioners have the burden of demonstrating that: (1) a regulation is not necessary to prevent unreasonable or discriminatory practices or pricing; (2) enforcement is not necessary for protection of consumers; and (3) forbearance is consistent with the public interest.
• "Complete as Filed" Rule. Petitioners should, in their initial filings, submit all of the evidence on which they are asking the Commission to make a forbearance decision.
• Full, Fair and Timely Access to Forbearance Petitions and Documents. Interested parties must be allowed to review all relevant forbearance petition documents on their own premises and in any format, including electronic.
• Timeline Procedures and Ex Parte Rules. The Commission should adopt a timeline that: (1) specifies a limited period for a petitioning party to cure defects in its petition; (2) provides a specific vehicle for state input in the forbearance process; (3) addresses motions to dismiss; and (4) establishes a standard comment cycle.
• Time Limit on Ex Parte Submissions. The Commission should also require a time limit on substantive ex parte submissions to prevent petitioners from filing critical information at the 11th hour, when it is too late for other parties to comment.
• Dismissal of Section 251 Petitions for Inadequate Data. The Commission has determined that evidence of competition in wire centers is most relevant to evaluating the merit of Section 251 petitions asking forbearance from providing UNEs, which are critical to competitive carriers. If, upon filing, a petition does not include all empirical data at the wire center level and all data explaining the methodologies used, the Commission should dismiss the petition.
• Written Orders on All Forbearance Petitions. The Commission should issue a written order within seven days of granting or denying, in whole or in part, a forbearance petition. Timely issuance of a written order would facilitate any appeal of that order. For deemed granted petitions, the Commission should issue a written order as soon as a majority of Commissioners reach agreement.
• Reconsideration. Requiring forbearance petitions to be subject to the same standards for petitions for reconsideration in rulemaking proceedings would provide additional much-needed order to the forbearance process.

Francie McComb, Vice President of Regulatory Affairs at Cavalier Telephone & TV, said, "The proposed rules on forbearance are essential to ensuring that the Commission's processes are thorough and fair. Without rules in place, incumbents will continue to leverage forbearance as a tool to circumvent the law, turn back the clock on competition, and eliminate consumer choice in telecommunications."

Contact:

Crawford Public Relations Jim Crawford T:  M: