Verizon Pushes For FCC To Loosen Competition Rules

CourierPostOnline — Thursday, October 11, 2007

Courier-Post Staff

Verizon, the region's largest telephone company, wants the Federal Communications Commission to take off the regulatory handcuffs and allow it to compete without restraint in a rapidly changing telecom landscape.

The FCC is expected to rule in December on six petitions by Verizon that could affect the cost and availability of service to 34 million consumers between Boston and Virginia Beach, including 2.7 million, or 89 percent of all households in New Jersey. If the requests are granted, competitors, consumer groups and regulatory bodies fear it will end competition, choice and innovation in the industry.

"Telecommunications, that is voice, video and data transfer, is essential. We can't live without it. Consumers would never see a direct impact of this issue on their bill, yet it could change the industry substantially," said U.S. Rep. Rob Andrews, D-N.J.

Andrews wants the FCC to squelch Verizon's requests.

"If Verizon is allowed to control its price, it will control the market. It will hurt low-income areas – like Camden – the most. The FCC would effectively be creating a monopoly in the region covered by the petitions," Andrews said .

At issue are select parts of Verizon's network, sometimes referred to as the "last mile" of wire to a customer's house or business.

Under the Telecom Act, signed by President Clinton in 1996, dominant or incumbent carriers, such as Verizon in this area or AT&T in the West, must lease access to the last mile at regulated or wholesale prices to competitors. This avoids duplication and allows small companies to compete.

It also illustrates the unusual ground rules in the industry. Competitive Local Exchange Carriers, such as Magellan Hill in Mount Laurel, which leases from Verizon, is both its partner and competitor.

New Jersey has about 50 registered CLECs, but under a dozen have a strong presence in the marketplace.

Local exchange carriers remain in the market by stressing individual customer service and working on slimmer margins.

Verizon says rate controls are no longer necessary because competition is thriving.

"The law says we can petition for forbearance if we demonstrate relief is warranted. Given the ubiquitous competition from a wide array of technology and providers, it no longer makes sense to have archaic rules. Nobody benefits from old-style regulations. The market, not government, should set the price," said Verizon spokesman David Fish.

The New Jersey Board of Public Utilities does not agree. While access for local carriers will not be cut off, higher wholesale prices could drive them out of the market.

"Verizon's petitions threaten the very foundation and balance that the Board has worked so hard to achieve. Efforts to facilitate competition will be eliminated," said board President Jeanne Fox in a statement to the FCC.

Similar regulatory agencies in Pennsylvania, Delaware and Virginia have also challenged Verizon's case to relax the law.

There is precedent for Verizon's request. Last year the FCC granted rate relief to Qwest Communications, the incumbent carrier in Omaha, Neb., based on heavy competition in the market.

Bradford Bono, president and CEO of Magellan Hill, which serves about 400 mid-to-large business clients, believes the potential is there for Verizon to gouge the competition, but is hopeful it won't happen.

"I understand the concern because the customer doesn't understand this complex world, only that their bill is going up. I don't think Verizon will turn the spigot off by pricing us out of existence. Wholesale business is important to Verizon. Truth is we need each other."

Verizon's wholesale revenues last year was $8.3 billion. Only a portion comes from CLECs, but the company would not disclose how much.

A 17-year veteran of the telecom businesses, Bono said he is concerned by the relentless mergers in the industry that ultimately could lead to a duopoly with Verizon, which now owns MCI, and AT&T, which includes Bell South and Cingular.

"We could be going full circle to the pre-1984 break up of At&T. But given the choice, there are still customers who prefer the service and nimbleness of a small company. My customers don't have an 800 number for service. They call my cell," he said.

Copyright 2007 Courier-Post

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