FCC rules preserved the right of local phone companies to lease the Bell networks at discounted, government-mandated rates through the UNE-P, and designated rulemaking authority to state public utility commissions. But on March 2, the U.S. Court of Appeals for the District of Columbia Circuit overturned those rules.
There is a chance the FCC’s UNE-P rules will remain in effect beyond June 15, however. The federal government may ask the U.S. Supreme Court to review phone regulations the Bells vociferously oppose. The deadline for asking the Supreme Court to accept the case is June 1, according to AT&T. “We are still pushing for an appeal,” H. Russell Frisby Jr., CEO of the CompTel/ASCENT Alliance, told xchange in late April, “and we think that’s essential.”
In the meantime, BellSouth Corp., Qwest Communications International Inc., SBC Communications Inc. and Verizon have all proposed wholesale leasing arrangements and emphasized that they are committed to entering good-faith negotiations with competitors.
Some trade associations, however, have groused there is a wide disparity between what the Bells want to charge rivals to lease the local phone network, and what competitors are willing to pay. “We’re far apart on price and other terms,” says Frisby.
Frisby adds small phone companies are reluctant to strike agreements with the Bells because they do not know what deals their peers are negotiating. “A number of small companies feel they have more strength in numbers,” he says. “Secondly, they are really afraid to be the first one to sign or come to an agreement because they don’t know what is happening elsewhere. It is a very confused process right now.”
BellSouth, SBC and Verizon are entering private talks with their competitors. BellSouth, for example, has forged agreements with about 50 companies to enter private negotiations, according to a spokesman. In late April, Atlanta-based BellSouth said it reached privately negotiated wholesale agreements with CI2, Dialogica Communications and International Telnet. The terms of the agreements were not disclosed.
John Windhausen Jr., president of the Association for Local Telecommunications Services, says the biggest local phone companies have proposed high rates for access to transport and loops, representing a 300 percent to 400 percent hike over current UNE rates. The Bells are proposing special access, he says, a tariff offer that has been around for decades. “If Congress
had thought special access was appropriate, it never would have required unbundling” in the Telecommunications Act of 1996, he says. “Not much progress has been made thus far,” Windhausen says of the negotiations. Among the agreements that had been reached as of late April:
SBC announced a seven-year agreement to provide wholesale phone services throughout its 13-state territory to Sage Telecom. The RBOC says Sage will pay on average under $25 a month to lease a phone line over the life of the contract.
Some trade groups said the agreement should be filed with state regulators pursuant to federal law, and other phone companies should have the right to opt into it. An SBC spokesman told xchange, “We will extend comparable terms and conditions to any comparably situated wholesale customer.”
In a letter to the National Association of Regulatory Utility Commissioners, Sage wrote: “Obviously, Sage will comply with regulatory requirements in states where Sage is certified to provide local exchange service. However, it is important to note that the SBC/Sage agreement is a privately-negotiated commercial agreement that contains provisions specific to Sage’s business strategies and technology requirements, and that the agreement must therefore be protected from public disclosure for competitive reasons.”
Qwest and Covad Communications Group Inc. have also said they’ve completed a three-year commercial line-sharing agreement. The pact allows Covad to continue to offer DSL within Qwest’s 14-state region. Windhausen says that agreement had been in the works for a year, ever since the FCC voted to phase out rules requiring the biggest local phone companies to share lines with broadband providers.
MCI reached an agreement with Qwest to support a framework for open negotiations to set the rates for leasing Qwest’s local phone network.
The arrangement calls for former Wisconsin Public Service Commission Chair Cheryl Parrino to mediate the negotiations. “We have not reached agreement with any other Bells for open, mediated negotiations, but we’re hoping they’ll come to the table,” MCI spokeswoman Sudie Nolan says.
In a related development, AT&T in late April proposed using its own switches to provide local phone services if BellSouth, Qwest, SBC and Verizon remove obstacles to leasing the wires connecting homes to telephone central offices.
The proposal calls for a spike in the price of the controversial leasing platform known as UNE-P by at least $3 per line over the next 2.5 years in exchange for access to the last mile of wires to homes “on terms that are reasonable and fair.”
BellSouth rejected the proposal. And in early May, a group of facilitiesbased CLECs announced a proposal designed to secure access to the Bell networks to reach small and medium businesses. Under the proposal, the CLECs would pay BellSouth, Qwest, SBC and Verizon negotiated rates for highcapacity dedicated transmission facilities.
Allegiance Telecom, KMC Telecom, NewSouth Communications, NuVox Communications and XO Communications Inc. submitted the proposal.
MCI also has said it plans to offer local phone service over its own network as well as through UNE-P. “We’re also proactively evaluating and selectively expanding our facilities-based local network to serve not only the business community but consumers as well,”Wayne Huyard, president of U.S. sales and service at MCI, said during a conference call with reporters.
“And we’ll begin turning up geographic areas over the next couple of months on that facilitiesbased service,” Huyard says. “So through a mix of facilities-based service and hopefully continued UNE-P, we’ll be able to profitably and appropriately serve the consumer market ...”
