Based on solid OSS marks from an independent auditing firm, Verizon Communications (www.verizon.com) late Nov. 3 asked the Pennsylvania Public Utility Commission (PUC, http://puc.paonline.com) to consider advancing its review of the company's plan to offer in-region long-distance service.
Competitors such as AT&T Corp. (www.att.com), though, call the shortcut request "unconscionable" and likewise have asked the state regulators to refrain from moving too quickly on Verizon's long-distance bid in Pennsylvania. Verizon currently has federal approval to provide in-region long-distance service in New York and has another Section 271 bid for Massachusetts pending at the Federal Communications Commission (FCC, www.fcc.gov). This request coincides with Verizon's plans to request approvals on multiple Sec. 271 applications with the federal agency.
As in Verizon's OSS testing in New York, independent third-party tester KPMG Peat Marwick LLP (www.kpmg.com) reportedly has given Verizon high marks in a comprehensive test of its back-office systems in Pennsylvania.
"The KPMG report shows our systems are performing extremely well," said Daniel J. Whelan, president of Verizon Pennsylvania. "This performance proves that Verizon's systems meet the requirements of the Telecommunications Act [of 1996] for long-distance entry. We now will make our case that the local phone market in Pennsylvania is indisputably open."
In submitting its 641-page draft report to the PUC on Friday, KPMG reported that it examined 569 "test points" involving Verizon's OSS, which competitors use to switch customers' local phone service from Verizon.
The KPMG testing demonstrated that competitors can compete effectively using those systems, and KPMG noted that none of the remaining areas it categorized as "Not Complete" or "Not Satisfied" have a material adverse impact on competition, according to Verizon. Whelan said Verizon expects to improve its performance in those areas to a satisfactory level by the time KPMG issues its final report 45 days after the initial draft is released.
KPMG test results in Pennsylvania follow a pattern in New York and Massachusetts, where Verizon's systems also got high KPMG marks.
"Competitors and their assorted front groups jumped on whatever they could find in both states, but regulators correctly saw through these wafer-thin tactics," Whelan said in a statement. "Our opponents will continue to complain about our systems' readiness, but all their whining just isn't borne out by the test results or months of actual commercial experience."
In the Pennsylvania test, KPMG set up a mock CLEC. KPMG sent orders through Verizon's systems to switch customers from Verizon's local phone service to the mock CLEC. KPMG tested such items as how quickly and accurately Verizon's systems process orders from CLECs for new service, and how well Verizon technicians connect the wires that change a customer's local phone service from Verizon to a CLEC.
"This has been the most exhaustive, comprehensive and expensive review ever conducted by a Pennsylvania agency," said Whelan. "More than 80 competitors today can and do rely on our systems to offer local telephone service in Pennsylvania. Competitors serve more than two million active phone numbers throughout the commonwealth, and WorldCom [Inc.'s, www.wcom.com] recent announcements about entering the local market here only underscore that fact."
In its filing, Verizon asked the PUC to move forward the commission's 100-day review of Verizon's readiness before the company files a formal long-distance application with the FCC. Verizon asked the PUC to begin its review period on or after public release of KPMG's initial draft report.
The PUC's recommendation on Verizon's Sec. 271 bid, as well as that of the U.S. Department of Justice (www.usdoj.gov), will be considered by the FCC, which ultimately decides such BOC requests.
Despite Verizon's information, an AT&T executive says Verizon appears to be pressuring Gov. Tom Ridge and the Pennsylvania PUC to push for shortcuts in testing Verizon's back-office systems.
Jim Ginty, president of AT&T-Pennsylvania, calls Verizon's actions "unconscionable," especially in light of the problems that occurred in New York where Verizon's systems were not fully tested. AT&T eventually filed a lawsuit against the FCC's approval of Verizon's 271 in New York, but lost that case earlier this year.
AT&T said a shortcut of the testing process will serve Verizon's profit interest to the disadvantage of consumers who want to be able switch local phone companies without costly, time-consuming hassles.
Ginty claims there are significant problems with the KPMG test, which he says should be modified to close some serious gaps. He cited three major problems with current testing of Verizon's OSS:
¨ The systems that will actually be used in the real-world competitive environment will not be tested under high-volume conditions, a flaw identified by in its review of the Massachusetts' testing process.
¨ In the OSS test, KPMG is not using the test metrics prescribed by the PUC. The test metrics currently in use were developed without input from competitors and other stakeholders.
¨ KPMG does not appear to be adequately testing Verizon's systems for providing competitors with DSL service.
"We believe the [PUC] recognizes the critical importance of thorough testing," Ginty said. "Given the PUC's pro-competition track record, we believe they will ignore Verizon's self-interest and do the right thing."
