Wednesday, September 21, 2005

CLECs Call for Merger Conditions on SBC/AT&T and Verizon/MCI

Eight competitive telecom service providers submitted a petition calling on the FCC to impose strict conditions on the pending mergers of SBC/AT&T and Verizon/MCI in order to safeguard competition. The companies said the divestitures of AT&T's and MCI's local network assets would not be enough to alleviate the harms to the local wholesale market.

Companies endorsing the comprehensive remedies were Broadview, BridgeCom, Conversent, Eschelon Telecom, NuVox, TDS Metrocom, Xspedius and XO Communications.

The companies proposed the following pricing, performance and other remedies:

  • Require Local Wholesale Prices to Reflect Pre-Merger Conditions. A Merger Order must ensure that local wholesale circuits are priced at the lowest pre-merger rates and include the same terms and conditions. For telecom providers, special access rates should be reinitialized at 11.25%, or determined by commercial negotiations with a requirement that "baseball arbitration" be used if the negotiations fail- with winners determined by bids that most closely approximate the lowest pre-merger rate.

  • Ensure Unbundled Network Elements (UNEs) and Freeze Rates. UNEs are the other alternative means of access for facilities-based competitive providers. Current access to UNEs and rates must be continued. Any Merger Order should prohibit any further delisting of UNEs and freeze the associated rates of such UNEs for a period of five years.

  • Recalculate the Triennial Review Wire Center Test by Eliminating AT&T and MCI as Fiber-Based Collocators. The current collocation requirement in the Wire Center List is based on the presence of actual competition, which will disappear when AT&T and MCI cease to be independent competitors. Because the FCC's TRRO earlier this year took into account AT&T and MCI as independent companies, Merger Orders must require a recalculation of the Wire Center List for de-listed UNEs, removing AT&T and MCI.

  • "Fresh Look" - Give AT&T and MCI Customers the Right to Exit Contracts.
    The companies cited a recent University of Connecticut survey of Fortune 1000 businesses that concluded that by a 2 to 1 margin, the telecom managers in these companies believe they will be harmed by these mergers. Therefore, these business customers that are losing AT&T and MCI as their longstanding providers should be allowed to cancel contracts that carry over to the merged companies without incurring termination penalties.

  • Eliminate the DS1 Loop and Transport Caps. When establishing these caps, the FCC relied on the availability of competitive facilities, something that will be greatly reduced when AT&T and MCI cease to be independent competitors.

Doug Kinkoph, XO Communications Vice President of Regulatory Affairs, said, "Because the harms of the proposed mergers are severe, the conditions on these mergers must be comprehensive and ensure that all customers of AT&T and MCI are no worse off should the government approve them."

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