Monday, October 17, 2005

Competitive Providers Lobby for Conditions on SBC/AT&T and Verizon/MCI Mergers

Six leading communications companies and the Ad Hoc Telecommunications Users Committee, which represents high-volume business customers, filed an ex parte with the FCC seeking safeguards to ensure competitive pricing of special access services after the mergers of AT&T and MCI with SBC and Verizon and prevent SBC and Verizon from discriminating in favor of their respective AT&T and MCI affiliates and against third parties in the pricing and provisioning of special access services.

Companies represented in this petition are BT Americas, Broadwing Communications, Level 3 Communications, Qwest Communications International, SAVVIS, and XO Communications.

Specific merger conditions and ongoing requirements that these competitive carriers would like to see the FCC impose on SBC/AT&T and Verizon/MCI include:

  • Corrective Pricing Adjustment. Post-merger, SBC and Verizon must be required to reduce their base DS1 and DS3 special access rate elements by 50 percent - bringing their prices in line with what AT&T and MCI today charge. This adjustment would apply to all rate elements in both the price caps and pricing flexibility rate schedules. To protect against "backsliding," SBC and Verizon would not be permitted to increase DS1 and DS3 rates above this corrected level, and would be required to honor existing contracts for new and existing service orders.

  • Fresh Look. To preserve the impact of the corrective pricing adjustment on the downstream retail market, AT&T and MCI customers would be allowed, within the first 12 months following the effective date of the merger, to terminate their contracts without paying a penalty. Customers choosing to terminate these agreements would have a six-month transition period to migrate off of the AT&T and MCI networks.

  • No Restrictive Bundling. SBC and Verizon should not be allowed to bundle channel terminations or other non-competitive special access services with competitive services in any way that would deter customers from using competitors' alternate facilities.

  • No Conditions on Customers. SBC and Verizon may not place conditions on a customer's ability to receive corrected special access pricing, such as requiring the customer to waive their rights to Unbundled Network Elements (UNEs) or to give up the right to commingle UNEs with special access services. SBC and Verizon would also be forbidden to engage in any conduct, such as unreasonable grooming conditions, that interferes with a customer's ability to switch to a competitor, or to use more cost-efficient services offered by SBC or Verizon.

  • Termination of Special Access Contracts. As with "Fresh Look," customers of SBC or Verizon special access services would for 12 months be able to terminate their agreements after the mergers, without penalty.

  • No Favoritism. SBC and Verizon may not give their respective AT&T and MCI affiliates any special access rates or conditions that are not also available to third parties, and may not favor themselves in the provisioning, maintenance and customer care of special access.

  • Regional Symmetry of Special Access. SBC and Verizon must offer in-region customers the same special access services that they - or AT&T and MCI - purchase from other carriers outside the region.

  • Enforcement. The safeguards will be enforced through public informational postings required of SBC and Verizon. Audits, penalties and/or customer credits for violations will be required to help ensure compliance.
  • The FCC might vote on the pending mergers at its next open meeting on October 28.

  • In September, a separate group of 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, Bridge Com, Conversent, Eschelon Telecom, NuVox, TDS Metrocom, Xspedius and XO Communications.