Interconnection Renegotiations Seen Bearing Little Fruit

As the clock winds down to the day FCC rules are slated to expire, telecommunications providers have cut few agreements to lease the regional Bell networks.

That begs the question: If new agreements are not reached by June 15, will the biggest local phone companies honor or declare void existing interconnection agreements? Or as Brad Mutschelknaus, moderator of a panel on the status of renegotiation efforts at ALTS 2004 Annual Conference, put it, are we facing a June 16 train wreck?

At least in the case of Qwest, there appears to be no imminent train wreck pending. Wendy Moser, a panelist representing Qwest, said that if no follow-on agreements regarding replacement products for UNE-P are reached by June 15, then Qwest would continue to honor the terms and conditions of existing interconnection agreements. We will still provision service on June 16,” she said. As for the rest of the BOCs, the matter is far from certain. The other panelists said Qwest has been more open and flexible thus far in the process than the other BOCs.

We have 800-900 interconnection agreements, Moser said. We are looking for business solutions.

Most ILECS have been insisting upon complete confidentiality with regards to the details of their discussions and offers. To date, very few agreements have been announced and neither side seems confident of an industry sponsored solution through the renegotiation process.

After a federal appeals court overturned FCC rules March 2, all five FCC commissioners called on the biggest local phone companies and their competitors to negotiate commercial agreements to replace government-mandated wholesale rates.

Ed Cadieux, a panelist representing NuVox, the BOCs are attempting to force competitive carriers to migrate from UNE rates to special access where price increases could be high enough to put companies out of business.

They want us to see the special access route as inevitable, Cadieux said. The pressure will be there to go to 5-7 year contracts where your business is locked up and you vitiate your opportunity to go to our own facilities or to a third party, he added.

Mutschelknaus, a telecom lawyer with Kelley Drye and Warren, mentioned that as aspects of these private negotiations become public, competitors will be looking to see if volume and term commitments are being required. This would tend to discriminate against small carriers, who normally do not have the numbers of customers necessary to qualify for such deals, according to the panel.

Panelists and members of the audience expressed concern over what course the other BOCs will take if industry-wide agreements are not struck. Will they immediately move to cut off or re-price elements available to competitors under their current interconnections agreements?

Jeff Oxley, a panelist representing Eschelon, indicated that in addition to the dreaded change of law provisions in most contracts, there also are terms for dispute resolution that could be invoked as a counter. Many require the involvement of the state PUC. If so, the state regulator could be facing a lot of action related to these interconnections agreements in the months ahead.

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