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FCC Shelves Forbearance Petitions at Monthly Meeting

After hours of delay, the FCC at its monthly meeting decided late Tuesday it wouldnt address several telco forbearance petitions on its plate.

That gives commissioners another month to deliberate over the requests.

The agency also pressured Qwest Communications International Inc. to withdraw its petition for relief from last-mile broadband connection rules at least temporarily. The request is similar to the one the FCC granted to Verizon Communications Inc. in March 2006.

AT&T Inc., Embarq, Frontier/Citizens Communications and Qwest all want the FCC to free them from rules that govern how they share their broadband networks with competitors and how they price those wholesale services. But commissioners appeared to be concerned about granting more Bell relief as they also consider whether to deregulate high-capacity special access.

Opponents of those telco petitions say the incumbents havent been able to prove theyre having difficulty competing against other providers. Providers such as McLeodUSA and Integra Telecom fear the entrenched carriers could use regulatory relief to increase prices and drive smaller rivals out of the market.

Meanwhile, analysts for investment bank Stifel Nicolaus said Qwest took its plea off the books because it was getting resistance from some commissioners. While there was talk the agency was willing to give Qwest partial deregulation, it appears that relief would have been modest to nominal, analysts wrote in a research note.

The FCC would have had to rule by midnight Tuesday or Qwests petition would have automatically been granted. But the carrier pulled the document after the agency pressured it to do so, or when it became clear there were not enough votes to approve the move, analysts said. Qwest planned to re-file the request on Wednesday so the FCC would have more time for review.

Medley Global Advisors analyst Jessica Zufolo said this outcome leaves the remaining pending petitions in grave doubt. Thats because FCC Chairman Kevin Martin, who reportedly planned to approve all of the forbearance petitions, seems to be encountering resistance from his full complement of commissioners. The two obvious resistors are Democrats Jonathan Adelstein and Michael Copps. It was thought the other might be Robert McDowell, a former lawyer for COMPTEL and advocate for competitive service providers, as Deborah Tate has yet to stray from Martins party line. On Wednesday afternoon, however, McDowell released a statement saying he was disappointed that Qwest felt it had to withdraw its petition and that the FCC didn’t approve it.

“I have wholeheartedly supported every de-regulatory pro-competition initiative that has come before me since I joined the commission last year, and I would have liked to have done so [on Tuesday,” he said.

Stifel Nicolaus analysts said if Qwest resubmits its bid as expected, the FCC is expected to act on it when addressing the other telco petitions. Those come due for action this fall. AT&T is up first, on Oct. 11.

Forbearance has been a hot-button issue for several years, but especially since the FCC in March 2006 granted, by operation of law, Verizons request for relief on broadband regulations. Stifel Nicolaus analysts said on Tuesday the FCC seems to want to clarify and even pare back that relief. Verizon says the agency cant legally do that without opening a new rulemaking. The company also contends theres no market failure that would justify such a proceeding.

Verizon has another forbearance petition pending that would deregulate its networks in six Eastern territories. The deadline for that FCC decision was Sept. 5, but the agency can push it out for another three months.

AT&T Inc. www.att.com

Embarq www.embarq.com

FCC www.fcc.gov 

Frontier/Citizens www.frontieronline.com

Integra Telecom www.integratelecom.com

McLeodUSA www.mcleodusa.com

Medley Global Advisors www.medleyadvisors.com

Qwest Communications International Inc. www.qwest.com

Stifel Nicolaus www.stifel.com

Verizon Communications Inc. www.verizon.com


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