Stepping Up Enforcement

Posted: 2/2004

Stepping Up Enforcement
FCC Commissioners Call on Regulator to Extend 271 Compliance

By Josh Long

One of the biggest regulatory battles of the last seven years ended in
December when Qwest Communications International Inc. was granted FCC approval
to offer long-distance phone and data services in Arizona. All four Bells have
authority to provide long-distance services throughout their entire local phone
territories after regulators found they have opened their networks to

But Jonathan Adelstein and Michael Copps, FCC commissioners in the Democratic
minority party, have called on the top communications regulator to step up its
enforcement to monitor Verizon Communications Inc. and its Bell brethren. We
need to take our enforcement duty more seriously. We have taken a step in the
right direction by establishing a formal Section 271 Compliance Review Program.
Yet our practice has been little more than requiring Bell operating companies to
provide the commission with performance data for the first year following
longdistance authorization, Adelstein and Copps said in a joint statement.
Without effective monitoring we may find the old monopoly forces that led to
the breakup of Ma Bell will just piece themselves back together again.

Under Section 271 of the Telecommunications Act of 1996, the FCC Enforcement
Bureau can take a variety of actions against a Bell that has stopped meeting any
of the conditions stipulated in a 14-point checklist.

Those enforcement actions include issuing an order directing the phone
company to get back into compliance, imposing a fine known as a forfeiture,
suspending a Bells authority to process more orders, or revoking its license.

Following federal approval of a long-distance application, the
FCC evaluates performance data and other information to determine whether the
Bell is complying with federal law. The FCC conducts compliance reviews six
months and one year following approval. Adelstein and Copps have asked the FCC
to extend the compliance reviews beyond one year.

FCC insiders say the two commissioners do not have the ultimate power to
alter the enforcement policy because the agencys Republican majority led by
Chairman Michael Powell controls the agenda and would have to take some type of
action to propose changes. All Adelstein and Copps can do, these people say, is
make lots of noise.

An official in the FCC Enforcement Bureau says the agency does
not stop enforcement just because one year passes following 271 approval. Companies still can file complaints and the FCC can decide to
launch an investigation, says the official, who agreed to speak on condition of

The only formal enforcement action the FCC has taken against the Bells for
stepping out of 271 compliance occurred in 2000. On Dec. 22, 1999, the FCC
authorized Bell Atlantic (now Verizon) to provide long-distance service in New
York. Two months later, the FCC began investigating claims Bell Atlantic was
failing to notify customers about the status of customers orders for local
service in a timely manner.

On March 9, 2000, the FCC and Bell Atlantic entered a consent
decree, requiring the phone company to implement a new software system for
processing the orders of its rivals. Bell Atlantic also agreed to pay $3 million
to the U.S. Treasury.

Beyond that we have not yet found major problems, says the FCC

It is unclear what would constitute grounds for suspension or revocation of a
271 license. The FCC official says the agency never has crossed that bridge. We
are continuing to do the reviews and we continue to be available to anybody who
thinks they spotted a problem, the official adds.

Asked whether the chairman would take any action to extend the oversight of
the FCC Enforcement Bureau beyond one year as requested by Adelstein and Copps,
Powells senior legal advisor Christopher Libertelli says, In cooperation
with state regulators, the enforcement bureaus 271 oversight efforts extend
past the oneyear time period you describe.

If a BOC falls out of compliance with the competitive checklist, they are
subject to sanction regardless of the timeframe, Libertelli adds.

Jonathan Lee, senior vice president of regulatory affairs with
the CompTel/ASCENT Alliance, says the trade group in 1999 asked the FCC to
implement the performance standards the state of New York had adopted.

Several other states have adopted performance measurements to
ensure the Bells continue opening their local phone networks to rivals. In
Massachusetts, for example, the performance metrics cover ordering,
provisioning, maintenance and repair, and network performance.

Lee says the FCC declined to issue federal performance measurements. The FCC
Enforcement Bureau told us adopting specific performance criteria [would]
hamstring the agency in the future, Lee says. We thought, rather it would
show a commitment to competition but they disagreed.

In November 2001, the FCC began a rulemaking proceeding to establish a set of
national performance measurements and standards to evaluate an incumbent phone
companys performance in providing wholesale services to competitors. But the
FCC has yet to adopt rules, the official says.

CompTel/ASCENT Alliance
Qwest Communications International Inc.
Verizon Communications Inc.

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