WASHINGTON-More regional holding companies filed petitions for review at various courts of appeals of the Federal Communications Commission’s local competition and interconnection order in hopes of killing, or at least delaying, commission rules that they view as being anti-states’ rights. And in the midst of all this wrangling, Western Wireless Corp., a cellular and personal communications services provider, filed in 13 states to begin interconnection arbitration under rules generated by the Telecommunications Act of 1996.
BellSouth Corp., Pacific Telesis Group and Bell Atlantic Corp. filed joint paperwork Sept. 6 at the U.S. Court of Appeals for the District of Columbia Circuit that said, “Relief from the commission’s order is sought on the grounds that it is arbitrary, capricious and otherwise contrary to law. Petitioners request that this court hold unlawful, vacate, enjoin and set aside the commission’s order.” In a separate filing the same day, SBC Communications Inc. submitted the same words at the Circuit Court of Appeals for the Fifth Circuit in New Orleans, and Nynex filed at the D.C. Circuit. Ameritech waited until Sept. 10 to file at the D.C. Circuit to overturn significant portions of the order; like its sister RHCs, Ameritech did not request a FCC stay of the rules.
Southern New England Telephone Co. followed up its Aug. 28 FCC request for stay by asking the D.C. Circuit Sept. 10 to overturn the interconnection order and to stay the rules until a decision is made.
The FCC currently is considering a number of petitions for the stay of its rules. However, by lottery, it was decided the St. Louis appeals court would hear the arguments against implementing interconnection rules. Oral arguments reportedly could begin with four months.
BellSouth said that it has supported competition and successfully negotiated 20 interconnection agreements within its nine-state region, and that “the FCC had no right to supplant these marketplace agreements or the intent of Congress with its minutely detailed rules.”
Walter Alford, BellSouth’s general counsel, said, “The commission seems to be taking over regulation of local telephony, which is entrusted to the states. We want to move quickly to competition; therefore, we feel we must act to keep the commission from undermining the interconnection agreements we have reached through voluntary negotiations and state-conducted arbitration proceedings.”
None of the RHCs can enter the lucrative long-distance market-a key carrot contained in the Telecommunications Act of 1996-until they open up and unbundle their networks to the competition. To this end, Alford said, “We want to get into long distance as soon as possible because BellSouth’s customers want a complete package of telecommunications services. On the other hand, AT&T (Corp.) and MCI (Communications Corp.) can be expected to do anything they can to protect their cozy long-distance cartel.”
Pacific Telesis believes the FCC’s rules will stifle competition at the state level; in addition, PacTel said the new rules “virtually eliminate the role of state commissions in overseeing pricing issues … forcing them into a narrow one-size-fits-all model.”
“This isn’t our understanding of what Congress intended,” said PacTel general counsel Dick Odgers.”We’re anxious to get into long distance, but we want good rules that reflect the intent of Congress. The long-distance companies are more than happy with these rules because they know they will delay competition in their business.”
Two objections to the FCC’s interconnection order pushed SBC into filing for a review: the rules negate state authority over pricing and negotiation without taking into account local needs and conditions; and that because the FCC did not include a methodology for recovering the actual network costs into the rules, it “acted in a confiscatory manner.”
SBC’s Senior Vice President Dan Hubbard commented, “We expect to ask for an expedited hearing because we don’t want to hold up competition in the local market. SBC already signed interconnection agreements with nine competitive providers in four states, and we’re negotiating with many more. The FCC rules are not helpful in completing this process.”
Now for the flip side of all of this. Claiming that the two entrenched carriers were not negotiating new interconnection contracts in good faith, Western Wireless filed arbitration requests to state commissions Sept. 6 against U S West Communications Inc. in Colorado, Idaho, Montana, Nebraska, New Mexico, North and South Dakota, Oregon, Utah and Wyoming; and against GTE Telephone Operations in California, Hawaii, Nebraska, New Mexico, Oregon and Texas.
The Issaquah, Wash.-based carrier is the first to seek state regulatory help to level the playing field regarding interconnection fees and mutual compensation.
“Western Wireless took this action following several months of negotiations with U S West and GTE,” said Gene DeJordy, director of regulatory affairs and Western Wireless’s principal interconnection negotiator. “U S West and GTE have been unwilling to implement the FCC’s default proxy rates and have been unable to produce a forward-looking cost study based on a `total element long-run incremental cost’ methodology to support higher rates, as required by FCC regulations. Consequently, Western Wireless had no option but to seek arbitration.”
Interconnection pricing is the main stumbling block. According to DeJordy, other carriers with which he needs to work are charging anywhere from a little less than three cents per minute to 17 cents per minute.
The state commissions have about three months to make a decision, DeJordy told RCR, but the companies will continue to negotiate during that time. “Several of the states do not have arbitration rules in place yet.” In those states, regulatory commissioners probably will be assigned as arbiters in the event the three carriers cannot come to a mutual pricing decision on their own.
