FCC Denies Verizon's Rate Request
The FCC decided late yesterday that Verizon is still required to give smaller carriers access to its network at discounted rates, so to increase competition in certain markets. The decision affects six U.S. cities: New York; Boston; Philadelphia; Pittsburgh; Providence, R.I.; and Virginia Beach, Va.
Verizon had asked the FCC to remove this requirement more than a year ago, arguing that it's facing increased competition already from cable, wireless, and VOIP operators. (See Verizon Asks FCC to Undo Unbundling.) That competition has resulted in the carrier's recent loss of traditional access lines.
But the FCC agreed with the little guys that they could very well have gone out of business in this fiercely competitive market, were it not for the reduced rates.
Companies like Broadview Networks Holdings Inc. , Covad Communications Inc. , EarthLink Inc. (Nasdaq: ELNK), and XO Communications Inc. use Verizon's lines for at least parts of their networks.
Broadview, which recently filed for an IPO, has had no problem increasing revenues, but its losses have gone up, too. Broadview arguably could have been crippled if Verizon were allowed to charge much higher rates. (See IPO Alert: Broadview Files Its S-1.)
While legislators applauded the FCC's decision, Verizon said the FCC was actually inhibiting competition.
"If the FCC had approved these petitions, it would have permitted Verizon to provide network facilities at commercial rates," Verizon executive vice president Tom Tauke said in a statement. "Instead, the Commission missed an opportunity to promote and encourage facilities-based competition by continuing to require one of the network providers in these markets to sell unbundled facilities at government-mandated, subsidized prices."
On top of trying to force CLECs to pay higher rates, Verizon has also inhibited them by cutting the copper loop from homes in which it installs FiOS. This makes it impossible for a CLEC to provide service to that specific home. (See Got FiOS? Say Goodbye to DSL.) Verizon says its policy is to leave the copper in place if the customer requests it.
— Raymond McConville, Reporter, Light Reading
Obviously nothing.
Expect VZ to take them to court on this and win.
The FCC has never won in court against the ILECs when they argue interpretations of the Comm Act of 1996. NEVER.
Here is what will happen. They go to Court, the FCC is ordered to grant the forbearance. The FCC has now lost what little teeth they had left. The ILECs definition of modal infrastructure competition stands. You can almost hear the argument to the court: Cable Companies are taking share from us, so are CLECs, so is satellite, so are ISPs and so is wireless. Cable companies by law do not have to provide access but we do. Forbearance will be granted.
Remember Mike Powell ... ILECs sent him packing.
The time for negotiation and compromise was before a vote. When the court orders this ... all hell breaks loose for non-infrastructure owning CLECs. Deservingly so. They need to stop depending on the ILEC.
I'm Kreskin and you heard it here first.