Stepping Up Enforcement

Posted: 2/2004

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

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 anonymity.

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 official.

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.