10/21/2008 02:13:54 PM EST
John M. Garvey, Esq., on In the Matter of Petitions of Qwest Corporation for Forbearance
In In re Petitions of Qwest Corp. for Forbearance, 2008 FCC LEXIS 5585 (July 25, 2008), the Federal Communications Commission (FCC or Commission) rejected Qwest’s petition under Sec. 10 of the Communications Act of 1934 (1934 Act) to eliminate dominant carrier, unbundled network element (UNE), and Computer III regulatory requirements in the Denver, Minneapolis-St. Paul, Phoenix, and Seattle Metropolitan Statistical Areas (MSA). The rejection of Qwest’s petition is notable since it reverses a trend toward granting these petitions. In this Commentary, John M. Garvey discusses the FCC’s rejection of Qwest’s petition. He writes:
Qwest sought forbearance in the Denver, Minneapolis-St. Paul, Phoenix, and Seattle MSAs from: (1) dominant carrier rate and tariff regulations applicable to mass-market and enterprise-switched access services; (2) UNE requirements under Section 251(c)(3) [of the Telecommunications Act of 1996] for loops, subloops and transport; and (3) Computer III requirements. The UNE requirements in Section 251 of the 1996 Act imposes on incumbent carriers the duty to, inter alia, provide unbundled access to loops, various subloops, and back-office transport at cost-based rates. Dominant carrier regulations include, inter alia, transfer of control and discontinuance proscriptions, cost-supported tariffing, and rate regulation. Computer III regulations were promulgated pursuant to the FCC’s Title I jurisdiction under the 1934 Act, and allows the Bell Operating Companies (BOCs) providing data services to choose between the Computer II structural separation requirements or nonstructural safeguards. The Computer II obligations have for decades allowed competitors to access the BOCs’ underlying telecommunication functionality in order to provide data-based services to end-users.
In rejecting Qwest’s petition, the Commission noted that the degree of competition in the four MSAs does not warrant such forbearance. The Commission explained that the degree of facilities-based competition is not comparable to other proceedings where forbearance was granted. It also noted that competition that relies on Verizon’s wholesale inputs is not a sufficient basis to grant forbearance. Moreover, competition from cable companies is problematic due to their minimal build-out outside the residential space.
As it has in other forbearance proceedings, the FCC was highly critical of the data used to support the forbearance petition. For example, it noted that the data submitted by Qwest to gauge wireless substitution consists of information Telephia published based on some sort of survey conducted of the wireless-only household rate in specific market areas, including the Denver, Phoenix, Minneapolis-St. Paul, and Seattle metropolitan areas. However, the only substantive information in the record regarding the Telephia survey is a news release that does not describe Telephia’s methodology or provide any other information to support the significance of the data. To the contrary, the news release states that the “[d]ifferences in wireless penetration rates between cities may not be statistically significant. Thus, the margin of error in such a survey alone would not allow us to draw any firm conclusion as to whether the criteria had been met.”
(citations and footnotes omitted)