Verizon Says Deregulation Ruling Won't Unravel MCI
By Amy Schatz
The Wall Street Journal
Thursday, March 23, 2006
Verizon Communications Inc., making clear its view on some
implications of a confusing move by the Federal Communications
Commission earlier this week, said regulators' decision to
deregulate broadband data services it provides to large business
customers won't free it from conditions imposed when it acquired
MCI Inc. Verizon also said the decision won't eliminate its
obligation to continue payments to a fund that subsidizes phone
services for low-income and rural customers.
Earlier this week, the FCC granted Verizon's request that its
high-volume data lines be reclassified, essentially lifting
price controls. But it did so without written comment, sparking
widespread uncertainty over the implications.
Verizon's 2004 petition asked the FCC to ease a wide swath of
obligations, including contributions to the Universal Service
Fund, which subsidizes phone services for rural and low-income
consumers. But the company said in a Feb. 17, 2005, letter to
the FCC that it wasn't asking for relief from its USF
obligations. It now says that letter reflects its current
position.; some FCC officials have said it was unclear that
letter trumped Verizon's original petition.
There was enough concern inside the FCC about the issue that FCC
Chairman Kevin Martin directed staff to draft an order requiring
Verizon to pay into the fund, which is now circulating. "It's
fair to say USF issues are near and dear to the chairman's
heart," said one FCC official. "We want to make sure there's
nothing that upsets the status quo."
Verizon also said this week's decision has no impact on
conditions the FCC and Justice Department imposed when it
acquired MCI last year. Most of the conditions required it to
continue to lease high-volume lines in some markets and limited
the price it could charge to some customers. Although the
relief provided by the FCC involves some of the same lines, the
merger conditions are a separate obligation and aren't affected,
said Ed Shakin, assistant general counsel at Verizon. "You can
have independent obligations on the same services," he said.
Write to Amy Schatz at