Appeals Court Lets Stand FCC Relief for Verizon
By Corey Boles
The Wall Street Journal
Saturday, December 7, 2007
An federal appeals court rebuffed an attempt by Sprint Nextel
Corp. and Qwest Communications International Inc. to overturn
relief Verizon Communications Inc. won last year from rules
governing aspects of its commercial broadband service.
The U.S. Court of Appeals for the
District of Columbia on Friday declined
to review the situation, saying that there was no Federal
Communications Commission action to review.
The relief to Verizon was granted last year when four FCC
Commissioners were deadlocked over the company's request and a
deadline expired. The fifth commissioner, Republican Robert
McDowell recused himself because he had recently arrived at the
agency and had a conflict from his previous role as a lobbyist
for smaller telephone companies.
As a result of the deadlock, Verizon's forbearance petition, was
"deemed granted." Verizon was given considerable flexibility
over the rates it is allowed to charge large companies
subscribing to broadband service. Sprint Nextel and Qwest were
hoping the court would overrule the decision and roll back the
relief granted to Verizon. But the court disagreed.
"There is no indication that the commission or individual
commissioners have abused this provision or have acted in bad
faith," the Appeals Court
But Verizon's victory may be short-lived. FCC Chairman Kevin
Martin has circulated a proposed rule to the other commissioners
that would partially remove the pricing flexibility Verizon has
and would bring the company's regulatory treatment into line
with rivals AT&T Inc. and Embarq Corp.
Those companies, plus Qwest, filed what are called "me, too"
petitions seeking parity with Verizon.
In September, Qwest withdrew its petition when it seemed certain
to be denied by the FCC. The agency then partially granted the
requests by AT&T and Embarq. After the AT&T and Embarq
decisions, Qwest then filed a second application seeking the
"We hope the FCC now feels comfortable with moving forward on
Qwest's petition and grants it the same relief afforded our
largest competitors, AT&T and Verizon," said Shirley Bloomfield,
senior vice president of Qwest's federal relations team.
Mr. Martin's proposed order would bring Verizon into line with
AT&T and Embarq as far as rules the companies must abide by.
A spokesman for Verizon said the rules should not be changed.
"This occurred 20 months ago. Since then we have negotiated
more than 200 contracts with large companies and prices have not
gone up," said David Fish, the spokesman.
The Verizon case has been highlighted by lawmakers and other
critics of forbearance petitions as an example of why the
current FCC framework needs repair. Mr. Martin was pressed by
members of the House Telecommunications Subcommittee to commit
to always holding a vote on future forbearance petitions at an
oversight hearing earlier in the year.
Two senior Democrats, Reps. John Dingell, D-Mich., and Edward
Markey, D-Mass., the chairmen of the House Energy & Commerce
Committee and the telecommunications subcommittee respectively,
introduced legislation in October that would remove the "deemed
granted" language in the Communications Act of 1934 where it is
The FCC declined to comment for this article.
"While we are disappointed in the court's decision, we are
encouraged that leaders in Congress have recognized that the
FCC's forbearance process is broken and that the law needs to be
changed," said John Taylor, a Sprint Nextel spokesman. "This
decision demonstrates that changes in the law cannot happen soon
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