The News Spring (cont'd)

The Bells have argued for years that cable-delivered voice should be subject to common carrier regulation. The cable industry had avoided the issue successfully arguing their networks were built on private capital. An October 2003 ruling has muddied the issue, however. On October 6 the 9th Circuit US Appeals Court overturned the FCC's March 14, 2002 "information service" cable broadband classification. The three-judge panel declared cable a "telecommunications service," thus subject to common carrier regulations. On April 9, however, the cable industry and the FCC won a delay of a ruling that would open cable systems to rivals to offer Internet services. If an appeal to the U.S. Supreme Court is filed by June 30, the delay will remain in effect until the high court finishes with the case, according to the 9th Circuit Court's order.

Regulation Generates Cash for States, U.S. Treasury
During the past 12 months, nearly every major incumbent carrier in the United States was fined for at least one violation of competition rules. While the fines are common, they are not necessarily proving to be effective as many carriers continue to persist and pay further fines.

Verizon was fined $5.7 million for violating a federal ban on marketing long distance services in its local region prior to FCC authorization. Verizon also broke affiliate transaction rules, failing to keep its BOC arm structurally separate from its long distance affiliate. Further, the FCC awarded $12 million to Core Communications as compensation for Verizon denying the company access in the Washington Metropolitan area, a gross violation of Section 251 rules.

BellSouth was fined $1.4 million for violating long distance marketing rules and for refusing to provide long distance services to certain CLEC customers. Cingular Wireless and T-Mobile were each hit with E911 violations. T-Mobile was fined $1.25 million for its Phase I violation, Cinglar Wireless $675,000 for its Phase II violation. Meanwhile, AT&T was fined a mere $780,000 for Do-Not-Call violations.

SBC and Qwest have been busiest at drawing fines. SBC was fined $1.35 million for long distance marketing violations. An amazing 38-month streak of SBC/Ameritech Merger term violations ended for SBC in November 2003 - not because the violations ceased, but rather because the requirement to report wholesale performance standards did. The latest round of fines SBC/Illinois paid to the state of Illinois was $801,661, for a total of $57.3 million since July 2000. Across its 13-state territory, SBC has been fined more than $1 billion by state and federal regulators for wholesale performance standards violations. The U.S. Treasury has received $724,475 from SBC for a final total of $85.3 million in federal fines for anti-competitive behavior since 2000.

Qwest was fined $6.5 million for its long distance marketing violations. The FCC fined Qwest $9 million for failing to follow rules designed to ensure competition for local phone service in Minnesota and Arizona. This follows Qwest's settlement of $21 million in Arizona and a fine of $26 million in Minnesota, which is under appeal. Qwest asked the Arizona Corporation Commission (ACC) to keep secret the amount of restitution it would pay to individual CLECs if it adopts Qwest's latest proposed settlement of charges. The charges surround allegations that Qwest made secret preferential deals with selected CLECs in order to buy their silence regarding violations. Qwest proposed to pay restitution to 3 CLECs who weren't offered closed-door deals. It does not end there. Qwest and the Colorado Office of Consumer Counsel agreed to a settlement of charges that Qwest made secret preferential agreements with selected CLECs in order to get them to drop their opposition to Qwest's regulatory initiatives, such as its long distance entry bid. Qwest is paying $7 million to settle the charges.

It is unnerving to see these kinds of violations. Even the language of the statements is uncomfortable. The following quote, "SBC has agreed to make a voluntary payment of $1.35 million to the United States Treasury," is from the October 1, 2003, FCC news release. How many of the $1 billion dollars in fines paid by SBC were given voluntarily? If they were given voluntarily, it suggests SBC has much to gain through paying fines and failing to meet wholesale performance standards - thus hamstringing their competition.

Lastly, WorldCom is emerging from bankruptcy as MCI. WorldCom recently agreed to create 1600 jobs in Tulsa in exchange for dismissal of fraud charges the state of Oklahoma has brought against the company. This has occurred despite the fact that $64 million was lost from the Oklahoma state pension fund specifically as a result of WorldCom's $11 billion accounting scandal.

« Prev   |   1   |   Subscribe 2

Send Comment

© 2004, All information contained herein is the sole property of Pipeline Publishing, LLC. Pipeline Publishing LLC reserves all rights and privileges regarding the use of this information. Any unauthorized use, such as copying, modifying, or reprinting, will be prosecuted under the fullest extent under the governing law.