MARTIN FAULTS FCC RATIONALE FOR APPROVING SBC'S CAL. APPLICATION
It’s “premature” to give Sec. 271 authority to SBC for Cal., even though company has made “great strides in opening the local market” there, FCC Comr. Martin said in statement explaining why he dissented in vote to approve SBC’s application (CD Dec 20 p3). “The record does not demonstrate that SBC has satisfied all of the requirements of Section 271,” he said. Congress didn’t give FCC right to look at any Bell’s overall compliance and balance out pluses and minuses, he said. Instead, Congress required that Bell “must meet each and every checklist item” before FCC granted it interLATA relief, Martin said.
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Noting that Cal. PUC had determined that not all checklist items had been met and saying application wasn’t in public interest, Martin said “states play a critical role in our evaluation of checklist compliance” and their views should be “accorded great weight.” After “an intensive proceeding spanning more than 4 years,” Cal. PUC held that SBC had failed Checklist Items 11 and 14, involving number portability and resale, Martin said: “I am troubled by my sense that this Commission has not given appropriate weight or respect to the findings of the California Commission on these issues.” He said he was particularly dismayed about FCC dismissing Cal. PUC’s concerns on one particular Checklist 14 issue -- restrictive conditions in SBC’s interconnection agreements. FCC dismissed those concerns, saying PUC hadn’t provided enough details and no commenters had identified any particular restrictive conditions, Martin said. “However, the [PUC] opinion does, in fact, offer insight into the nature of these restrictive conditions,” he said: “The opinion reflects that the state had before it arguments by several parties, including AT&T, XO, ASCENT… that various interconnection agreements contained numerous restrictive conditions.”
Another of Martin’s concerns: DS3 rate offered by SBC in Cal. when application was filed Sept. 20. He said he didn’t think rate was TELRIC-compliant or met Checklist Item 2, which required nondiscriminatory rates for network elements: “Indeed, this rate is more than triple the comparable rate in Texas.” SBC consequently lowered rate but Martin questioned whether it was right for FCC to waive “complete-as-filed” rule and accept lower rate in its deliberations.
FCC Comr. Copps said although he voted to approve application he also had concerns, including misgivings about whether SBC had met its obligation to make DSL services available for resale, issue that came up more than year ago when SBC’s Ark.-Mo. application was approved. FCC had committed to look into that issue by 2002 and still hadn’t come to resolution, Copps said: “I am deeply troubled that we find ourselves in this position, but I cannot vote to deny an application when it is the Commission itself that has failed to provide clarity and direction.” He said PUC’s concerns whether SBC application met public interest standard also “is enough to give me pause.” However, he said he felt comfortable that FCC’s action met public interest, especially if it and state commission remained “vigilant.”
FCC Chmn. Powell said Commission went to “great lengths to give appropriate consideration to these issues.” He said that “while this decision accords an appropriate amount of deference to the California Commission, the statute and our precedent also make clear that this Commission is not bound to reach the same outcomes as might be reached by the state commission… I am hard put to see how we could have afforded any more deference to the California Commission without compromising the integrity of this Commission’s independent review. It is also worth emphasizing that the California Commission is currently considering a decision that will resolve all of its remaining concerns under state law. While I am mindful that this decision has not yet been approved by the California Commission, it would seem to me that any suggestion that we have undermined a critical state interest or otherwise acted against the wishes of the state is exaggerated and creates conflict with the states where none can be reasonably found.”
Legg Mason analyst Blair Levin cautioned investors that while regulatory clearance was positive for SBC, “there is still some litigation risk from a likely AT&T challenge [because] the FCC decision does not appear to be bullet- proof, though so far no 271 approval has been blocked in court.” In report Fri., Levin said there might be silver lining for AT&T, WorldCom and other competitors: “The Bell long distance offensive could bolster their political arguments that the FCC should not radically scale back UNE-P” (unbundled network element platform). UBS Warburg analyst John Hodulik also saw UNE-P connection, saying Martin’s dissent was “an indication of the procompetitive position he is likely to take in the upcoming debate of UNE-P.”