Private Investors Keep Tabs on Pending Forbearance Petitions

The FCC’s 2005 action set a new precedent. In essence, the agency invited carriers to use the forbearance clause in the 1996 Telecom Act to seek deregulation they might not otherwise secure -- and use the clause they have, although with varying results. Verizon scored a coup when the FCC let a March 2006 deadline lapse without a vote. The inaction invoked the “deemed granted” provision, which meant in part that no official order would be published, so no one except Verizon knows the extent of the relief received.

Verizon didn’t fare so well last year, however. The FCC in December denied a Verizon request that mirrored Qwest’s Omaha petition, except that the forbearance would have applied in six markets, not one. Because of that breadth, experts have speculated Qwest will get a similar denial on its 4-MSA plea.

But that didn’t stop Verizon. Instead, in February, the carrier filed for the same forbearance relief. This time, though, it narrowed the scope just to Rhode Island. Verizon reasoned that it deserves forbearance similar to what Qwest received in Omaha because of competition from Cox Communications.

Verizon’s latest filing has led to outcry; competitors say Verizon hasn’t presented new information and that it’s abusing the forbearance process. In fact, 30 competitive carriers have asked the FCC to dismiss or deny the petition altogether.

Verizon rebuts opponents’ claims. In an April 14 letter, the carrier said competitors “ignore the fact that Verizon’s petition relies on new data, seeks relief for a different geographic area and addresses other concerns the commission previously identified.”

The newest Verizon forbearance petition also is fueling comments in another docket. The FCC has agreed to take input on whether it should adopt rules for considering forbearance petitions. Investors including M/C Venture Partners have told the FCC it needs to adopt a so-called “bright line test.” Such a test would require petitioners to file complete requests, and require the FCC to make a decision on facts that exist when the document is filed. Petitioners often add pivotal information to their requests at the last minute, excluding other parties from commenting by the deadline.

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