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CLECs CITE FRUSTRATIONS WITH ANTITRUST LITIGATION AGAINST ILECs

Antitrust litigation is avenue for CLECs seeking more cooperation from ILECs they view as monopolistic, but successful litigation can be elusive, attendees said at pulver.com conference in Washington on antitrust Wed. Washington antitrust attorneys and executives of embattled CLECs discussed in detail how Goldwasser decision -- which states that regulators overseeing Telecom Act generally preempt antitrust litigation -- has limited ability of CLECs to counter alleged monopolistic behavior by ILECs. Discussion intentionally didn’t include any ILEC representatives, since attendees hoped they could pool their resources to find ways to go after ILECs in court on antitrust grounds.

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Goldwasser is “800-pound gorilla” blocking competition, said Cole, Raywid, Braverman partner Chris Savage. He represents CLECs but once worked for Bell Atlantic. Stephen Perkins, gen. counsel for Cavalier Telephone, said that in his company’s antitrust suit against Verizon, it specifically did not file any Telecom Act complaints, but Verizon in its motion to dismiss said the case still dealt with Telecom Act and should be dismissed under Goldwasser. “Verizon wants to crush us,” Perkins said, noting that ILEC had become harder to deal with since court case began and had attempted to block Cavalier’s acquisition of Net2000. Covad also is in antitrust suit with Verizon, but Covad Senior Counsel Tony Petrilla said ILEC had improved its behavior following beginning of litigation because poor behavior would be harder to defend in court. Still, he said Covad “knows what it’s like” to be targeted by ILECs.

Few attendees were confident CLEC woes could be solved at FCC. Thomas Krattenmaker of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, said “the FCC is never going to be able to come down squarely on the side of competition” because it aims to preserve subsidies for various industries and regulate public interest issues not directly related to competition. He said “in the short run at the FCC, the little guys are screwed,” adding “if you're a CLEC and you want relief, the FCC is not the place, nor is Congress… court is the only remedy.” Others said CLECs wouldn’t succeed simply by working out deals with ILECs. Savage said Bell attorneys were “very intelligent about protecting things… they're very good at defense.” Trying to reach interconnection agreements with Bell “is like negotiating with a terrorist… it’s a slow and painful process,” he said. Even after agreements are reached, he said, Bells often violate them, then tell CLECs they can take issue to court if they choose.

Much of focus on whether Bells are natural monopolies was on their ownership of local loop, and Covad Senior Counsel Tony Petrilla said that since Covad relied on copper loop to interconnect its network with ILECs and aimed to offer broadband nationwide, “the copper loop is a natural monopoly.” Goldwasser case was handed down by 7th U.S. Appeals Court, Chicago, but Covad’s case with Verizon is in 11th Circuit, Atlanta. Some antitrust attorneys in attendance were hoping that another circuit would rule on antitrust in favor of CLEC and at least in part break down restrictions of Goldwasser, and hoped such potential reversal wouldn’t be forestalled by CLECs’ settling out of court. Petrilla promised “our case is not going to be settled. There’s zero chance of a settlement.” There was general consensus that Goldwasser had been overread by ILECs and that courts needed to be educated about antitrust authority they did have over Bells.

CLEC in-house and outside attorneys for such litigants as Ntegrity, CoreComm, NOWCommunications, espire.net, Allegiance Telecom, Z-Tel and Servisense presented long lists of actions taken by Bells they said were abuses of monopoly power. Diana Parker, head of law firm representing Ntegrity, said she was in discovery process seeking evidence that ILEC operations officials colluded with other ILECs in limiting options to CLECs. Other attendees expressed skepticism at finding evidence of collusion from Bells, but Parker said she also may subpoena trade associations ILECs belong to such as USTA to see if they have any records of dialog among ILECs.

Several attorneys criticized cap on fines FCC can issue for bad behavior by ILECs. Blumenfeld & Cohen partner Jeff Blumenfeld, who once headed U.S. v. AT&T case for Justice Dept., said Verizon made more than $60 billion annually in revenue, so $10 million fine was like “$10 parking ticket.” He and others dismissed notion that recent $6 million in fines imposed on SBC (WID Jan 21 p1) would in any way affect that company’s bottom line or motivate it to change its behavior.

Mintz, Levin’s Krattenmaker said he had told law students that they “shouldn’t worry about regulations because technology will outrun them.” But American ISP Assn. Pres. Sue Ashdown said people had been saying for years that satellite and wireless networks would render moot the monopoly ILECs held on local loop, but that still hadn’t happened, and “I doubt you're going to see that soon.”