DoJ RECOMMENDS APPROVAL OF SEC. 271 FOR VT. IF PRICES ARE RIGHT
Dept. of Justice recommended FCC approve Verizon’s application to provide long distance service in Vt., but urged Commission to “carefully review” concerns by several CLECs about Verizon’s pricing of unbundled network elements (UNEs) in state. Justice’s recommendation followed pattern set by its last 2 Sec. 271 recommendations -- for N.J. and R.I. -- in which it recommended FCC approval with caveat that Commission make sure wholesale prices were right. DoJ said Commission was more experienced in ratemaking issues, so it should determine whether those UNE prices were appropriate.
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DoJ said in news release -- and also in footnote -- that there was additional uncertainty about prices because of changes that have occurred since application was filed, but it didn’t take position on whether changes should be taken into consideration. Verizon’s Vt. application relies on benchmark comparisons to unbundled switching rates in N.Y., which recently were reduced about 50% by N.Y. PSC, Justice said. It said Verizon’s Sec. 271 petition for R.I. also was based on those old N.Y. rates and company had proposed amending its R.I. petition to take changed rates into consideration. FCC is considering whether to allow Verizon to reflect lower switching rates in R.I. petition. Deadline for FCC action on R.I. petition is Sun. and agency is expected to act today (Feb. 22).
Otherwise, DoJ Antitrust Chief Charles James said, competitors have made progress in entering business market in Vt. “and the department believes there are no longer any material nonprice obstacles to residential competition in the state.” Department said Verizon submitted evidence to show its Vt. operations support systems (OSS) were same as those FCC found satisfactory in Mass. “Moreover, the record indicates few complaints regarding Verizon’s [Vt.] OSS,” DoJ said. It said Verizon and CLECs served total of 374,000 lines in Verizon’s Vt. service area and CLECs “using all modes of entry serve approximately 21,500 lines, or 5.7% of all lines.” Competitors serve 16% of business lines but only 1% of residential lines, DoJ said. Most of competitors’ stake in business service is provided by resale -- 12.1% of all business lines in Verizon territory is served by competitive resellers. Facilities-based competitors have 3.5% of business lines and UNE-based CLECs have less than 1%.
Verizon Senior Vp John Thorne said company was “delighted” by DoJ’s recommendation. Current Justice Dept. is “tough on competition questions,” he said, so recommendation, even though it left pricing question to FCC, indicated strong signal. Thorne said DoJ’s strength was looking at whether markets were competitive so it left pricing issues that FCC had been so involved with. Verizon has gained Sec. 271 approval in Conn., Mass., N.Y. and Pa. and has petitions pending for N.J., R.I., Vt. No filings have been made yet for its remaining 6 states and D.C. Thorne said Verizon’s entry into long distance markets in other states had stimulated additional competition so “we look forward to offering consumers in Vermont the same benefits from competition as enjoyed by their neighbors in Massachusetts.”