SERVICE CONTINUITY LIKELY TO BE FOCUS OF SENATE TELECOM HEARING

OPASTCO sent statement to Senate Commerce Committee for today’s hearing. OPASTCO Pres. John Rose focused on importance of interstate and intrastate access charges and universal service funds for rural carriers. Rose said WorldCom’s bankruptcy, and its inability to make payments, could spread to other companies, including rural telcos he represents. “OPASTCO members believe that it is essential for federal policymakers to take steps to ensure that the business failure of WorldCom does not spread to other companies,” Rose said. Rural telecom companies rely on revenue from both universal service payments and access charges, he said. “Were small, rural LECs to lose a significant portion of either or both of these revenue streams, access charges and/or local rates would need to be increased in order to continue to provide quality service,” Rose said. “In turn, such increases could force many rural residents to drop off the network.” OPASTCO said WorldCom asked U.S. Bankruptcy Court, Manhattan, to classify access charge payments as “utility service payments” with “administrative expense status.” Such status would assign payments as lower priority, as opposed to category of “critical vendor payments.” “Access charge payments are not just another cost of doing business for WorldCom,” Rose said. “Access is a critical input in the provision of toll service; without it, toll calls could not be initiated or completed. Therefore, any disruption of access payments would jeopardize both WorldCom’s efforts to continue its operations, as well as the reliability of our national telecommunications network.” Rose also said WorldCom’s universal service contributions couldn’t be treated in similar manner to other govt. fees it might incur. He said it was “essential” that court and federal regulators demand that WorldCom specifically guarantee that it would continue to make its contributions to universal service fund.

Allegiance Telecom sent letter to Powell objecting to request by BellSouth, USTA and Verizon for protection for ILECs should CLECs and IXCs be unable to make payments. “The ability to impose and enforce the payment of security deposits on competitors in the hands of monopoly carriers, such as the RBOCs, can be extremely anticompetitive,” Allegiance Telecom CEO Royce Holland said. Efforts by RBOCs to require 2-month security deposit and advance payments from competitive carriers were “one-sided and heavy handed in the extreme,” he said. Holland recommended: (1) All carriers should be treated equally with regard to security deposits and advance payments. (2) Deposits should be refunded promptly, with interest, once good payment history was established or reestablished. (3) Commission should support all carriers’ efforts in bankruptcy court, not only those of ILECs, to obtain adequate assurance of payment for services provided to carrier-customers in bankruptcy. (4) All competitors should have equal opportunity to compete for and obtain distressed CLEC customers and facilities (including leased UNEs) used by distressed CLEC to serve them by ensuring that migration process was as seamless for competing CLEC as for ILEC retail division.

In reply to Allegiance letter, BellSouth spokesman said ILECs were simply seeking right to reevaluate financial stability of customers. He said existing rules allowed ILECs to evaluate new customers, but not reevaluate existing customers. And USTA said that despite “overblown rhetoric,” Holland largely agreed with USTA positions. “All telecom companies, large and small, will be affected by the fallout from WorldCom, and the FCC must take steps to minimize the damage to the industry by not propping up failing companies at the expense of healthy ones,” USTA spokeswoman said.