NuVox, XO Wanted FCC To Open AT&T/BellSouth 'Back Room'

Telecom Policy Report, Oct 16, 2006

Federal regulators on their own certainly had the authority to open a new 10-day comment period on merger-approval concessions proposed by AT&T and BellSouth, but they also may have had a heavy assist in reaching that decision due to protests by competitive carriers that appear to reflect policy frustration among rivals of the former Bell operating companies.

The Federal Communications Commission (FCC) meeting cancellation and vote delay on the merger last Friday was preceded the prior evening by an "emergency motion" filed by Chesterfield, Mo.-based NuVox Communications and Reston, Va.- based XO Communications, competitive local exchange carriers (CLECs) that were alerted about deal-making by media reports. They decried alleged "backroom, middle-of-the-night" efforts to get a 4-0 favorable vote from the regulator on the BellSouth asset/license transfer applications.

In a 11-page filing, NuVox and XO effectively challenged the compromise talks taking place between the two major incumbents and the FCC commissioners and staff, urging an open disclosure of the AT&T/BellSouth move that they claimed was designed "to force" a unanimous approval from skeptical regulators. They maintained the commission shouldn't permit AT&T to engage in such dealings outside of the public eye, and they claimed there were violations of rules going on.

"Although it apparently made its proposal available to at least one FCC commissioner, AT&T did not contemporaneously file those conditions in the public docket as required by FCC rules," NuVox and XO told the press. "As such, the public has been denied the opportunity to counter AT&T's back-room advocacy. This denial of public input is particularly stark during the so-called Sunshine Period, during which the public is barred from making ex parte contacts with the FCC on the merger proceeding."

In an exchange of internal letters on the matter, FCC Chairman Kevin J. Martin, a Republican, told Democratic Commissioners Michael J. Copps and Jonathan S. Adelstein that the AT&T/BellSouth proceeding would be "taken off of sunshine" to allow more time for evaluation and opportunities for public comment.

Rule Allegedly Ignored

NuVox and XO had said that, even if provided in response to a commission request for information, AT&T's ex parte presentations must be disclosed to the public if the presentation involves "new information regarding the merits" of the proceeding. Any presentation by AT&T that proposes the adoption of conditions AT&T hadn't previously proposed is, by definition, new information and must be disclosed in full, according to the two CLECs.

Their petition included additional exhibits with news stories quoting Robert Quinn, AT&T's senior vice president for regulatory affairs, as well as e- mails showing that an attorney for NuVox and XO - Thomas Cohen of Kelley Drye & Warren LLP - had tried to find out from AT&T counterparts (apparently unsuccessfully) how to access the new proposals at the FCC. "We have put a full set of conditions on the table that are reasonable and protect consumers," was the Quinn quote, without elaboration, that kicked off the affair. "I want a deal with these guys; we want a 4-0 vote."

NuVox and XO had argued that circumstances that exempt such settlement discussions from the commission's ex parte rules didn't apply to the current AT&T/BellSouth situation. As such, the two players should be ordered to file within 24 hours "all materials evidencing so-called conditions that were filed in this proceeding." The FCC's notice for additional comments didn't mention an order on the AT&T/BellSouth applicants but it certainly surfaced within about 24 hours.

Perhaps AT&T and BellSouth - not to mention other large incumbents - regard NuVox and XO as troublemakers on numerous regulatory and legislative scenes, but they, other CLECs and such affiliated organizations as The Competitive Telecommunications Association and the Alliance for Competition in Telecommunications have been consistent interveners opposed to the proposed consolidations and general thorns in incumbent-telco sides.

Policy Misgivings Elsewhere

NuVox, XO and other CLEC misgivings about policy directions, for instance, were evident at CompTel's 2006 Fall exposition and conference last week in Orlando. At a last-day regulatory session, NuVox and XO legal executives were among those with concerns about a variety of current and potential FCC developments surrounding digital subscriber line (DSL) deregulation, contradictions on the common carrier or information service classification of Voice over Internet Protocol (VOIP) activities, the new unified intercarrier compensation (ICC) regime and possible universal service fund (USF) reform.

Edward Cadieux, NuVox's vice president and senior regulatory counsel, was in high gear when he attacked the so-called "Missoula Plan" proposal - put together by AT&T, BellSouth, Global Crossing, Level 3 Communications and numerous rural ILECs - to revamp the telecom business's agreements on access charges and ICC arrangements (Telecom Policy Report, Sept. 30). Pending at the FCC, the plan was attacked by Cadieux on a wide range of what CLECs would regard as onerous and unfair items, including impacts on USF, state options/jurisdictions, subscriber line charges (SLCs), unbundled network elements and rival access to the public switching telephone network (PSTN) via Signaling System No. 7.