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FCC Spent $150,000 Evaluating One Verizon Pricing Bid

By Fawn Johnson, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Federal Communications Commission devoted more than 2,000 staff hours, costing about $150,000, to a single petition from Verizon Communications Inc. (VZ) to raise wholesale prices in Virginia Beach and Rhode Island, Acting FCC Chairman Michael Copps said in a letter to House Energy and Commerce Committee Chairman Henry Waxman, D-Calif.

In the letter released for public notice Tuesday, Copps said substantial private resources also were expended for the petition, which Verizon withdrew at the last minute.

Excluding Verizon's filings with the FCC, the docket for the case exceeded 1, 850 pages. Verizon's filings alone totaled roughly 400 pages.

Waxman asked Copps to detail the FCC's activities on the petition after Verizon withdrew it days before the commission was set to deny it.

Verizon said it yanked its request because a federal appeals court hadn't ruled on the company's separate bid to raise prices in six markets.

Experiences such as this have prodded Copps to attempt to change the way the FCC processes requests from telecom companies for regulatory relief, often to raise wholesale prices or to change other business-to-business contracting terms.

Copps argues that the process, known as "forbearance," significantly strains the FCC's resources at a telecom company's discretion.

In his letter to Waxman, Copps noted that this isn't the FCC's first deregulatory petition from Verizon. Just months before Verizon submitted its most recent bid, the FCC had denied a similar request for pricing flexibility in six markets. Verizon challenged that ruling in court, which also cost the FCC considerable time and money to defend.

AT&T Inc. (T), and Qwest Communications International Inc. (Q) also have submitted such petitions to the FCC.

Much of the FCC's deregulatory process is set by statute, meaning Congress would have to step in to change some of its most controversial elements.

For example, the FCC is required, by law, to act within a certain time on companies' petitions, often to increase wholesale prices for competitors in certain markets. If the commission doesn't issue a decision by the deadline, the companies' requests are granted automatically.

Many Democrats on Capitol Hill have echoed Copps's concern that telecom companies game the FCC's deregulatory system.

Copps believes the FCC can make tweaks to the process, without upsetting congressional authority, that would discourage companies from withdrawing their petitions at the last minute, among other things.

Copps has circulated a proposal to his fellow FCC commissioners that he believes will make the process more efficient and fair.

In his letter to Waxman, Copps said his proposal aims to "protect the Commission from utilizing its limited resources on forbearance petitions that are incomplete, unclear or retain the possibility of being unilaterally withdrawn by petitioners late in the process."

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@ dowjones.com

  (END) Dow Jones Newswires
  06-09-091640ET
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