SBC WITHDRAWS SEC. 271 APPLICATION FOR MICH.
SBC said it would refile its Sec. 271 application for Mich. within 30 days, after withdrawing it early Wed. because of “the need to clarify the record.” The company withdrew the application to offer long distance service in Mich. only hours before the FCC was to act on it. The agency was statutorily required to vote on SBC’s application by the end of the day Wed. SBC Senior Vp James Smith called pullback “a minor delay.” He said there was no question the state had strong local competition and a statement by FCC Chmn. Powell after the withdrawal indicated the agency’s concerns were “very narrow.”
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Despite the fairly high number of competitors in Mich. and an endorsement by state regulators there, observers had been speculating the FCC would turn it down, especially after the agency asked for more information about the company’s billing system last week. The Dept. of Justice also had indicated “serious concerns” about the application in its Feb. 26 evaluation, saying it couldn’t support the application because of questions about the company’s “change management processes.”
Powell’s statement indicated that the agency was contemplating denial. He said he thought SBC’s application “generally” was acceptable but: “The outstanding issues that prevented approval were very narrow, but nonetheless important. Perhaps the most troubling of these issues relates to billing. Despite extensive examination of the record supporting these applications, questions remain regarding whether SBC is currently providing wholesale billing functions for competitive LECs in a manner that meets the requirements of our existing precedent.”
The application had been strongly criticized by competitors for lacking proof that SBC’s wholesale billing procedures were operating effectively and not hurting competitors that leased facilities from SBC in Mich. An MCI spokeswoman said the withdrawal was “good news for consumers and competition.” She said SBC must prove “it can cooperate with other carriers” before regulators “reward it with long distance authority.” An AT&T spokeswoman “commended” the FCC “for remaining steadfast and refusing to approve” the application: “Ordering, wholesale, billing, process and data integrity problems plagued this application and SBC’s postfiling claims that it had or would remedy these problems were far too late and too little to permit approval.”
Powell said part of the problem was that data involving billing came so late that it challenged the agency’s rule that a Sec. 271 application had to be weighed based on the information provided when it was filed and couldn’t be revised as time passed. “Indeed, much of the information related to this issue, including the results of a data reconciliation, was introduced very late in our 90-day process,” Powell said. “If the Commission were to take this evidence into account, it would have required an unusually broad waiver of our freeze frame’ rule.”
“Few states have achieved the levels of market penetration seen by Michigan,” Powell said, and he was confident the problems would be resolved soon “in consultation with the Michigan Commission, Department of Justice and this Commission.”
IBEW’s Mich. unit wrote to the FCC Tues. urging it to turn down SBC’s application, saying it shared DoJ’s concerns about change management procedures, “dysfunctional” operations support systems, “gamesmanship regarding line-loss notifications,” billing procedures, “incomplete performance data measures.” IBEW said that as a union it supported competition as a “job generator.” It said “ideally” it would like to see SBC enter the long distance market because that would create additional competition and jobs, “but we do not support the entry into such markets to the extent it undermines competition in the local telephone and narrowband data markets.”