THE OVERALL ISSUE

Section 10 of the Telecommunications Act of 1996 (47 U.S.C. §160) requires the FCC to forbear from “applying any regulation or provision” of the Act to a telecommunications carrier or service if it determines: (1) enforcement is not necessary to ensure rates are just and reasonable and not unreasonably discriminatory; (2) enforcement is not necessary to protect consumers; and (3) forbearance is in the public interest.

In March 2006, a deadlocked Federal Communications Commission on a Verizon Communication’s forbearance petition resulted in the Bell company receiving sweeping relief from federal and state regulation of its high-capacity broadband voice and data services. As a result of Verizon’s unprecedented “win” at the Commission, AT&T, Qwest and other independent phone companies filed “me-too” forbearance petitions in an effort to receive the same regulatory relief.

On the heels of this deregulatory victory, Verizon in the Fall of 2007 filed additional forbearance petitions that sought relief from all unbundling and dominant carrier requirements in six major metropolitan statistical areas (MSAs). Verizon claimed the relief was justified because of alleged “extensive” competition it faces in Boston, New York, Philadelphia, Pittsburgh, Providence and Virginia Beach. Verizon would be relieved of having to provide unbundled network element (UNE) loops and transport for both residential and business customers from Massachusetts down to North Carolina.

Again, following Verizon’s lead, Qwest filed a forbearance petition for similar relief in four MSAs, including Denver, Minneapolis-St. Paul, Phoenix, and Seattle.
 

The FCC Dec. 4, 2007 unanimously rejected all six forbearance petitions filed by Verizon Communications.  On July 25, 2008, the FCC also rejected Qwest's forbearance petitions.

These FCC’s rejections were appealed and on June 19, 2009, the D.C. Circuit Court of Appeals vacated the decision and remanded it back to the Commission for further explanation of its reasoning. In the meantime, Qwest re-filed for forbearance in the Phoenix MSA.  But this request was subsequently denied and has been appealed to the 10th Circuit.

In rejecting Qwest’s most recent request for forbearance in Phoenix, the FCC applied a market power analysis.  It has sought comment on whether the analytic framework it used in deciding the Qwest Phoenix request should apply in other forbearance proceedings seeking similar relief.  Comments on this topic are due August 23, with replies due on September 22.
 

• Economic Impact of Verizon's Rhode Island and Virginia Beach Petitions  
   
• The Importance of Wholesale Competition to Market Performance 
   
•  Properly Estimating Size of Wireless-Only Market
   
• Mobile Wireless Service to "Cut the Cord" Households in FCC Analysis of Wireline Competition
   
• GeoResults Data Shows Low Competition Levels in Enterprise Markets
   
• Forbearance Will Levy $1.14 Billion Annual "New Telecom Tax" on Customers in Four Qwest Markets