Draft FCC Order Denies Qwest Forbearance
17 July 2008
Volume 28; Issue 138
(c) 2008 Warren Publishing, Inc. All Rights Reserved.
Chairman Kevin Martin circulated a draft order denying a Qwest forbearance petition opposed by competitive local exchange carriers, agency and industry sources confirmed. The draft's market-share test doesn't count cut-the-cord wireless subscribers, we're told. Qwest seeks relief from loop and transport unbundling rules in Phoenix, Denver, Seattle and Minneapolis. Commissioners must vote by July 26 under a statutory deadline.
Commissioners are undecided on forbearance, we're told, but Qwest seems likely to lose a hard-fought battle against competitive local exchange carriers. "The Bell's prospects are dim" without Martin on its side, Stifel Nicolaus said in a note last week. The commissions' two Democrats are seen as likely to vote to deny forbearance. Counting Martin, that means at least three votes against Qwest. "The FCC has until July 26 to issue its order on our forbearance petitions," a Qwest spokesman said. "We expect the commission to use all of that time to consider the matter." An FCC spokeswoman declined comment, since it involves a pending proceeding.
Qwest seemed worried about getting forbearance in a Tuesday ex parte. "Qwest is concerned that the [FCC] may be preparing to inappropriately apply a 'market share' test as a basis for denial of the pending Qwest petitions," it told the commission. Qwest fears the FCC approach will "systematically and arbitrarily overstate Qwest's market share" by discounting cut-the-cord wireless subscribers, "choosing instead to demand that Qwest produce some other numbers that have not yet been collected or analyzed," it said. Doing so would mean the FCC rejects market share data used in "other forbearance contexts... fly[ing] directly against the legal structure that Congress has established for the grant of forbearance petitions."
The Qwest drive for forbearance seemed "uphill in the wake of the FCC rejection last December of Verizon's similar six-city request," Stifel Nicolaus wrote. Still, the analysts "thought Qwest had a shot in Phoenix, given the level of telecom competition there, particularly from Cox cable." If the FCC denies Qwest's petition, the Bell could go to court and refile for relief in more sharply defined geographic areas, the analysts said: "Verizon has already adopted such a two-pronged approach, challenging the FCC denial of its six-market bid in the U.S. Court of Appeals for the D.C. Circuit while making new forbearance filings for large parts of the Providence and Virginia Beach markets." -- Adam Bender