Verizon Asks Virginia SCC to Amend New Rules in Determining When Telecom Markets are Competitive

RICHMOND - Verizon today asked the Virginia State Corporation Commission to change portions of its Dec. 14 order that ruled on the company's request to bring regulation more in line with the state's vibrantly competitive telecommunications market.

In a 13-page petition for reconsideration, the company asked the commission to change its new rules for determining what particular telephone exchange areas are competitive by counting many now-excluded facilities-based providers that today offer service in those areas. 

"We commend the Commission for correctly defining the limited role for regulation in competitive markets and attempting to put into place a testing process that would stay current with the rapid technological changes in telecommunications.  However, the test for competition needs to be changed to recognize major competitive investments and to eliminate the requirements for customer data we cannot obtain," said Robert W. Woltz Jr., president of Verizon Virginia.  "Our proposed changes would ensure that this test accurately reflects facilities-based competition from existing and new technologies, and that it can be administered based on available data."

In its order, the SCC found that residential phone competition was sufficiently prevalent in parts of the Hampton Roads, Northern Virginia, Richmond and Roanoke areas.  It similarly found sufficient competition for small businesses is present in parts of the Hampton Roads, Northern Virginia and Roanoke areas. 

The Commission's order means that Verizon has pricing flexibility more comparable to its many competitors in these markets, with no price floors or ceilings and shorter tariff-filing requirements.  The Commission also established a five-year cap in the competitive areas that limits any price increase for basic local phone service in these areas to $1 per year for residential customers and $3 per year per line for small business customers.

To determine when competition becomes prevalent in other areas, the Commission established a two-pronged test to gauge whether consumers and small businesses in particular phone exchanges have enough alternatives to Verizon's landline voice service.  Under the first prong, 75 percent of homes or businesses in a telephone exchange area must be able to choose two alternatives to Verizon.  The second requirement is that 50 percent of the homes or businesses in an exchange area have the option to choose a "facilities-based" competitor that owns its own wireline network facilities.

Verizon asked the Commission to change the second requirement by expanding the universe of facilities-based competitors to include companies with their own call-switching equipment and backbone facilities such as Cavalier Telephone and Ntelos that purchase "last-mile" connections from Verizon to serve retail customers; cable companies that have upgraded their networks to provide digital broadband service, and wireless providers who have invested in their own networks to provide phone service.

"CLECs (competing local exchange carriers such as Cavalier and Ntelos) that provide their own switching and other facilities, but lease (last-mile facilities from Verizon), have always been considered 'facilities-based' for regulatory purposes," the Verizon filing stated.

The company also asked the Commission to change its rules so that competition from Internet-phone (VoIP) providers such as Vonage can realistically be counted in the test for availability of competition.  The Commission's rules currently require that, in order for such providers to be counted, at least 75 percent of the homes or businesses in a phone exchange must subscribe to broadband Internet service. 

Unfortunately, neither Verizon nor the SCC has a way to collect this information from individual broadband providers.  Broadband Internet service is regulated by the Federal Communications Commission, and broadband subscriber data are collected on a state-by-state basis.  "Since most broadband providers, most notably cable and wireless providers, do not fall within the regulatory jurisdiction of the (State Corporation) Commission, it cannot require these carriers even to report aggregate subscribership data, comparable to what it requires wireline local exchange carriers to report," the Verizon filing stated.

Verizon proposes in its filing that the Commission instead permit the inclusion of VoIP providers in the competitive availability test based on the availability of broadband service to at least 75 percent of homes or businesses in an exchange.

Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving 63.7 million customers nationwide.  Verizon's Wireline operations include Verizon Business, which delivers innovative and seamless business solutions to customers around the world, and Verizon Telecom, which brings customers the benefits of converged communications, information and entertainment services over the nation's most advanced fiber-optic network.  A Dow 30 company, Verizon has a diverse workforce of nearly 238,000 and last year generated consolidated operating revenues of more than $88 billion.  For more information, visit www.verizon.com.