[February 3, 2005]

8. Verizon's Petition for Forbearance

This petition contains a number of technical arguments. In addition, it makes analogies that are specious and draws conclusions that are not supported by the facts or by prior and current Verizon business conduct even without Forbearance. One can only guess what Verizon will do if the Commission grants the Petition, but if past behavior is any indication, the ISP industry, as we know it, will be history.

For example:

a. Verizon states that Long Distance carriers handle the bulk of large business traffic, which is factual. So what does this have to do with Forbearance? Does Verizon intend to use its monopoly over the last mile to raise prices on the local loop for data to the point where the 10 or so seriously competitive broadband business providers can no longer compete with a Verizon offering? Verizon is a monopoly and long distance carriers are not. Verizon's broadband network is pointed at residential and local business, not large-scale bandwidth consumers.

b. Verizon states that competition will insure that [their] network is available to wholesale customers are reasonable prices. What competition? What reasonable prices? Although I can think of a dozen reasons why Verizon should be catering and supporting their wholesale customer base, in point of fact, they are attempting to destroy their internal competition even without Forbearance. Obviously the Attorney who drew up the petition is unaware of the reality of how Verizon beats up their wholesale customers.

Here is what Verizon says on this subject in their Petition:

"Similarly, the competitive nature of the broadband market will ensure that broadband will be available to wholesale customers at reasonable rates [what is reasonable?]. In granting forbearance in the Section 271 Order, the Commission stated:

[T]he evidence currently before us, taken as a whole, leads us to conclude that competition from multiple sources and technologies in the retail broadband market, most notably from cable modem broadband providers, will pressure the BOCs to utilize wholesale customers to grown their share of the broadband markets and thus the BOCs will offer such customers reasonable rates and terms in order to retain their business. Verizon plausibly claims that because BOCs face intense intermodal competition they will need to find ways to keep traffic "on-net," which we conclude would likely include the provision of wholesale offerings."

The words "plausibly" and "likely" have no connection with reality. The business practices outlined in this document are real. Simply put, Verizon has adopted business practices calculated to destroy their wholesale customer base, which runs counter to the beliefs of the Commission as stated above.

c. Verizon states correctly that cable isn't subject to the same rules as Verizon. They use that as a reason for Forbearance. This is specious for two reasons; 1) The status of cable service is under judicial review and 2) Cable service isn't ubiquitous and telephone service is, especially in rural areas.

d. Verizon holds out the carrot of investment. Verizon and the other BOCs said the same thing about Congressional legislation as personified in the Tauzin-Dingell Bill. Senator Hollings killed Tauzin-Dingell, but Verizon is investing in broadband anyway—even in towns as small as Gustine, Texas, population 430, where DSL was just installed. In other words, watch what Verizon does, not what Verizon says.

 

1. Background

what the RBOCs really think about competition

missing the Internet revolution

Robert Cannon

2. Pricing and Cost Issues: predatory prices crush competition

RBOC costs, for the record

3. Business Practices

4. Slamming and other dubious business practices

5. Networks

6. Customer Service

7. VNXX

8. Verizon's Petition for Forbearance

>9. Unintended Consequences

10. Conclusion

RBOCs, why you need me