[February 3, 2005]

10. Conclusion

Without question, Verizon has adopted a number of business practices that disadvantage competitive Internet Providers that have contracts with Verizon that should thereby have a level playing field, but don't. While those business practices may or may not be in violation of FCC regulation or illegal in some other way, they are sleazy, especially those centered on slamming and solicitation by Verizon Online after the customer has signed with another ISP.

If I had the funds, I would hire the very best Telecommunications legal specialist not already in the employee of Verizon or another RBOC and file under the Rocket Docket with the FCC. Given that it would strain my budget just to pay for a round trip ticket to Washington, I am unable to do what begs to be done.

I submit that the petition for Forbearance as filed by Verizon and prior to that time by BellSouth, SBC and Qwest, are not in the public interest. I fully recognize that comments on the BellSouth Petition are closed.

In my opinion, the FCC should do the following:

1. Combine all of the Forbearance petitions into one investigation. This is too important a subject to be settled in a haphazard fashion or piecemeal fashion. If the FCC grants Forbearance, then competition has no future. If comment is made otherwise, I respectfully direct attention to what each RBOC is currently doing as opposed to what they might say they will do or have done.

2. Investigate if each RBOC is funding a loss on DSL service by its owned subsidiary with regulated revenues. I find it interesting that while business plans must be filed and updated, I cannot get a firm answer from the FCC whether or not the ARMIS database contains data on DSL.

3. Determine if the herein listed business practices do or do not conform to FCC regulation. Depending on the answer to that question, I have several recommendations:

a. If it is determined that Verizon is unlawfully making bandwidth available under terms that advantage Verizon Online, stipulate that those same arrangements be made available to other Internet Providers, up to and including bandwidth that is designed for more limited service, such as a T1, or direct Verizon to include in its wholesale price that cost of bandwidth and make that price equal for everyone.

b. If it is determined that Verizon's co-marketing agreement with Verizon Online should be made available to other wholesale customers, then establish procedures that are bullet proof. Verizon has shown a serious talent for twisting any regulation that has any ambiguity to their advantage.

c. If it is determined that Verizon is slamming DSL customers and/or soliciting customers of one of their wholesale customers unlawfully, then the FCC needs to direct that those practices not only cease, but also take such other action as FCC regulation require and allow.

4. Determine through required audits and analysis of business plans for unregulated subsidiaries that were supposed to be filed if in fact Verizon and any other RBOC is using regulated revenues to sell DSL below cost. If in fact a determination is made in the affirmative, then require that Verizon divest themselves of some portion of their ill-gotten customer base to their wholesale customers and raise their retail rates or lower their wholesale rates.

Verizon isn't a very good ISP compared to most. I have heard reports that SBC is just about as inept. Cable is still the dominant broadband provider in spite of predatory pricing by Verizon and SBC. Verizon rushed to agree with the Commission in Section 271 order that competitive pressures "… would likely include the provision of wholesale offerings." Verizon conveniently left out the FCC comment "at reasonable prices." Verizon does offer wholesale contracts, but the price exceeds the lowest retail cost provided by Verizon Online through bundling arrangements. Verizon now offers a very low price for business customers, $39.95, and allows the first three months FREE. A wholesale customer of Verizon cannot compete with those prices.

The bottom line is simple. What Verizon does is often in conflict with what Verizon says. Through business practices and predatory pricing, it would appear that Verizon is determined to eliminate as much competition as they possibly can and in fact, Verizon Online controls 90 percent of DSL business done through Verizon at this time. While Verizon says that wholesale customers are good for business, it takes steps to insure that no wholesale customer can compete with the prices charged by Verizon's owned subsidiary. What Verizon does is far more convincing than what Verizon says.

Verizon holds out the prospect of investment while seeking regulatory relief and/or legislation. Yet Verizon has only invested what it wants to invest irrespective of promises during the process of regulatory or legislative proceedings. Verizon has promised to invest and hasn't. Conversely, Verizon has stated they would not invest unless some piece of legislation passed. It didn't and yet Verizon made the investment.

Verizon isn't the evil empire. Verizon is simply doing what its executives believe is in the best interest of themselves and the company as a whole. It is up to the Commission, State Regulatory Agencies and the various legislative bodies to determine to what extent Verizon is allowed to exercise its monopoly power.

Imposed competition built the Internet, drove long distance prices down and added a host of enhanced services to the benefit of the body public—consumers. Everything has gotten cheaper except local dial tone provided by the local telephone monopoly.

During the past few years, the RBOCs and ILECs have succeeded in curtailing competition to the point where hundreds of businesses have been driven into bankruptcy and the old Telco total monopoly is once again in process of being restored. Billions of dollars of investment is now lost.

Yet Verizon and other BOCs tell us that investment is the product of regulatory relief. I respectfully suggest to the Commission that innovation, customer service and the cost of product is best served by competition. And that the denial of Forbearance is in the interest of competition as is the continued audit of Verizon and RBOC business practice and enforcement of regulation that supports competition instead of killing it.

One final comment should be made. RBOCs have terminated employees in wholesale quantity. In addition, their war against competition has caused wholesale layoffs as companies downsized and went bankrupt. Over 3,000 Internet Providers have ceased to exist, with some percentage because of RBOC policy, and more, many more, to come.

As BOCs tighten their monopoly stranglehold over all things telecom with or without the blessing of the Commission, the economic repercussions will extend to not only more unemployment in the Telecom arena, but also to the ranks of innovative small companies who are not on the approved list as RBOC vendors.

The FCC is not accountable for generating jobs. But it is accountable for a healthy and competitive marketplace, something that by any measure is rapidly ceasing to exist one small incremental step at a time, thanks to concessions made to the army of lawyers and lobbyists deployed by the RBOCs.

This is the end of comments to the Commission.

 

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