________________________________________________________________
Mary E. Burgess
Room E604
32 Avenue of the Americas
New York, NY 10013
212-387-4046
Senior Attorney
November 22, 2000
Mrs. Susan M. Hudson, Clerk
Vermont Public Service Board
112 State Street
Drawer 20
Montpelier, VT 05620-2701
Re:
Regulation of Nondominant Carriers
Dear Mrs. Hudson:
AT&T Communications of New England, Inc. (“AT&T”)
hereby submits this letter in lieu of reply comments regarding
the appropriate level of regulation of nondominant
telecommunications carriers in Vermont.
In its initial comments, the Department of Public
Service (“DPS”) recommends that the Board make several specific
modifications to the statutes applicable to nondominant
telecommunications carriers in Vermont.
With regard to the provisions which govern companies
seeking to acquire a controlling interest in a company subject
to Public Service Board regulation, the DPS recommends that
Section 107 be modified to establish an automatic approval
process of 45 days.
While AT&T appreciates that the DPS’s
objective is to streamline the approval process for these types
of transactions, AT&T recommends that the Board adopt a 30
calendar day timeframe for automatic approval to further
streamline the process.
DPS recommends that the Board do away with tariff
filing requirements for nondominant carriers, because doing so
will make it “easier for nondominant carriers to compete in the
new marketplace” (DPS comments at 3).
However, AT&T recommends
that the Board not adopt a policy of complete detariffing for
nondominant carriers at this time.
Rather, the Board should
adopt a policy of permissive detariffing whereby nondominant
carriers that wish to file tariffs may do so.
Many nondominant
carriers have been filing tariffs for years and are used to
conducting business in this manner.
Prohibiting nondominant carriers from filing tariffs
would likely add to their transaction costs.
This would place
nondominant carriers at a competitive disadvantage if the ILEC
is permitted to continue to file tariffs and thus avoid the
transaction charges associated with a tariff-free regulatory
environment.
In contrast, permissive detariffing would offer
nondominant carriers the flexibility they need to compete
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effectively.
In New Hampshire, nondominant carriers are
afforded the opportunity to file tariffs following the format of
a model tariff, which has been approved by the Commission.
AT&T
submits that adoption of a model tariff in Vermont would foster
the efficient use of the resources of both DPS staff and
nondominant carriers, while affording consumers the protections
to which they are entitled and accustomed.
AT&T supports the Department’s recommendation that the
Board relax the notice requirements associated with the
disconnection and deposit rules, and looks forward to reviewing
the Department’s specific modifications.
However, AT&T requests
that the Board make such modifications applicable to both local
and toll service in order to encourage entry into Vermont’s
local telecommunications market by nondominant carriers.
Verizon appears to have misunderstood the objective
behind the Board's inquiry regarding the regulation of
nondominant carriers.
From their initial comments, it is
apparent that DPS and Sprint agree with AT&T that in Vermont
nondominant carriers are those other than the incumbent (See
DPS's proposed definition of the term at p. 1 and Sprint’s
initial comments at pp. 3-4).
In stark contrast, Verizon’s
comments reveal that it views the Board's future rulemaking
proceeding as an opportunity to further entrench Verizon's
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monopoly control of the local exchange market in Vermont.
For
example, Verizon attempts to portray itself as nondominant in
situations involving trunking or collocation. (Verizon initial
comments at 3).
Verizon's argument, however, does not withstand
scrutiny.
In its initial comments, Verizon states that the
Board’s decisions regarding regulatory forbearance should be
made on a “market by market” basis (Verizon Comments at 3).
However, as recently as February of this year, the Board
acknowledged that “the telecommunications market in Vermont is
dominated by an incumbent carrier that provides local, toll, and
other services, and that there are new entrants who rely in part
upon the incumbent’s network to offer their products.”
(Docket
6077, Bell Atlantic Special Contracts, Order issued February 8,
2000 at 7).
Should the Board approach forbearance in the manner
suggested by Verizon, it would be critical for the Board’s
analysis to address whether Verizon retains dominance over any
essential inputs for the market in question (e.g., the local
loop).
If Verizon retains dominance over such critical inputs,
it should not be declared nondominant.
Another important aspect
of the Board’s analysis would be an examination of the
profitability and costs of the carriers for the service or
market in question.
For example, if it is only theoretically
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possible for CLECs to serve a specific market, but in reality it
would be economically impracticable to do so, then Verizon
should clearly not be declared nondominant in that market.
Verizon states that in its analysis of dominant
status, “the Board should avoid focusing on historical dominance
and nondominance, but instead should carefully examine the
characteristics of the market today and how it may change in the
future.”
(Verizon comments at 3 (emphasis added)).
disagrees.
AT&T
While the Board’s analysis should certainly focus on
the present state of the market, it would be erroneous to base a
declaration of nondominance on competition that may emerge in
the future but does not now exist.
Verizon claims that in determining the extent of
regulatory forbearance, “markets” may equate to “services” in
some instances (Verizon comments at 3).
The Board should be
wary of adopting Verizon’s proposed definitions of “market” and
“service”, and should conduct a comprehensive investigation
before declaring Verizon nondominant in any given market or
service.
In its comments, Verizon asserts that its unbundled
network elements and resale of its services make competition
possible in Vermont, and render it impossible for Verizon “to
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raise its retail prices without the risk of losing its customers
to competitors.”
(Id.) AT&T submits that before making any
changes to Verizon’s dominant status in Vermont, the Board
should require Verizon to submit a quantitative financial
analysis demonstrating that CLECs are able to produce and
sustain sufficient profit to continue offering competitive
services in the future for the markets in which Verizon seeks to
be declared nondominant.
AT&T appreciates this opportunity to provide
preliminary comments on the issues that will be raised in the
Board’s upcoming rulemaking.
Respectfully submitted,
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